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Annual Report and Accounts 2020
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Welcome to the 2020 Annual Report
Who We Are
We specialise in designing and manufacturing
professional lighting systems.
We currently employ over 650 people and although
each company works autonomously, our skills and
markets are complementary.
Investment case
01 A well-positioned
portfolio of companies
across seven different
countries
Read more on
pages 28 to 36
Our Purpose
Provide technically advanced
lighting solutions that deliver
long-term lowest cost of
ownership.
Our Vision
Maintain a consistently
respected and profitable
organisation with an
environmental conscience.
02 Innovative products
with market-leading
technology
Read more on
pages 18 to 21
Our Values
03 Strong profit margins and
robust balance sheet
Read more on
pages 78 to 83
Integrity
Honesty
Longevity
Visit us online at:
www.fwthorpe.co.uk
Front cover picture: The Silverstone Experience
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Annual Report and Accounts for the year ended 30 June 2020 Highlights
Financial Highlights
Revenue (£m)
+2.4%
2020
2019
2018
2017
2016
Operating profit (£m)
−7.5%
113.3
110.6
109.6
105.4
88.9
2020
2019
2018
2017
2016
16.3
17.6*
19.5
18.4
16.2
* 2019 excludes the profit on disposal of property
of £1.9m
Basic earnings per share
(pence)
−17.7%
Diluted earnings per share
(pence)
−17.6%
2020
2019
2018
2017
2016
11.45
13.91
13.91
12.54
11.24
2020
2019
2018
2017
2016
11.40
13.83
13.81
12.47
11.21
Dividend per Share (pence)
Operational Highlights
+2.4%
2020
2019
2018
2017
2016
5.66
5.53
5.40
4.90
4.05
1. Revenue surpassed last year’s
high, supported by SmartScan
sales, Famostar and Services
2. Results dampened by impact
of COVID-19 in last quarter of
the financial year and the lower
margins for Services
3. Operating cash generated
remained strong at £19.4m
4. Solid recovery at the start of
2020/21, operating performance
in line with the start of 2019/20
Contents
Business Overview
Highlights
FW Thorpe at a Glance
Strategic Report
Chairman’s Statement
Marketplace
Business Model
Strategy
Strategy in Action:
SmartScan – New Features
Key Performance Indicators
Strategy in Action:
01
02
08
11
14
16
18
22
Opening of the Light
Quality Experience
Multi-million pound
investment in new machinery 26
28
24
Operational Performance
Strategy in Action:
38
Lightronics opens European
Application Centre
Portland Lighting Moves
40
to New Premises
Financial Performance
42
Principal Risks and Uncertainties 44
50
s172 statement
52
Sustainability
56
58
Our Governance
Board of Directors
Directors’ Report
Statement of Directors’
Responsibilities
Directors’ Remuneration Report
Independent Auditors’ Report
to the Members of FW Thorpe Plc 69
64
65
79
Our Financials
Consolidated Income Statement 78
Consolidated Statement of
Comprehensive Income
Consolidated and Company
Statements of Financial Position 80
Consolidated Statement of
Changes in Equity
Company Statement of
Changes in Equity
Consolidated and Company
Statements of Cash Flows
Notes to the Financial
Statements
Notice of Meeting
Financial Calendar
84
128
131
83
82
81
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01
Stock Code: TFW www. fwthorpe.co.ukBusiness OverviewStrategic ReportOur GovernanceOur Financials FW Thorpe at a Glance
The complete service offering we provide...
Design &
Development
£1.3m
Group spend on
capitalised R&D
(2019: £1.8m)
Manufacturing
Services
£3.0m
Revenue from Services
(2019: £2.4m)
£1.1m
Acquisition of
facilities for Portland
£2.3m
Acquisition of
facilities for Famostar
Read about our service offering on pages 14 and 15
Our Strategic pillars...
SmartScan technology
Focus on high
quality products
and good
leadership in
technology
Continue
to grow the
customer base
for Group
companies
•
•
Focus on
manufacturing
excellence
Continue to
develop high
quality people
A sophisticated lighting management system for indoor and outdoor
applications based on reliable wireless communications offering fully
programmable control combined with energy and status reporting.
Key features:
•
Indoor and outdoor lighting
management for energy
conservation, flexibility and
well-being.
Fully automatic emergency
lighting testing and reporting.
Building management functions
such as room occupancy
profiling and air quality sensing.
•
•
•
•
Fully programmable control.
Sensor technology integral
to the luminaire avoiding
additional installation costs.
Wireless communication
protocol for simple installation.
Web-based information display
and reporting.
Read about our strategic pillars
on pages 16 and 17
Read about SmartScan on page 18
FW Thorpe timeline
1936
1940-1960
1965
1989
1990-1996
2005
2009
2011
Established by
Frederick William
Thorpe and his
son Ernest Thorpe.
Spinning circular
reflectors
Moved to larger
premises twice
to cope with the
expansion into
linear fluorescent
luminaires, and to
enter the exterior
and hazardous
markets
02
Floated
on the London
Stock Exchange
Moved to
our Redditch
headquarters
Transferred
to AIM
Acquired
Solite Europe
Lighting for
clean rooms
Acquisition
of Portland
Lighting
Mackwell
Electronics
disposal
First acquisition
– Mackwell
Electronics
Start-up in retail
and display
lighting
Acquired
Philip Payne
emergency
exit signs
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Annual Report and Accounts for the year ended 30 June 2020
Our Global footprint
We focus on long-term growth and stability, achieved by delivering
market-leading products, backed by excellent customer service.
Revenue by region (£m)
3
1
7
2
4
5
1 United Kingdom
Thorlux Lighting,
Philip Payne,
Solite Europe,
Portland Lighting,
TRT Lighting
2 Netherlands
Lightronics, Famostar
3
Ireland
Thorlux Lighting
4 Germany
Thorlux Lighting
5 United Arab Emirates
Thorlux Lighting
6 Australia
Thorlux Lighting Australasia
7
Spain
Luxintec
2.7
12.2
28.7
2020
2.5
11.2
6
28.2
2019
UK
Netherlands
Rest of Europe
Rest of the World
69.7
68.7
Read about our marketplace on pages 11 and 12
Read about our performance
on page 28
2013
2014
2015
2016
2017
2018
2019
2020
Start-up company
TRT Lighting
Entered the street
lighting market
Creation of an in-
house LED printed
circuit board
production line
Ability to
place 400,000
components
per day
Acquisition
of Lightronics
– Netherlands
Develop
European market
Sugg Lighting
disposal
Investment
in Luxintec
– Spain
Target Spanish
market and
acquire lens
specialism
Acquired
remaining share
capital in Thorlux
Australasia
Target Australian
market, improve
performance
Acquired Famostar
– Netherlands
Improved
emergency
lighting product
offering
Compact
Lighting business
successfully
merged with
Thorlux Lighting
Portsmouth
facility sold
All operating
businesses housed
in Group-owned
property
Maintained
operations
during COVID-19
pandemic
03
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Stock Code: TFW www. fwthorpe.co.ukBusiness OverviewStrategic ReportOur GovernanceOur Financials FW Thorpe at a Glance continued
Description
The Thorlux range of luminaires
is designed, manufactured and
distributed by Thorlux Lighting, a
division of FW Thorpe Plc.
Thorlux luminaires have been
manufactured continuously since
1936, the year Frederick William
Thorpe founded the company.
The company now operates from
the Group’s modern 16,882m2
self-contained factory in Redditch,
Worcestershire, central England.
Thorlux is well known throughout the
world and provides a comprehensive
range of professional lighting and
control systems for a wide variety of
applications.
Key products
•
Recessed, surface
and suspended
luminaires
Emergency
lighting systems
•
• Hazardous
area lighting
• High and low
bay luminaires
Lighting controls
Exterior lighting
•
•
Market sectors
• Commercial
Industrial
•
Education
•
• Healthcare
• Manufacturing
Retail, Display
•
and Hospitality
Description
Philip Payne recognises that most
trade emergency exit signage
products are generally designed with
the functional in mind.
Philip Payne offers a backbone range
of quality standard products but
more importantly encourages direct
dialogue with architects and designers
to ensure, via product variation or
bespoke work, aesthetic aspirations
and requirements are fully met.
Key products
Emergency
•
exit signage
Emergency
lighting
systems
•
Market sectors
• Commercial
• Hospitality
• Healthcare
Description
TRT (Thorlux Road and Tunnel)
Key products
•
Road and
Description
Based in Waalwijk, Netherlands,
Lighting is an independent specialist
tunnel lighting
Lightronics specialises in the
company which has evolved from
• Amenity
Thorlux Lighting.
lighting
Building on years of lighting
experience, TRT is dedicated to the
design, manufacture and supply of
LED road and tunnel luminaires.
TRT produces quality, efficient, stylish,
high performance LED products that
are manufactured in the UK.
Market sectors
•
•
Infrastructure
Facilities –
car parking
Key products
•
Road lighting
• Amenity
lighting
• Outdoor wall
and ceiling
luminaires
controls
Market sectors
•
•
Infrastructure
Facilities –
car parking
• Housing
ceiling luminaires as well as control
•
Lighting
development, manufacture and
supply of external and impact
resistant lighting, which includes
street lighting, outdoor wall and
systems. The majority of its revenue
is derived from the Netherlands but
there is also an export presence in
other European locations.
Lightronics was originally established
in 1946 and has a strong tradition
of solid, reliable products as well
as being known for its innovation.
Products are environmentally friendly
in terms of energy use as well as in the
prevention of light pollution.
Read more on page 29
Read more on page 31
Read more on page 34
Read more on page 35
Description
Solite Europe is a leading
manufacturer and supplier of clean
room lighting equipment and
luminaires within the UK and Europe.
Solite provide luminaires for
laboratories, pharmaceutical and
semi-conductor manufacturing areas
including hospitals, kitchens and food
preparation applications.
Key products
• Clean room
luminaires
Market sectors
Pharmaceutical
•
• Healthcare
Education/
•
Research
Key products
Lighting for
•
signs
Market sectors
Retail
•
• Hospitality
• Advertising
Description
Portland Lighting designs,
manufactures and supplies innovative
lighting products to the advertising,
brewery, retail and sign lighting
industries.
The company operates from a modern
1,394m2 facility in Walsall, which was
purposely designed to enable the fast
turnaround of customer orders.
Established in 1994, the product
range has continually evolved to
ensure that Portland remains one of
the leading companies in its sector.
Description
Our investment in Luxintec,
based in Valladolid, in north-west
Spain, specialises in the design,
development and manufacture of
innovative and high performance LED
luminaires and lighting systems.
Alongside its range of luminaires for
a variety of market sectors, Luxintec
designs and produces custom LED
lighting solutions for emergency
vehicles, general automotive and
other customer applications.
Key products
•
•
LED industrial
luminaires
LED retail and
display
luminaires
• Customised
LED solutions
•
LED optics
Market sectors
• Architectural
•
•
Retail
Industrial
• Automotive
Description
Based in Velp, Netherlands, Famostar
specialises in the development,
manufacture and supply of
emergency lighting products.
Revenue is derived from the
Netherlands, where it is considered
one of the foremost brands in the
market.
Famostar was originally established
in 1947, with each product being
designed and manufactured at its
own production facility. Famostar
has a reputation for designing and
manufacturing reliable luminaires
offering solutions for sectors
including commercial, industrial,
education and retail applications.
Emergency lighting
knowledge and
expertise is key to
the success of the
business. Famostar
offers both the correct
technical solution
and unique proposals
to complement
the needs of the
customer.
Key products
Emergency
exit signage
Emergency
lighting systems
Market sectors
• Commercial
Industrial
Education
Retail and
Hospitality
•
•
•
•
•
Read more on page 32
Read more on page 33
Read more on page 36
04
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Annual Report and Accounts for the year ended 30 June 2020 Key products
Description
•
Recessed, surface
Philip Payne recognises that most
and suspended
trade emergency exit signage
Key products
•
•
Emergency
exit signage
Emergency
lighting
systems
Market sectors
• Commercial
• Hospitality
• Healthcare
products are generally designed with
the functional in mind.
Philip Payne offers a backbone range
of quality standard products but
more importantly encourages direct
dialogue with architects and designers
to ensure, via product variation or
bespoke work, aesthetic aspirations
and requirements are fully met.
Description
The Thorlux range of luminaires
is designed, manufactured and
distributed by Thorlux Lighting, a
division of FW Thorpe Plc.
Thorlux luminaires have been
manufactured continuously since
1936, the year Frederick William
Thorpe founded the company.
The company now operates from
the Group’s modern 16,882m2
self-contained factory in Redditch,
Worcestershire, central England.
Thorlux is well known throughout the
world and provides a comprehensive
range of professional lighting and
control systems for a wide variety of
applications.
luminaires
•
Emergency
lighting systems
• Hazardous
area lighting
• High and low
bay luminaires
Lighting controls
Exterior lighting
Market sectors
• Commercial
Industrial
Education
• Healthcare
• Manufacturing
•
Retail, Display
and Hospitality
•
•
•
•
Description
TRT (Thorlux Road and Tunnel)
Lighting is an independent specialist
company which has evolved from
Thorlux Lighting.
Building on years of lighting
experience, TRT is dedicated to the
design, manufacture and supply of
LED road and tunnel luminaires.
TRT produces quality, efficient, stylish,
high performance LED products that
are manufactured in the UK.
Key products
Road and
•
tunnel lighting
• Amenity
lighting
Market sectors
Infrastructure
•
Facilities –
•
car parking
Key products
•
Road lighting
• Amenity
lighting
• Outdoor wall
and ceiling
luminaires
Lighting
controls
•
Market sectors
Infrastructure
•
Facilities –
•
car parking
• Housing
Description
Based in Waalwijk, Netherlands,
Lightronics specialises in the
development, manufacture and
supply of external and impact
resistant lighting, which includes
street lighting, outdoor wall and
ceiling luminaires as well as control
systems. The majority of its revenue
is derived from the Netherlands but
there is also an export presence in
other European locations.
Lightronics was originally established
in 1946 and has a strong tradition
of solid, reliable products as well
as being known for its innovation.
Products are environmentally friendly
in terms of energy use as well as in the
prevention of light pollution.
Read more on page 29
Read more on page 31
Read more on page 34
Read more on page 35
Description
Solite Europe is a leading
Key products
• Clean room
Description
Portland Lighting designs,
Key products
•
Lighting for
manufacturer and supplier of clean
luminaires
manufactures and supplies innovative
signs
room lighting equipment and
luminaires within the UK and Europe.
Solite provide luminaires for
laboratories, pharmaceutical and
semi-conductor manufacturing areas
including hospitals, kitchens and food
preparation applications.
Market sectors
Pharmaceutical
• Healthcare
•
•
Education/
Research
Market sectors
•
Retail
• Hospitality
• Advertising
lighting products to the advertising,
brewery, retail and sign lighting
industries.
The company operates from a modern
1,394m2 facility in Walsall, which was
purposely designed to enable the fast
turnaround of customer orders.
Established in 1994, the product
range has continually evolved to
ensure that Portland remains one of
the leading companies in its sector.
Description
Our investment in Luxintec,
based in Valladolid, in north-west
Spain, specialises in the design,
development and manufacture of
innovative and high performance LED
luminaires and lighting systems.
Alongside its range of luminaires for
a variety of market sectors, Luxintec
designs and produces custom LED
lighting solutions for emergency
vehicles, general automotive and
other customer applications.
Key products
LED industrial
•
luminaires
•
LED retail and
display
luminaires
• Customised
LED solutions
•
LED optics
Market sectors
• Architectural
Retail
•
•
Industrial
• Automotive
Description
Based in Velp, Netherlands, Famostar
specialises in the development,
manufacture and supply of
emergency lighting products.
Revenue is derived from the
Netherlands, where it is considered
one of the foremost brands in the
market.
Famostar was originally established
in 1947, with each product being
designed and manufactured at its
own production facility. Famostar
has a reputation for designing and
manufacturing reliable luminaires
offering solutions for sectors
including commercial, industrial,
education and retail applications.
Emergency lighting
knowledge and
expertise is key to
the success of the
business. Famostar
offers both the correct
technical solution
and unique proposals
to complement
the needs of the
customer.
Key products
Emergency
•
exit signage
Emergency
lighting systems
•
Market sectors
• Commercial
Industrial
•
•
Education
Retail and
•
Hospitality
Read more on page 32
Read more on page 33
Read more on page 36
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Stock Code: TFW www. fwthorpe.co.ukBusiness OverviewStrategic ReportOur GovernanceOur Financials Strategic
Report
Chairman’s Statement
Marketplace
Business Model
Strategy
Strategy in Action:
SmartScan – New Features
Key Performance Indicators
Strategy in Action:
Opening of the Light
Quality Experience
Multi-million pound
investment in new machinery
Operational Performance
Strategy in Action:
Lightronics opens European
Application Centre
Portland Lighting Moves
to New Premises
Financial Performance
Principal Risks and Uncertainties
s172 statement
Sustainability
08
11
14
16
18
22
24
26
28
38
40
42
44
50
52
Gilks Garage Café
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Chairman’s Statement
Remarkably, the 2020/21 financial year has
started reasonably well overall for the Group,
all things considered, with orders and revenue
similar to levels at the start of last year.”
£44m
Revenue from outside the UK
(2019: £42m)
Despite seriously challenging
times for all of us, your Company
remains very profitable and in
a good, robust condition. The
word “unprecedented” has been
used prolifically during 2020,
and again in the last few days
the resilience of the business
has been demonstrated, with
Lightronics experiencing a fire
at its facility in the Netherlands;
I provide more details on
this towards the end of my
statement.
Until the March lockdown, whilst
there were the usual Group ups and
downs, most companies were in a
strong position, especially at the main
division, Thorlux Lighting, where
orders were at record numbers and
good levels of profit were being
achieved. During each of the worst
months – in March, April and May –
the Group still returned an operating
profit. Inevitably, however, profit in
those months was much reduced,
dampening the year-end result,
which, until the COVID pandemic,
the Board had expected to be an
improvement on the previous year’s.
All factories within the Group
presently operate with full capacity
available, using COVID-secure
methods. No factory staff have been
on furlough since early June. Over
100 office staff are still working
successfully from home, with
excellent IT logistics providing the
capabilities to work near normally in
most cases.
The Annual Report and Accounts
contains a more detailed overview
of the COVID situation and how it is
being dealt with across the Group,
together with a closer appraisal of the
performance of each Group company.
Group results
Year-end revenue was higher than
the previous year’s, culminating in an
overall increase of 2.4%, at £113.3m.
Most of the growth was attributed
to Thorlux Lighting, with some of
that revenue resulting from larger
projects including survey, installation
and project management activities.
Group cumulative operating profit
had been ahead of last year’s until
lockdown occurred. During April and
May in particular, lockdown resulted
in significantly reduced revenue for
the UK companies, wiping out the
cumulative profit gain and losing
positive momentum; revenue for this
period was down on the previous
year’s by 27%. Final operating profit
for the year was down by 7.5%
(before disposal of property last year),
at £16.3m – a creditable result, all
things considered.
There were notable performances
across the Group: at Thorlux, TRT
Lighting and Famostar. Thorlux
experienced excellent order levels
throughout the year, especially for
larger special projects in the rail
and healthcare sectors, resulting in
order income of £75m, up 4%, and an
improved return on sales until the last
quarter. TRT improved profitability
again, albeit dampened by the
restrictions in April and May, whilst
Famostar managed an increase even
in its final operating profit (before
acquisition adjustments), of +41%, to
€2.8m. In addition, throughout late
spring and early summer, the Group’s
Dutch companies did a tremendous
job of safely operating their
factories at near-normal levels and
experienced only slightly reduced
customer demand.
08
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Annual Report and Accounts for the year ended 30 June 2020 The Silverstone Experience
I am proud that both Thorlux and
Philip Payne manufactured lights for
the Birmingham Nightingale Hospital
and continued to supply other
healthcare projects throughout the
critical period.
Through prudent management of the
business over many successful years,
FW Thorpe has a strong balance
sheet with significant reserves, and
at the start of the COVID crisis Group
companies were showing good levels
of orders. The Board decided not to
apply for any government support
for furloughed employees during
lockdown; this impacted operating
costs by £0.6m, as the Group paid all
employees normal salary whilst they
were not working. This decision was
duly considered and leaves the Group
free of debt to external supporters,
protects its reputation, and gives
management ongoing freedom to
make choices for the good of the
business and its shareholders.
The Group’s robust balance sheet
and continued strong operating cash
flow performance allow the Board to
recommend a final dividend of 4.2p
per share (2019: 4.1p) for the year to 30
June 2020, which gives a total of 5.66p
(2019: 5.53p) and an increase of 2.4%.
Outlook
Remarkably, the 2020/21 financial
year has started reasonably well
overall for the Group, all things
considered, with orders and
revenue similar to levels at the
start of last year. However, some
of the Group’s smaller companies
are suffering a reduction in orders
– most notably Portland Lighting,
which primarily serves the retail and
hospitality sectors.
Recent investments in new
machinery, new factories and in
(temporarily suspended) customer
experience centres are now
completed, putting the Group
in good shape. No significant
investment is planned in the first
months of this new financial year,
beyond the usual requirements for
keeping products and technology up
to date with market expectations.
Such an extreme situation has
reminded the Board that FW Thorpe
is intentionally managed cautiously
to serve many market sectors, both in
the type of products manufactured
and geographically. This wide focus
reduces the Group’s exposure to
changes in political situation and in
technology, and during this year has
given some degree of resilience in
response to the pandemic.
It seems inevitable, however, that
there will be a global recession, and
that the UK, against a backdrop
of Brexit uncertainly and the
intense lockdown enforced by the
Government, could be affected worse
than many countries.
Whilst the Group’s present order
book is healthy and daily orders are
good, this is partly attributable to an
amount of pre-COVID work carried
forward and to pent-up demand
in the market. Due to significantly
reduced new-project sales visits and
activity during lockdown, reduced
usage of the Group’s extensive
Application and Experience Centres,
and the general state of the economy,
it is difficult to predict anything other
than a downturn in orders at the end
of the 2020 calendar year.
All Group companies are being
closely managed and performance
is being monitored. Where markets
have been severely affected, the
Board will focus its attention on
finding new markets in more
buoyant areas; however, transitioning
businesses into these new areas
takes time. There are a number of
larger-scale project opportunities for
Group companies to target, but these
inevitably come with tighter margins
and higher operating costs.
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09
Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Chairman’s Statement continued
now in use in several other Group
companies, which, like Thorlux, are
finding the market very receptive to
the latest wireless technology.
the warehouse and offices. The Board
would like to express its thanks to the
local fire brigade for their efforts to
limit the spread of the fire.
Longer term, it is widely believed that
UK and EU governments will invest to
stimulate the economy. FW Thorpe is
well positioned to be able to benefit
from this as and when it occurs.
The Group remains acquisitive and
continues to carefully investigate
complementary businesses; however,
opportunities have taken a back seat
whilst the Board focuses on day-to-
day operations and waits for more
stability in the Group’s markets in
Europe and further afield.
Personnel
I would like to thank my whole team
for their continued support and
diligence through such challenging
times. The Board is especially
grateful to employees who so
positively turned up to the Group’s
factories to work right through
this unprecedented situation, and
to those who kept motivated and
committed whilst working from
home, often from their dining-
room tables and with added family
distractions. Everyone’s flexibility
and conscientiousness throughout
this period has kept the Group’s
customers satisfied, with on-time
deliveries and services, whilst the
companies’ professionalism in
managing risk has kept everyone in
the Group safe.
Lightronics
As the Board puts the finishing
touches to this year’s Annual Report
and Accounts, I unfortunately have to
report that Lightronics experienced a
fire on 23 September at its facility in
the Netherlands.
Fortunately, no one was injured;
however, damage to the assembly
area and the European Application
Centre is significant. The combination
of the fire brigade’s actions and the
fire protection invested in during
the recent refurbishment was able
to prevent the fire from spreading to
With the support of the Group,
Lightronics is working to restore
operations to full capacity and has
secured a temporary site. Whilst
short-term disruption is inevitable,
some servicing of customer
requirements commenced within
24 hours of the fire. The limited
impact on Lightronics’ inventories, its
ability to source further supplies, as
well as the rapid response in which
Lightronics is resuming operations
and servicing customer needs,
should, together with insurance cover
for any unavoidable financial loss,
result in no significant impact on the
Lightronics business this year.
The Board wishes the team in the
Netherlands well and thanks them for
their efforts to limit the effects of the
fire during these challenging times.
Annual General Meeting 2020
Unfortunately, due to the current
restrictions put in place by the UK
Government with regard to public
gatherings, the Group is unable to
hold its annual general meeting in
the same way as in previous years.
The Board will, of course, endeavour
to give shareholders the opportunity
to ask questions in other ways; please
see the Notice of Meeting for further
details. I look forward to welcoming
you all back next year.
Best wishes to all the Group’s
shareholders, stakeholders and
employees during this difficult period.
Mike Allcock
Chairman and Joint Chief Executive
30 September 2020
+2.4%
Dividend
(2019: +2.4%)
All Group companies have benefited
from the market adoption of LED
technology over the last decade.
Sales of LED luminaires were relatively
easy to achieve, primarily on the
basis of significant energy savings
and increased reliability. Projects that
can benefit from LED technology
remain firm targets, such as where
projects are still lit with luminaires
using fluorescent lamps. For example,
recent healthcare projects that
Thorlux delivered were funded by
paybacks that the customer achieved
with LED technology. Opportunities
to replace non-LED lamps are,
however, fewer now. Early LED
installations are now eight to ten
years old, so the replacement market
will soon become a target again.
Group companies need to offer
features beyond energy saving and
reliability alone. Options include
improving the quality of the white
light from LED luminaires, reducing
glare, and improving the ecological
impacts of our product designs.
Thorlux will continue to invest
in controls technology, to offer
lighting units with intelligence
and connectivity that can link into
other areas of building control and
information technology. Thorlux
continues to successfully evolve
the SmartScan system, which now
controls and monitors devices
beyond purely lighting technology.
(You can read more about this
in a specific feature later in the
Annual Report and Accounts.) Such
controls technology will give Group
companies an advantage over
competitors offering cheap low-
quality luminaires. SmartScan is
10
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Annual Report and Accounts for the year ended 30 June 2020
Marketplace
Commercial
Housing
Industrial
Facilities
Education
Infrastructure
Healthcare
Advertising
Manufacturing
Research &
Development
Retail
Pharmaceutical
Display
Hospitality
Geographic markets
UK
+1%
Revenue
Netherlands
+2%
Revenue
•
Increased business from heavy industry, healthcare
and rail
•
•
Fall in Lightronics revenue offset by Famostar growth
Demand largely unaffected by COVID-19
• Services revenue increased albeit with minimal gross
contribution
Europe
+10%
Revenue
Other countries
+6%
Revenue
• Additional business in Germany and Ireland
•
Improved demand in Australia and the UAE
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Job Number 6 October 2020 1:05 pm Proof 11Marketplace continued How did you manage through the initial impact of COVID-19?Our priority was the health and well-being of our employees whilst balancing the requirements of essential customers during the first few weeks of restrictions. Decisive action was taken at an early stage to enable those employees who could work from home to do so and to ensure the safety of those employees who remained at our facilities. Detailed risk assessments, endorsed by an independent third party, were undertaken to enable us to continue operating at our manufacturing sites. See page 44. Which market sectors are growing? The main growth areas have been healthcare and rail. This continues to justify our investment in business development for these areas. The growth in these areas however was offset by reductions in general commercial and education spending. We will consider how we deploy our existing selling resource during 2020/21 in order to target specific sectors. Which sectors are you focusing on? Our product and solution portfolio continues to evolve and can cater for a variety of different sectors. We continue to focus on the healthcare, logistics and retail sectors but with some renewed endeavour on education. Do your competitors have an interest in each of these markets as well?We have both domestic and international competition across all of these markets, from listed multinationals to solid private businesses. We continue to differentiate ourselves with product and systems innovation, combined with excellent customer service through the life cycle of a project. Are you in each of these markets in all of the geographies you operate within?We tend to focus on particular product ranges in new territories. We focus on our industrial products with controls technology as this has driven export success in the past. That does not preclude us from offering solutions in other sectors and we have won orders in education and facilities as examples.University of WorcesterAnnual Report and Accounts for the year ended 30 June 20201227581-FW Thorpe-AR2020 Strategic.indd 1206/10/2020 17:05:06 Increase in demand
for technology
International
economic conditions
Globalisation
What this means
•
Evolution of controls technology
– wireless
• Connectivity with the internet and
other devices – the Internet
of Things
What this means
• COVID-19 crisis has driven many
global economies into recession
• Certain sectors and businesses
under pressure and facing several
years to recover
• Ability to offer customers
• Pressure on global supply chains
What this means
• Responding to the demands of
our traditional customers who are
developing a global footprint
• Harmonisation of technology from
the adoption of LED brings the
threat of increased competition
from both Far Eastern and Western
economies
• Recent global pandemic
highlights the need for resilience
in the supply chain
Opportunity it provides
• Certain sectors will continue to
invest or potentially increase
investment – healthcare, logistics
are examples
• Government has indicated the
intention to invest to support
economy – more projects to be
given the “green light”
• Potential to acquire competitors
who struggle to recover as
economies restart
Opportunity it provides
• Chance to establish ourselves in
new territories with established
customers in the countries we
currently supply into
• New sourcing opportunities –
pricing, quality, technology
• Potential for customers to
reconsider sourcing strategies and
buy “local”
additional functionality by adding
different sensor technology and
presenting data, e.g. air quality
data, occupancy profiling
The Group has seen a shift in LED
sales, moving from 3% to 90% of
total revenue in recent years
•
Opportunity it provides
Improves ability to hold
•
specification business with our
own controls offering
• Potential to supply retrofit projects
with wireless controls where wired
controls were cost prohibitive
• Offer solutions to provide
additional data specific to the
market sector, i.e. occupancy
sensing for logistics and facilities
management
• Demand for retrofit installations
replacing fluorescent lighting for
LED – for example street lighting
or education sector
How we are responding
• Well placed with introduction of
•
SmartScan in 2016
Further development of the
SmartScan platform, bringing
other non-lighting devices into the
web portal
How we are responding
•
Ensure our businesses are not
reliant on any one sector in
particular
Target sectors where demand is
stable or increasing i.e. logistics,
healthcare
•
• Occupancy profiling, air quality
• Redirect sales focus as appropriate
sensing, and the ability to change
colour temperature are all features
• All new product developments are
LED based
• Continual review of LED
technology offerings to take
advantage of the latest advances
and ensure we are offering the
best solutions to our customers
How we are responding
• Working with global customers
• Continual development of the
supply chain
• Potential to establish new offices
in chosen locations to support
both customer and supply chain
development in the future
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Business Model
Customers come to us for peace of mind. They want the correct technical solution, professional
service, sustainability of products/services and the ability to support the customer during a
product’s warrantable life and beyond.
Our business model is focused on the needs of our customers and the marketplace, with a robust
capital structure that underpins our ability to deliver sustainable growth, innovative products
and excellent customer service.
>
>
>
The key resources
we utilise...
The service offering
we provide...
The key markets
we serve...
Design & Innovation
Continuous product
development – products,
software/controls, lighting
design
Talented People
Continual development
Design &
Development
£1.3m
Group spend on
capitalised R&D
(2019: £1.8m)
Manufacturing
Commercial
Manufacturing Facilities
UK – multiple sites,
Europe – Netherlands, Spain
Continual Investment
Commercial
Commercial
Commercial
£1.1m
Acquisition of
facilities for Portland
Hospitality
Hospitality
£2.3m
Acquisition of
Education
Industrial
facilities for Famostar
Education
Industrial
Commercial
Industrial
Education
Healthcare
Manufacturing
Commercial
Industrial
Education
Healthcare
Manufacturing
Retail
Retail
Display
Display
Hospitality
Pharmaceutical
Hospitality
Pharmaceutical
Research &
Development
Research &
Development
Advertising
Infrastructure
Facilities
Advertising
Infrastructure
Facilities
Housing
Housing
Industrial
Industrial
Education
Education
Healthcare
Manufacturing
Healthcare
Manufacturing
Retail
Retail
Display
Display
Pharmaceutical
Pharmaceutical
Research &
Development
Research &
Development
Advertising
Infrastructure
Advertising
Infrastructure
Facilities
Facilities
Housing
Housing
Healthcare
Manufacturing
Healthcare
Manufacturing
Retail
Retail
Display
Display
Commercial
Financial & Environmental
Sustainability
Financial stability, Carbon
Offset Scheme
Industrial
Education
Services
Healthcare
Manufacturing
Retail
Advertising
Infrastructure
Advertising
Infrastructure
Display
Facilities
Facilities
Housing
Housing
Hospitality
Pharmaceutical
Hospitality
Research &
Development
Research &
Development
Pharmaceutical
£3.0m
Revenue from Services
Manufacturing
Advertising
Healthcare
Research &
(2019: £2.4m)
Development
Commercial
Industrial
Hospitality
Education
Pharmaceutical
Retail
Infrastructure
Display
Facilities
Housing
14
Hospitality
Pharmaceutical
Research &
Development
Advertising
Infrastructure
Facilities
Housing
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Annual Report and Accounts for the year ended 30 June 2020 >
Solutions provided for
our customers...
The value generated...
Target
Customers
Those responsible for the
whole life cycle cost of the
products/services we supply
• Energy efficiency
• Low maintenance
• Rapid installation
• Longevity of product
• Low total cost of ownership
Customers
Short-term
Replacement of ageing
technology with improved
lighting systems
Long-term
Innovative lighting that delivers
cost savings and additional
benefits, such as data capture
and presentation
Shareholders
Short-term
Opportunity to invest in
a company that pays a
progressive dividend and with
a robust balance sheet
Long-term
Sustainable profit growth
drives future shareholder
returns
Employees
Short-term
Opportunity to work with an
innovative market leading
company within the lighting
industry
Long-term
Continual development with a
variety of Group companies in a
number of different territories
Our revenue drivers
Specification – renovations, new
build, energy saving, compliance,
technology adoption
Diversified product portfolio
gives the ability to supply a
complete project – “boiler room to
board room”
Cross-selling opportunities with
other Group companies to offer
a complete solution to a wide
variety of sectors
15
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Strategy
Our products are sold throughout the world. The Group management team is passionate about
developing the business for the benefit of the shareholders, employees and customers. With the
energy and ability of our staff we look forward to the future with enthusiasm. Our aim is to create
shareholder value through market leadership in the design, manufacture and supply of professional
lighting systems.
Our focus is for long-term growth and stability, achieved through the following priorities:
Focus on high quality
products and good
leadership in technology
Continue to grow
the customer base
for Group companies
Customers continually require new
and innovative ways in which to
reduce the operating costs of their
lighting installations. There is also
the requirement to reduce their
environmental impacts.
Progress to date
• Continued enhancement of
features for the SmartScan
wireless system – occupancy
profiling, air quality, colour
changing capability and further
data capture
Integration of lens and optical
technology into certain ranges
•
Future opportunities
• Further development of
SmartScan
• Continuous research and
development
• Targeted acquisition
Associated risks
C
•
•
Product acceptance
Initial product introduction
Strategy in Action
Case Study:
SmartScan – New Features
With the continued investment in
the product portfolio and the broad
range of sectors we can service,
the focus will be on expanding our
customer base in new markets and
territories.
Progress to date
• Targeted approach in the
Netherlands with Thorlux
industrial product portfolio
• Luxintec adoption of Smart
and SmartScan technology in
existing product portfolio
Introduce Famostar product
portfolio to territories where the
Group has a presence
Introduce selected Luxintec
product to the UK via Thorlux
•
•
Future opportunities
• Consider further sales offices
overseas
• Potential business development
•
investment
Investment in sales personnel in
the UK and overseas
• Targeted acquisition
Associated risks
A C D J
•
•
Short-term cost increase without
immediate return
Prolonged time required to establish
FW Thorpe brands in new territories
Strategy in Action
Case Study:
Opening of the Light Quality
Experience Centre
Read more on page 18
Read more on page 24
Overview of strategy
• Strategy was designed to
build on the values that
have been at the core of the
company since its inception.
FW Thorpe has been built on
product innovation – design
and product development is
fundamental.
• The Group is product led.
This enables us to maintain
competitive advantage with
marketing leading products,
utilising technology to retain
and attract new customers.
• Sustainable growth is key to
our stakeholders – targeting
new customers in existing
or new territories, using our
product portfolio to drive into
new sectors.
• Control of the manufacturing
processes is of utmost
importance – key processes
are kept in-house with
targeted investment in new
machinery as required.
• Family principles with
our people fundamental
to our success – internal
development, training and
experience. The Group prides
itself on the development
of people from within the
organisation – maintaining
our values.
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Annual Report and Accounts for the year ended 30 June 2020 Focus on manufacturing
excellence
Continue to develop
high quality people
Our Values
One of our main sources of
competitive advantage, it is
imperative we continually develop
and retain talent within the
business.
Progress to date
• Training and development
• Apprentice scheme continues
•
Investment in management
training
Along with continued product
development, the need to innovate
the production process is essential.
Progress to date
• Acquired existing Famostar
facility and adjacent land for
potential future expansion
• New punch/bend capacity
brought online
• Utilisation of former TRT facility
to enable social distancing
measures for Thorlux and TRT,
store additional stock for Brexit/
COVID-19 protection
Integrity Honesty Longevity
Risks key
A Adverse economic
conditions
B Changes in government
legislation or policy
C Competitive environment
D Price changes
E Business continuity
Future opportunities
• Continued investment in
manufacturing facilities
Future opportunities
• Continued investment in training
and personnel development
F Credit risk
G Movements in
currency exchange
H Cyber security
I
Exit from the
European Union
J Global pandemic
Associated risks
C E
Associated risks
C
I
•
•
Reduced productivity while changes
are implemented
Learning curve on introduction of
new products and processes
•
•
Ability to retain staff in competitive
local job markets
Potential loss of UK personnel from
the EU due to Brexit uncertainty
Strategy in Action
Case Study:
Multi-million pound investment
in new machinery
Read more on page 26
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SmartScan – New Features
Building designers and
developers are under
increasing environmental
and legislative pressure to
reduce their carbon footprint
while providing high demand
essential logistics space within
increasingly challenging
environments. Taking this into
account, the highly successful
SmartScan wireless lighting
management system has been
upgraded with the addition
of new features, including air
quality sensing and occupancy
profiling.
Utilising BEA, SmartScan has the
ability to maximise:
• Space efficiency
• Operating cost savings
• Staff well-being
• Productivity
• Carbon reduction
Working closely with a particular
client, Thorlux has taken this a step
further and introduced the provision
for Built Environment Analytics
(BEA). Built Environment Analytics
was created for building tenants, to
give them a greater understanding
of how their facility performs in
operation. Supplying previously
unreported metrics for trend analysis
empowers a greater reduction in
energy consumption, with essential
environmental information based
upon qualitative data.
SmartScan Website
The system is accessed using a web browser; there is no need for a specific app or piece of software.
Energy performance data, emergency lighting testing records, occupancy profiles, air quality data, “as fitted” drawings,
interactive drawings and commissioning certificates are stored remotely on the web server.
All BEA metrics are graphically displayed, with customised automated CSV files generated for specified stakeholders.
18
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Annual Report and Accounts for the year ended 30 June 2020 BEA Topology
Occupancy
Profiling
Interactive
Drawings
Graphs
(d/w/m/y)
CSV File
Output
Website
1
Luminaires
2
Utilities
Metering
3
Photovoltaic
Panels
4
Electric
Vehicle
Charging
Sub-Metering
5
Exterior Air
Quality and
Noise Sensors
6
Interior Air
Quality
Sensors
7
Dock-level
Doors
8
Tenant
APIs
Energy Management
Reduce Operational Energy Use
The SmartScan portal displays full
historical consumption reporting of
all the main incoming supplies (gas,
water, electricity), with dedicated APIs
(application programming interfaces)
for photovoltaic generation
and electric vehicle charging
consumption.
Reduce Operational Energy Use
Installing specialist sensors,
dataloggers and volt-free contacts
onto other assets or services that
contain pre-written APIs enables
SmartScan to include this data – for
example, from photovoltaic panels
on the roof and on electric vehicle
charging bays – for analytics.
This data can be aligned with the
BEA metrics for occupancy and
occurrence to fully understand
electrical consumption within
operational procedures.
Carbon Offsetting
SmartScan provides automated
monthly reports with evidential data
for all supplied services as well as the
amount of carbon saved by the use
of smart lighting controls, i.e. daylight
dimming and presence detection.
All embodied carbon can be offset
using the FW Thorpe accredited tree-
planting programme.
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SmartScan – New Features continued
Interactive Display of Information
Navigation
Each dataset is shown as a
layer allowing the user to
zoom in or out as needed.
The user can look at data
for the whole building,
or focus attention on a
single room or individual
luminaire.
Occupancy Profile
The occupancy profile for
each sensor is displayed
by a range of colours
from grey (no occupancy)
through to red (occupied
continuously throughout
the selected hour).
Information Table
If a single luminaire is
selected,an information
table is displayed with the
data for that luminaire.
The user can select a date,
then using the time slider
can see how the usage
pattern or performance
changes through the day.
Status
If a luminaire requires attention
the exact position is highlighted
on the interactive drawing. The
information table will show the status
of electronic components within the
luminaire.
Energy Performance
Daily energy savings for lighting are
shown by a graduated indicator – the
darker the green, the greater the
energy saving that day. If a single
luminaire is selected, the information
table shows the energy performance
for that luminaire.
Air Quality Sensing
Temperature, humidity and CO₂
levels are displayed with colour-
coded shading. The information table
displays the exact values for each
sensor at any given time.
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Annual Report and Accounts for the year ended 30 June 2020 Employee Well-being
The modern workplace is fast becoming the extension of
our homes, and employers are keen to retain and develop
a more sustainable, cleaner and welcoming environment
that stimulates both the body and mind. The Well
Building Standard™ is at the forefront of standardising the
modern workplace. SmartScan provides full internal and
external air quality measurement to the IWBI Well Building
Standard, including exterior noise level sensing.
SmartScan Air Quality Sensor
The SmartScan Air Quality Sensor monitors three key
parameters: temperature, CO₂ and relative humidity.
Coloured LED indicators within the sensor provide
live status information for each parameter, enabling
users to take remedial action if necessary. Summary air
quality data is included in the daily status upload to the
SmartScan web server.
The Air Quality Sensor has three settings that can be
selected, based on the usage of the space, as part of the
commissioning process: inactive, semi-active or active.
Temperature
Temperature greatly influences an individual’s comfort level, affecting mood,
performance and workplace productivity. Comfortable temperature ranges will depend
upon the usage of the space.
Humidity
Humidity needs to be within a range of values for the environment to be comfortable and
to promote good health. If the humidity levels are too low, individuals may experience
dryness and irritation to the skin, eyes, throat and nasal passages. Conversely, high
humidity levels promote the growth and accumulation of mould spores, bacteria and dust
mites, potentially leading to allergies and respiratory inflammation. Humidity is also linked
to temperature, so that at lower temperatures, higher humidity levels can be tolerated.
Carbon dioxide
CO₂ levels over 1,000ppm create a stuffy atmosphere, causing individuals to
feel lethargic and sleepy, lowering concentration levels and reducing workplace
performance. The cause of CO₂ build-up is often inadequate ventilation and/or air
circulation within a space. Increasing the ventilation will bring in fresh air and dispel
accumulations of CO₂.
“
At Thorlux we are dedicated to continually
developing and evolving the SmartScan
platform, with the ultimate goal of providing
all our users with unique data that will
demonstrate building performance and
provide foresight to lower operational costs
and maximise efficiencies.”
Philip Hill
Senior Product Manager – Lighting Control Systems
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Key Performance Indicators
The following key performance indicators are considered to be the most appropriate for
measuring how successful the Group has been in meeting its strategic objectives.
KPIs
Revenue (£m)
2020
2019
2018
2017
2016
Operating profit (£m)
+2.4%
113.3
110.6
109.6
105.4
88.9
2020
2019
2018
2017
2016
−7.5%
16.3
17.6*
19.5
18.4
16.2
Performance in 2020
• Maintained 2019 performance despite impact from
COVID-19
Performance in 2020
•
• Famostar, TRT improvements offset by Lightronics
Impacted by Services sold in Thorlux
• COVID-19 impact deferred revenue into 2020/21 –
and other UK companies
low number of orders cancelled
• Commitment to full employee cost during a period
• Revenue growth at Thorlux, TRT and Famostar –
of lower sales due to COVID-19
dampened by Lightronics and other UK companies
• Reduced level of capitalised R&D 0.5m
* 2019 excludes the profit on disposal of property of £1.9m
Basic earnings per share (pence)
Operating cash (£m)
2020
2019
2018
2017
2016
−17.7%
11.45
13.91
13.91
12.54
11.24
2020
2019
2018
2017
2016
−10.1%
19.4
21.6
20.7
18.5
15.6
Performance in 2020
•
• Corporation tax – stage payment timing advanced
Impacted by reduced operating result
Performance in 2020
• Driven by operating results
•
Increased number of shares due to exercise
of executive share options
CO2 offset (tonnes)
2020
2019
2018
2017
2016
+9.9%
2,810
2,558
2,687
3,287
2,984
Performance in 2020
• Reduced from 2017 peak, taking into account
•
organic and acquisition growth during this period
Investment required in the future to create further
carbon offset capacity
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Annual Report and Accounts for the year ended 30 June 2020 The Silverstone Experience
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Opening of the Light Quality Experience
“
The new demonstration experience provides
an excellent insight into our relationship with
light and why getting it right is so important.”
£0.1m
Investment in Light Quality
Experience Centre
On 5 March 2020, the new Light
Quality Experience Centre
opened at the Redditch head
office. The new attraction forms
part of the Application Centre
and demonstrates the science
behind light and the influence
of light on our mental and
physical well-being.
Mark Austin, Sales Director,
comments: “The new demonstration
experience provides an excellent
insight into our relationship with
light and why getting it right is so
important. It is a great educational
tool and perfectly demonstrates
that Thorlux understands light and
therefore has the knowledge to best
guide our customers. It is unfortunate
that just as we opened this facility,
we had to close it due to COVID-19,
but we look forward to inviting
customers as soon as we are able to.”
The 25-minute fully automated
interactive experience combines
audio and video content with live
visual demonstrations. The viewer is
taken on a journey of light: what it is
and how we as humans respond to
it. The experience covers important
subjects such as the need for good
quality white light so we can see
colours correctly, the need for low
glare from luminaires to ensure
comfort, and for good lighting
design to create environments that
are stimulating and creative as well
as functional. Live lighting scenes
switch on and off in time with the
audio voiceover and video content.
The demonstrations include scenes
such as the “disappearing roses”,
where roses in a vase slowly change
from bright red to grey and dull, all
through manipulation of the light
spectrum.
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Multi-million pound investment in new machinery
the machines running overnight,
unattended, by loading large jobs
late in the day. However, the lack of
capacity meant the old machines
would complete the workload at say
2 in the morning and sit there idle for
six hours waiting for the day shift to
start, not producing work.”
What are the advantages of
the new machines over the old
machines?
“The new machines have many
advantages, including:
•
•
•
•
•
“The new machines have multiple-
material pallet-loading systems as
opposed to single pallet-loading/
pallet unloading systems, which
gives increased material-handling
capacity.
“The punches have servo-electric
punch systems as opposed to
the hydraulic systems of the old
machines.
“The new machines are
significantly faster than the old
ones.
“Two of the new machines are
combination machines, so they
have a laser as well as a punch.
“The new machines are much
more reliable and are easier to
maintain, with good support from
Amada.”
What has the reaction of the
machine operators been?
“The reaction has been good. The
operators have found the new
machines to be a major improvement
on the old systems, with updated
software packages making them
easier to program.”
Have the machine operators
needed additional training?
“As the machines have new
technology, additional training has
had to be given to the operators. Also,
new Amada software is being used
and trialled on the latest fibre laser
machine, so our operators have had to
be trained to use that.”
What impact will the new
machines have?
“The multiple-material pallet-loading
systems mean we can produce
smaller batch sizes, working closer to
the order book, hence fulfilling more
orders in a shorter period of time. The
faster speed also means that more
parts can be produced in the same
period of time.
“Instead of machines finishing in
the middle of the night, now, with
the multiple-material pallet-loading
systems, they have the capacity
to run until the day shift comes in.
With careful planning, it is possible
to load enough work on a Friday
morning to keep a machine running
until Monday morning. This gives us
maximum return on the investment,
speeds up production and reduces
delivery times.
“The two combination machines
enable us to design better products
with features that improve the
function of the luminaires without
adding additional components. It also
reduces the number of operations
that need to be performed. For
example, we used to produce a DOT
luminaire body by first punching
the blank as a square on the old
machines, followed by a manual
operation of cutting the blank into
a circle ready for spinning. Now we
punch and laser the circular blank in
one operation on the same machine,
so it can be spun straight away.
“Thorlux can produce more work
in-house that would normally have
been outsourced and produced by
subcontractors, hence reducing the
cost to Thorlux and reducing the lead
times.
“Finally, another major advantage is
that the new machines cost less to
run, because they are far more energy
efficient.”
In 2019/20, Thorlux made a
multi-million pound investment
in four new metal-forming
machines which have increased
capacity and modernised the
manufacturing process.
Dave Dainter, Production Manager at
Thorlux, explains why this investment
was needed and what the benefits
are to the business.
What was wrong with the old
machines?
“The Amada machines that we
replaced were over 25 years old,
based on out-dated, inefficient
technology. They kept breaking
down, and we faced issues with
getting parts for them. The old
machines were sometimes down for
weeks at a time when we needed to
source a new part or, if a new part
was not available, have the faulty part
refurbished or repaired.
“It reached the point where Amada
struggled to find engineers capable of
repairing the old machines. Many of
their younger engineers had not even
seen our machines before, so knew
very little about them. On one occasion
we had to wait for several days to get a
particular job done, because the only
Amada engineer who knew what to do
was not available.
“A major drawback was the lack
of capacity on the old machines,
which were based on single pallet-
loading systems. Our policy is to keep
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FW Thorpe: 2020 Group Company Overview
FW Thorpe Plc encompasses
individual companies that
concentrate on particular
market sectors and
geographical locations. The
companies provide the Group
with diversity as well as risk
mitigation, as they do not
compete with one another and
are complementary.
The companies within the Group
can be affected differently by trends
and economic impacts within their
respective markets. The continuing
Summary of the
COVID-19 situation
• Last quarter results severely
impacted in the UK;
Netherlands’ company results
relatively unaffected
• UK companies’ revenue
dropped 40% in April; some
recovery in May, with June
close to “normal” levels
• Portland the most affected
Group company; limited
revenue in last quarter with
some improvement in July
• The Group supported
essential customers and
projects, including the NHS, by
continuing to manufacture and
deliver products during the
peak of the pandemic in the UK
• No government support
accessed: support actively
declined, and repaid in
territories where it was
automatically received
development and market adoption of
LED and lighting controls technology
allows Group companies to share
the benefits of their product and
technical expertise, differentiating
themselves from competitors.
Group performance was hampered
for the final 15 weeks of 2019/20 due
to the COVID-19 pandemic; whilst the
Group managed to maintain revenue,
operating profit came in below that
of last year.
During the COVID-19 pandemic, it is
important for the Group to protect
and support its employees as well as
consider the long-term impact of its
actions on the Group’s customers,
reputation and independence.
Revenue was supported by some
major projects and services, but
these attracted lower margins than
typically achievable, and services
made little contribution, therefore
dampening returns at an operating
profit level. Continued new product
introductions, investment in
manufacturing facilities, and sales
into new markets have, however,
helped the Group deliver respectable
results against the backdrop of
uncertainty in the final quarter of
2019/20. Thankfully, the investment
in additional stock for the Brexit
transition served the Group well
in the early days of the COVID-19
outbreak.
The Group’s Dutch companies
weathered the storm of the last
quarter relatively unscathed. A
slightly subdued performance from
Lightronics, compared with the
company’s successive years of growth
under Group ownership, was offset
by a fantastic performance from
Famostar.
The Group continues to be
underpinned by the development of
market-leading lighting equipment
and the delivery of excellent
customer service.
The following is an overview of the
year for each company.
Group Total Revenue (£m)
Excluding Intercompany
Revenue by region (£m)
Excluding Intercompany
16.4
2.7
12.2
2020
31.3
28.7
2020
65.6
69.7
• All employees were paid in
full; £0.6m negative impact on
results due to furlough monies
not claimed
Thorlux
Netherlands companies
Other companies
UK
Netherlands
Rest of Europe
Rest of the World
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Annual Report and Accounts for the year ended 30 June 2020 £68.8m
Revenue
+4% (2019: −4%)
“
The success of
SmartScan continues,
with revenues
reaching £25.9m
(2019: £22.0m).”
Thorlux Lighting
If it had not been for the
COVID-19 pandemic, a comment
you will see frequently through
this year’s annual report,
Thorlux would have achieved
record revenues and improved
operating profit in 2019/20. New
orders appear to be holding
up at present, with July close
to 2019 levels and the total for
2019/20 ahead of last year’s.
The revenue line is supported by
growth in services, of which £1.5m
has earned lower margins and had
a dilutive impact. These services,
including surveying, project
management and installation,
are provided as they enhance our
ability to secure luminaire orders
of significant value with more
attractive margins. Operating profit
growth has been more difficult to
achieve in recent years; product
and sector mix has contributed to
this, as have operational efficiency
challenges. Some good improvement
in operating profit was achieved at
the start of the second half, but this
was severely hampered by COVID-19
issues in the last quarter.
Of Group companies, Thorlux covers
the largest variety of sectors with
the most comprehensive portfolio
of products. Thorlux’s approach of
targeting selling activity in specific
market sectors has paid off in the
last few years. 2019/20 has been
dominated by success in healthcare,
backed up by significant orders in rail.
At this time, it is difficult to ascertain
the impact of the pandemic on the
sectors that Thorlux sells to; however,
given the breadth of its coverage
and more targeted activity, Thorlux
should be in a reasonable position
to navigate the next few years of
uncertainty.
The success of SmartScan continues,
with revenues reaching £25.9m (2019:
£22.0m). This solution has been
developed further this year, outside
pure lighting controls technology, by
integrating new sensor technology
such as dock usage and vehicle
activity monitoring. Some third party
technologies have also been included
to enable mains electricity usage
monitoring and solar photovoltaic
generation data, all reporting back
to the end user via the SmartScan
website. Development work was
undertaken in-house, an investment
that is justified in order to follow
the Internet of Things revolution.
Several orders utilising these
Trinity Court
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Thorlux Lighting continued
Rugby School
developments have been secured in
the warehousing sector for delivery
in 2020 – a testimony to Thorlux’s
evolving industry-recognised
expertise in this area.
adapted for customer requirements
were designed, manufactured and
shipped over a few days during the
early critical stage of the pandemic,
when many factories were closed.
Read more on page 18
Innovation is a strategic pillar for the
Group. As well as the enhancements
to the SmartScan platform, several
new products have been launched
or are in the latter phases of
development. Products include
enhancements to existing successful
ranges, specific developments for
target sectors and developments
to support insourcing of key
technological components.
Recent investments in manufacturing
came to the fore during the year.
The flexibility acquired with the new
laser/punch machines supported
some large-scale projects. For
example, Thorlux was able to support
one of the NHS Nightingale projects,
where a significant number of fittings
The performance of Thorlux overseas
offices improved this year. All offices
delivered greater levels of revenue, in
particular the teams in Germany and
Ireland. A new distribution partner
in Germany delivered a number of
sizeable energy-saving projects – an
example for some Thorlux offices in
other territories to aspire to.
A new managing director, Peter
Maxwell, has recently been
appointed by the Group to lead
Thorlux over the next few years,
freeing some time for Mike Allcock
to focus on product development,
new technology and selling activities
throughout the Group, as well as the
drive into new territories. Peter will
use his expertise and experience to
focus on continuous improvement
techniques to provide further
revenue growth and operating profit
gains whilst harnessing the full force
of Thorlux’s tremendous deep-rooted
lighting knowledge.
The 2019/20 final result for Thorlux
does not necessarily reflect the effort
within the company, in particular over
the last few months. As the company
transitions into yet another difficult
economic climate, where orders
are expected to be hard-fought,
the Group should take solace from
Thorlux’s ability to surpass previous
year’s order levels. The company
starts the year with an increased
order book and the capability
to secure large-scale projects;
both should at least underpin the
months ahead. Continued targeted
selling activities will be essential,
ensuring the business identifies
the many opportunities in sectors
and territories where spending and
investment will continue despite the
economic downturn.
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Annual Report and Accounts for the year ended 30 June 2020 Philip Payne
“
For 2020/21, the target is to bounce back to 2018/19
levels of revenue. The investment in sales and
marketing will need to come to the fore.”
£2.7m
Revenue
−20% (2019: +2%)
Before COVID-19, Philip Payne
was on target to deliver yet
another set of positive results
in keeping with last year. The
impact in the final quarter
included low levels of activity
in both March and April, with
improved performance in
June. Maintaining operations
during this time was crucial
and enabled the company to
support a number of the NHS
Nightingale projects. As Philip
Payne moves into 2020/21, there
have been early signs of a return
to pre-COVID levels of business.
Discerning customers who desire a
well-engineered and architecturally
appealing product remain at the
core of this company. Prestigious
projects continue to augment sales,
with refurbishments at the Palace
of Westminster and Royal College
of Music, alongside success in the
rail and sports sector, with products
supplied for Bond Street and
King’s Cross stations and the new
Meadowbank Sports Centre.
Overseas revenue remained at similar
levels to last year. The sales office in
the UAE offers the best opportunity
to improve export revenue.
There was no significant investment
in manufacturing facilities during the
year. Investment during 2020/21 will
very much focus around sales and
marketing activities for both existing
products and the additional portfolio
from Famostar.
For 2020/21, the target is to bounce
back to 2018/19 levels of revenue. The
investment in sales and marketing
will need to come to the fore, as
well as planned activities with the
introduction of Famostar products
into the UK market.
SpectoWeb, the wireless emergency
lighting system that was developed
in conjunction with the Thorlux
SmartScan platform, offers customers
the ability to easily comply with
building safety regulations. Following
investment in development over
the last few years, success has been
recorded in the healthcare, university
and charity sectors, with total
revenue for these sectors ending the
year at £0.3m.
Further collaboration with Group
companies has continued this year,
including working with Famostar:
some of its products are being used
to enhance the Philip Payne product
portfolio manufactured in the UK.
This initiative is in the early stages,
and Philip Payne expects to see some
positive impact in 2021.
University of Edinburgh
University of Edinburgh
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Solite
St Mary’s Hospital, London – specialist green lighting
The Solite business is driven
by projects providing clean-
room lighting solutions to the
pharmaceutical and healthcare
sectors. Clearly the downturn
in the last quarter suppressed
revenue, significantly
impacting operating profit for
the year. On the positive side,
the reduced ability to dispatch
products during the last
quarter provides an increased
order backlog to start the new
financial year.
Whilst Solite has a standard range
of products, its ability to adapt
them to satisfy particular customer
requirements underpins the
company’s competitive position. To
support the flexibility required in
the manufacturing process, some
reorganisation of the facility has been
completed; this allows increased
storage for larger-scale projects and
enables some additional component
storage for supply chain protection
during uncertain times.
The collaboration between the
Group’s sales operation in Ireland
and Solite forms a significant part of
the business. In all, 33% of revenue
was derived from Ireland this year.
The Ireland office gives both Thorlux
and Solite the opportunity to cross-
sell into the market to satisfy the
requirements of a complete project,
as well as the opportunity to follow
some multinational customers into
other territories.
The targeting of the custodial sector
has seen limited success this year, but
will continue. Solite will also focus
on improving its product portfolio
to stay ahead of the competition.
During the year, Solite has developed
a product in conjunction with Thorlux
to target a specific requirement for
the retail sector, which has already
yielded some initial success.
Solite starts the new financial year
with a solid order book; however,
recent investments in sales and
marketing need to start to deliver.
It is too early to determine how the
market will shape up in the next 12
months, but Solite will continue to
focus on ensuring it has the product
portfolio and customer penetration
required to recover to levels seen in
the past few years.
32
£2.7m
Revenue
−21% (2019: −5%)
“
Clearly the downturn
in the last quarter
suppressed revenue,
significantly
impacting operating
profit for the year.”
St Mary’s Hospital, London –
specialist green lighting
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Annual Report and Accounts for the year ended 30 June 2020 Portland Lighting
“
Portland has utilised
its manufacturing
expertise to support
other areas of the
Group that are
enjoying stronger
order books.”
£2.4m
Revenue
−17% (2019: −10%)
Of all Group companies,
Portland was hardest hit by
the fallout from the pandemic.
The combination of Portland
supplying customers that
have fast-turnaround, easily
delayed projects, as well
as supplying the retail and
hospitality sectors, resulted in
weeks of minimal revenue. To
mitigate the damage, Portland
has utilised its manufacturing
expertise to support other areas
of the Group that are enjoying
stronger order books, avoiding
the need for those companies
to employ temporary labour to
meet demand. At the time of
writing, in September 2020, the
last two months have seen an
improvement and a return to
profitability.
Toby Carvery, West Midlands
The Longhorn, Walsall
The Group recognises that Portland
has been in steady decline for a
number of years and must work
harder at creating a wider product
portfolio for sales into new sectors.
The company has made renewed
effort in this regard, with support from
Thorlux; a number of new products
are in development and expected to
contribute to revenue in 2021.
Product innovation is increasingly
critical, and some projects this year
are moving forward at pace. Portland
has employed a specific full-time
product designer to support these
innovation targets.
Portland will continue to focus
on increasing sales of its core
products outside the UK. As well
working with its Benelux and French
agents, Portland is working with an
established Thorlux agent in Sweden.
Over the next year, some recovery is
expected in Portland’s core market,
however, this is somewhat dependent
on the retail and hospitality sector,
meanwhile, the company will
continue to support the Group, with
additional manufacturing capacity, as
required.
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TRT Lighting
Despite COVID-19, TRT has
managed to improve both
revenue and operating profit
this year. During the first
couple of months of lockdown,
customers were unable to
take delivery of outstanding
orders, and revenue was heavily
impacted. TRT responded well
in June, as customer demand
returned and shipments
recovered to normal levels.
As well as its local authority street
lighting business, TRT supported
Thorlux on several large-scale
projects in the rail and retail sectors.
Some tunnel projects were also
undertaken; these included the
TRT retrofit LED solution tailored to
existing TRT or competitor luminaire
enclosures, and the introduction
of the new X-range product.
The pipeline of tunnel project
opportunities remains healthy; TRT
waits to see whether these are given
the go-ahead in the current economic
climate.
Actions taken in previous years to
support operational efficiency have
supplemented the results for 2019/20,
with a focus on improving material
and labour costs. During 2019/20,
investment in a new painting facility
started to reap some benefit, making
TRT self-sufficient and reducing the
pressure on the Thorlux facility.
As is the case for all Group
companies, product development
and enhancement are crucial to
ongoing success. TRT has found some
success with the Optio street lighting
product, which has key features
to support specification sales.
Via, the lighting bollard solution,
has seen good initial sales, and a
similar version using some shared
components has been added to the
Thorlux product portfolio.
Government spending could increase
across the street and tunnel lighting
sectors, assuming the government
decides to spend its way out of
recession.
TRT starts the new financial year with
a solid order book and a number
of Group project opportunities
supporting Thorlux in the rail and
retail sectors as last year. Revenue
and operating profit growth will
be targets, as well as continuous
improvement in operational
efficiency.
£9.8m
Revenue
+14% (2019: −1%)
“
During 2019/20,
investment in a new
painting facility
started to reap some
benefit, making
TRT self-sufficient
and reducing the
pressure on the
Thorlux facility.”
Dual Carriageway Traffic Routes, North Wales
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Annual Report and Accounts for the year ended 30 June 2020 Lightronics
Havep Texperience Centre, Netherlands
Lightronics had another
solid set of results, although
revenue was lower than last
year; however, this was its first
slight step backwards since
joining the Group in 2015.
The company was largely
unaffected by COVID-19, since
operational measures were put
in place in the early phases to
enable Lightronics to continue
to service its customers during
the last quarter. In fact, June
operating results were some of
the strongest on record.
In contrast to previous years, there
were no major projects during the
year. Much of the business was again
driven by the street lighting sector in
the Netherlands. Sales into Germany
were marginally lower than last year,
with those to France at similar levels
to last year.
Lightronics markets Thorlux industrial
products, sales of which marginally
increased from last year to £0.4m but
were still not at the levels expected.
Investment in this area continues,
with a closer association to Thorlux
in the UK. The Group still believes
that the Netherlands is receptive
to energy-saving high technology
solutions. Lightronics needs to find the
best route to market – a Group belief
that has been reinforced by recent
positive results generated by Thorlux
in Germany from an additional sales
channel this year.
Lightronics continues to develop
new products for its domestic market
as well as working with the Group
on shared developments, mainly
with Thorlux and TRT. Progress
has been made on introducing
SmartScan technology into the range,
and Lightronics expects to have
introduced new Thorlux patented
applied for sensor technology by the
end of 2020.
The European Application Centre
was completed during this year. The
team at Lightronics has created a
wonderful space in which the Group
£22.7m
Revenue
−3% (2019: +12%)
(constant currency −3%
(2019: +12%))
“
Progress has been
made on introducing
SmartScan
technology into the
range, and Lightronics
expects to have
introduced new
Thorlux patented
applied for sensor
technology by the
end of 2020.”
can showcase products and systems
to support European selling activities
(see page 24). Whilst Lightronics
was able to open the facility on
time and in budget, the Group was,
unfortunately, unable to utilise its full
potential due to COVID restrictions.
As mentioned every year, building
on these results will be a challenge.
Although it produced an excellent
set of results, Lightronics fell short
of improving its figures this year and
now has a tougher economic climate
to contend with. Economic and
sector forecasts in the Netherlands
are pessimistic; this will put some
pressure on results in the next 12
months. Opportunities remain,
working with other Group companies
– Famostar and Thorlux in particular
– to generate increased demand from
new customers.
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Revenue
+12% (2019: +13%)
(constant currency +12%
(2019: +13%))
“
An increase in
domestic orders
has been driven by
targeted customer
activity to increase
market share”
Operational Performance continued
Famostar
Robbers & van den Hoogen winery, Arnhem – Netherlands
Part of the Group’s original strategy
when acquiring Famostar was to
integrate SmartScan technology into
Famostar’s excellent product portfolio,
which lacked wireless controls and
reporting technology. This has been
completed, and new products have
been taken to market with some initial
success; a few projects are secured for
delivery in late 2020.
The Group committed to acquiring
the current Famostar building and
the neighbouring land; this was
completed in July 2019. Draft plans
have been developed to expand
the current facility to save costs
on external storage and product
handling, as well as to future-proof
operations. Work on this project is not
expected to commence until late 2021.
Famostar has yet again exceeded
expectations this year; however, as
mentioned in the Lightronics report,
the economic and sector forecasts in
the Netherlands are pessimistic. The
company does, however, have some
targets to aim for: increased business
from SmartScan sales and the
introduction of the Famostar product
into the UK market; both should
present opportunities in 2020/21.
Famostar has been the standout
performer for the Group this
year, following on from a
strong performance last year.
As at Lightronics, performance
seemed unhampered by
COVID-19 in the final quarter,
actions having been taken in the
initial stages of the outbreak to
protect operations and ensure
continued supply to customers.
Compared with other Group
companies, Famostar, a specialist
emergency lighting company, has a
different route to market; however,
the process for creating demand for
product is much the same. Demand is
ultimately fulfilled by the wholesaler
network domestically, but specific
customers are targeted to generate
that demand.
Business, at present, is mainly derived
from the Netherlands. Expansion into
other territories will be led by Philip
Payne in the UK, with Famostar taking
advantage of Philip Payne’s local
emergency lighting know-how. An
increase in domestic orders has been
driven by targeted customer activity
to increase market share; the company
will look to further supplement this,
working alongside Lightronics to root
out other opportunities.
36
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Strategy in Action
Lightronics opens European Application Centre
A prison cell, a classroom,
a hospital ward, a railway
platform and a car park –
you can find it all at the new
experience centre at Lightronics
in Waalwijk.
Having completed the first phase
of the refurbishment of its facilities
early in 2019, Lightronics opened the
second phase, the Group’s European
Application Centre, in November. The
Centre features 800 square metres of
interactive, full-scale demonstrations
showcasing the latest advancements
in lighting control systems, LED
technology and luminaire design.
In many areas, light plays a role in
well-being and safety and, according
to scientific research, can have an
impact on learning performance. The
interactive classroom demonstrates
how Lightronics luminaires provide
the ideal lighting solution for modern
learning environments. “When
daylight decreases, you use your
brain less intensively, and the Smart
luminaires automatically anticipate
this”, says project manager Dirk
Brands. “The luminaires incorporate
SmartScan controls and adjust
independently according to the
ambient light in the immediate
surroundings. This provides good
uniformity and maximises energy
savings where the natural daylight
ingress is varied across the area.”
In the simulated hospital room,
the patient’s well-being is of prime
importance. From the bed, the
patient does not look at sterile
white fluorescent tubes, but rather
at the blue sky and clouds of the
FlexSystem.
“A different, positive experience,”
said Brands, “and one that benefits
a person.”
In the reconstructed prison
cell, another aspect of lighting
receives attention. The luminaires
are designed to be ligature and
38
“
In many areas, light plays a role in well-
being and safety and, according to scientific
research, can have an impact on learning
performance.”
impact-resistant, limiting the risk
of occupants self-harming. Added
to this, high severity impact testing
ensures that the luminaires will
sustain no operational impairment
during service.
Car parks also require robust
luminaires, so the simulated car park
area is illuminated with products
using UV-stabilised polycarbonate
covers and cast aluminium bodies for
rigidity and impact resistance.
The Centre was officially opened
on 13 November by Alderman John
van den Hoven, Deputy Mayor of
the Municipality of Waalwijk, in
the presence of the Mayor of Loon
op Zand, Hanne van Aart, and
representatives of the European
Commission, the Netherlands
Ministry of Economic Affairs and the
province of Noord-Brabant.
The Centre is part of the IKARES
project (Intelligent Low Carbon
Energy Systems). Partners in IKARES,
Lightronics and Global Innovator,
aim to make lighting more intelligent
and to interconnect it in a network
with users and the environment.
The objective of the project is to
achieve a CO2 reduction of up to
60% with smart lighting systems.
IKARES includes the European
Application Centre in Waalwijk, a
smart city scale model in Tilburg, and
22 pilot projects in the developed
environment in the provinces
of Noord-Brabant, Zeeland and
Limburg, in the Netherlands. IKARES
is co-financed by the European
Union from the European Regional
Development Fund.
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Strategy in Action
Portland Lighting Moves to New Premises
£1.1m
Investment
1,394 sqm
Floor space
After nearly 17 years at the old
Walsall Enterprise Park site,
Portland Lighting moved a
short distance to brand new
premises at Reedswood Park
during November 2019.
The lease on the old manufacturing
site was coming to the end, so this
presented an opportunity to seek
new premises. The new development
at Reedswood Park was an ideal fit, as
it was just a short distance from the
old site – allowing Portland to expand
without leaving Walsall.
Reedswood Park has excellent
transport links, being close to the
M6 motorway. The new custom-
built factory was the first unit to be
constructed on the new site. With
the factory’s two stories of office
accommodation, increased assembly
and distribution space and parking
for up to 45 vehicles, the investment
future-proofs the company’s
growth plans.
“
The new development at Reedswood Park
was an ideal fit, as it was just a short distance
from the old site – allowing Portland to expand
without leaving Walsall.”
In addition to the increased
manufacturing areas, the new
premises also feature an impressive
showroom facility demonstrating
Portland’s latest highly innovative
sign-lighting products.
Within the factory area, a state-of-
the-art powder-coating facility has
been installed, capable of coating
up to 6-metre-long luminaires,
improving speed and efficiency and
allowing Portland to react more
quickly to client requirements,
particularly for custom colours.
40
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Financial Performance
The events of 2020 highlighted the Group’s
financial strength and robust balance sheet.
We actively decided to support our employees
and not to access government schemes whilst
maintaining an increased dividend.”
£19.4m
Net cash generated from
operating activities
(2019: £21.6m)
The directors have pleasure in
submitting their annual report
and the audited consolidated
financial statements of the
Group and the Company for the
year ended 30 June 2020.
Results and dividends
Revenue increased by 2.4% to
£113.3m with underlying operating
profit (before profit on disposal
2019) decreasing by 7.5% to £16.3m.
Operating profit last year included the
profit on the disposal of the Thorlux
Portsmouth building of £1.9m.
Clearly the last quarter of 2020 was
severely impacted by COVID-19, with
our ability to deliver to customers
of our UK businesses significantly
hampered in April and May in
particular. The operating result
for Thorlux would have expected
to improve given the increase in
revenue; however, nearly a third of
the increase related to services with
little operating profit contribution.
The result was also dampened by
margins at lower levels for larger
projects and reduced efficiency
during the last quarter where we
42
committed to pay our employees
in full as we initially scaled back
operations to ensure they were
COVID secure, whilst opting not
to claim potential funding of
£0.6m under the government
furlough scheme. The impact is far
greater if we consider the reduced
contributions from the revenue
typically created by these employees.
The lower level results for the other
UK companies, except for TRT, were
partially offset by the operations in
the Netherlands.
The operating results were further
suppressed by the provision of an
additional £2.0m (2019: £2.2m) for the
expected payouts on the Lightronics
and Famostar earn-outs due to the
continuing success of both businesses.
Net finance cost of £0.4m this year
against a marginal income in the
previous year (2019: £0.0m). The net
income has reduced from previous
years due to the accounting treatment
of the Lightronics and Famostar
acquisitions and continued low
interest rates on our cash deposits.
The taxation charge represents
an effective rate of 16.49% (2019:
17.52%). This is less than the rate in the
previous year, with the rate lower than
the headline corporation tax rate in
the UK due to patent box relief driven
by the Group’s product innovations.
(2019: £4,763,000) and, if approved,
will be paid on 26 November 2020.
Total dividends paid during the
year amounted to £6,468,000 in
aggregate (2019: £6,299,000). The
final dividend for 2019 was paid on
29 November 2019.
The events of 2020 highlighted the
Group’s financial strength and robust
balance sheet. We actively decided
to support our employees and not to
access government schemes whilst
maintaining an increased dividend.
These decisions were not taken
lightly, with all of our shareholders’
and stakeholders’ long-term interests
in mind, ensuring we maintain
our independence as well as our
reputation, whilst operating the
Group with good conscience.
Cash and liquidity management
The Group’s cash is managed in
accordance with the treasury policy.
Cash is managed centrally on a daily
basis to ensure that the Group has
sufficient funds available to meet its
needs and the remainder is invested.
The majority of cash is placed with
approved counterparties either on
overnight deposit or time deposit.
There are a series of time deposits that
are maturing on a rolling cycle in order
to meet regular business payments,
with a margin for larger regular and
one-off payments as well as seasonal
variation in cash requirements.
On 21 April 2020, the Company paid
an interim dividend of 1.46p per share
(2019: 1.43p) amounting to £1,698,000
(2019: £1,660,000). A final dividend of
4.20p (2019: 4.10p) per ordinary share
is proposed amounting to £4,886,000
The Group primarily trades in sterling.
There is an exposure to foreign
currency as the Group buys and sells
in foreign currencies and maintains
currency bank accounts in US dollars,
Australian dollars, UAE dirhams and
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Annual Report and Accounts for the year ended 30 June 2020 Group Total Revenue (£m)
Excluding Intercompany
+2.4%
2020
2019
2018
2017
2016
113.3
110.6
109.6
105.4
88.9
Group PBT (£m)
Profit before tax
−18.5%
(-9.7% excluding 2019 profit on
disposal)
2020
2019
2018
2017
2016
15.9
16.3
19.6*
19.6
18.4
*
2019 includes profit on the disposal of
property of £1.9m
£128.3m
Net Assets
(2019: £122.2m)
euros. The activities of buying and
selling in foreign currency are broadly
matched with currencies bought and
sold as required in order to minimise
currency exposures. Larger exposures
would be hedged in order to reduce
the risk of adverse exchange rate
movement. There were no currency
hedging derivatives in place at
30 June 2020 or 30 June 2019.
Pension scheme position and
funding
The latest triennial actuarial valuation
was completed as at 30 June 2018.
This valuation showed that the
pension scheme position remains in
surplus and a funding level for the
future has been agreed between
the trustees of the scheme and
the directors of the Company. The
directors consider it unlikely that any
changes to the present funding levels
will have any significant effect on the
strength of the Company’s statement
of financial position.
Group research and
development activities
The Group is committed to research
and development activities in order
to maintain its market share in the
sectors and territories we operate.
These activities encompass constant
development of both new and
existing products to ensure that
a leading position in the lighting
market is maintained.
During the year the Group spent
£1,322,000 (2019: £1,791,000) on
capitalised development costs, which
includes internal labour.
Property, plant and equipment
The directors are of the opinion that
the market value of the freehold land
and buildings is in excess of their net
book value. While it is considered
that the market value is significantly
greater than the net book value for
many of the Group’s properties as a
result of being acquired between one
and over 20 years ago, management
considers that undertaking formal
valuation exercises would be costly
for limited value and consequently no
formal exercise has been undertaken.
Investment this year included
freehold property in Velp –
Netherlands for Famostar, the
completion of the European
Application Centre at Lightronics, as
well as the completion of improved
sheet metal working capacity and
the implementation of an automated
spinning process at Thorlux Lighting.
Creditor payment policy
The Group’s policy concerning the
payment of its trade creditors is to
accept and follow the normal terms
of payment among 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 year
end trade payables is 33 (2019: 44).
The Group continues to report on
payment practices and performance
as per UK legislation.
Internal financial control
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 any non-
compliance reported to the Group
Board. Any 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
rolling forecasts and monthly
financial reports comparing
performance against plan as well
as the previous year. 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.
Craig Muncaster
Joint Chief Executive, Group Financial
Director and Company Secretary
30 September 2020
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Principal Risks and Uncertainties
COVID-19
As the COVID-19 pandemic
swept across the globe, FW Thorpe,
like the majority of manufacturing
organisations, faced significant
operational challenges.
The directors are proud that the
Group reacted quickly to the
possible pandemic, as early as
February, restricting visitor entry into
its factories and offices, cancelling
some foreign travel and keeping a
log of employee movements. The
health and well-being of employees
has been paramount throughout,
and the focus on keeping employees
safe will continue.
As the crisis worsened and lockdown
commenced, the management
teams of all Group companies took
actions as appropriate for their
different operations, depending
upon each company’s ability to
handle precautionary measures such
as social distancing, and to try to
match capacity to the demands of
customers, especially for ongoing
critical healthcare and infrastructure
projects.
The Netherlands
In the Netherlands, lockdown of
manufacturing businesses was,
in general, less intense compared
with that in the UK; Lightronics and
Famostar continued trading at near-
normal revenue levels throughout.
Their employee councils met and
proved to be effective at planning
to create flexibility during the early
stages of the pandemic; through a
series of measures such as split shifts
and home working, production
was maintained near capacity
throughout.
44
The UK
In the UK, lockdown was far more
widespread than in the Netherlands
and most other countries in which
Group companies trade. Worst
affected was Portland Lighting,
where orders almost stopped
overnight. Other companies, such as
Thorlux, continued to receive a good
level of orders, although demand
for delivery on non-critical projects
slowed significantly.
During the early days of the
pandemic, very little government
guidance was available for
businesses; however, it was critical
to prioritise employee health and
safety when implementing the
Group’s decision to keep factories
working to meet customer demand.
Thorlux
At Thorlux, for risk-mitigation
reasons, the senior management
team split: several directors worked
from home whilst others remained
full time at Thorlux in Redditch.
Initially, Thorlux operated a skeleton
production staff, with several
hundred employees sent home;
many, being factory based, were
unable to work.
Thorlux has invested appropriately
in recent years to keep its IT
infrastructure up to date, and
it came to the fore in the early
days of lockdown. Thorlux office
employees were all able to connect
into the office network securely
from home, via VPN (virtual private
network), and calls to their desk
phones were seamlessly transferred
to their home/mobile phones via
VOIP (Voice over Internet Protocol)
technology. All stakeholders were
able to make effective contact
with employees without knowing
whether employees were at home or
in the office.
The Thorlux management team
has met twice daily via video
conferencing throughout the
pandemic, and the Group’s senior
team has met regularly too. To
keep employees informed, a
dedicated web portal was created
on Thorlux.com, which initially was
updated daily.
In early April, Thorlux completed the
primary reorganisation of its factory
with one-way “streets” throughout,
2m separation markings (by painting
the floor, as signs were not available
at that time), appropriate signage and
video information screens, sanitiser
gels throughout, and PPE for certain
operations. Risk assessments were
created for all operations, broken
down into subcategories pertinent
to specific tasks. These actions were
followed throughout the Group, with
directors visiting all UK sites to tour
the facilities and sign off the phased
re-opening to increase factory
numbers significantly beyond the
skeleton staff levels. Risk assessments
have been inspected by Thorlux’s
insurers, and the company also paid
for a third party audit of its “COVID
secure” measures as verification of
management’s actions.
As demand has recovered,
protective measures and controls
have been further increased.
Thorlux, like several other Group
companies, has invested in
automatic employee and visitor
fever-scanning equipment which
checks whether any people
entering the building have a body
temperature exceeding 37.5°C.
To enable Thorlux to reach full
capacity, an old TRT “mothballed”
factory a few miles away from
Thorlux in Redditch has been re-
opened, releasing a further 10,000
square feet of space. A whole factory
department (which produces small,
easily transported sub-assemblies)
has moved there for the time being.
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Annual Report and Accounts for the year ended 30 June 2020 In mid-August, Thorlux still had 109
office staff working from home;
however, gradually, more return
each week. Internal communication
is vitally important, including regular
sharing of information regarding
the company’s evolving knowledge
of the crisis and how it is using that
knowledge to protect employees
and the organisation.
The Group
Protecting employees’ mental
health has emerged as a high
priority. The Group has therefore
introduced a well-being policy
for all employees, which includes
regular contact with management,
an online wellness questionnaire to
complete, and a telephone call from
the personnel department every few
weeks. Managers have also been
given access to additional training
resources.
All Group companies now have full
capacity available in their factories,
although some are still experiencing
reduced order intake due to the
pandemic. The capacity from such
factories has been shared; for
example, Portland Lighting has been
making gear tray assemblies for TRT
Lighting, which has seen a good
increase in orders in recent months.
Cooperation between Group
companies has been excellent.
Through prudent management of
the business over many successful
years, FW Thorpe has a strong
balance sheet, with sufficient
reserves. At the start of the crisis,
Group companies were showing
good levels of orders.
The UK government introduced the
Job Retention Scheme intending
to save the jobs of people who,
during the COVID-19 lockdown,
would otherwise have been made
redundant because of a company’s
inability to stay afloat, thus keeping
people and critical skills within
a business. The directors believe
that the scheme is not intended to
support businesses that otherwise
have sufficient resources to pay
their employees and intend to
bring their employees back to
work after a reasonable period
when the crisis ends. The directors
therefore decided not to apply
for compensation for furloughed
employees during lockdown, and
all employees received their normal
pay whilst they were not working.
This decision leaves the Group free
of debt to external support and
gives the directors ongoing freedom
to make choices for the good of the
business and its shareholders. It also
enables the government to target its
funds to those areas where they are
required the most.
The Group prides itself on being a
responsible corporate employer,
and during this time the directors
think it important that Group
companies contribute to supporting
the national effort. This can be done
by the Group continuing to provide
goods and services where they are
needed, such as to the NHS – for
example by the Group supplying
luminaires to the Birmingham
Nightingale Hospital in April.
The directors would like once again
to sincerely thank all employees
for their wonderful support and
flexibility throughout this crisis.
Special thanks must go to those
who have continued to work at
facilities around the Group. We are
not, however, out of the woods
yet, and must remain focussed on
maintaining all the measures that
have been put in place to protect
employees and the company.
Temperature screening at Thorlux
Social distancing
measures at Thorlux
45
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Principal Risks and Uncertainties continued
Risk management process
The Board is responsible for the identification and effective management of risks posed to the
Group. Due to the impact certain risks could pose, the Board regularly reviews the likelihood of risks
occurring and the potential impact they could have on the business. Detailed below is a list of the
principal risks facing the business, and the corresponding actions the Board is currently taking in
order to manage them.
The Board
Strategic risk assessment at Executive level
Principal Risks
Strategic
Operational
Financial
Group Companies
Risk assessment at an individual company level
Type
of risk
Description
of risk
Mitigation of risk
Possible
impact on
performance
Strategic
priorities
impacted
upon
Change
in period
Deferred or
reduced capital
investment
plans in market
sectors, which
our products are
supplied into and
are key sources of
revenue for the
Group
Impact of
COVID-19 on
domestic and
global economies
Reduction in
public sector
expenditure and
changing policy
increases risk to
our order book
Uncertainty of
free access to EU
markets
• Broad range of customers in
High
differing sectors
• High quality, technically
advanced products to
differentiate the Group from
competitors
• Actively seek to identify new
opportunities to ensure we
maximise our potential of
winning new business
Medium
• Continue to seek to diversify
our customer portfolio to
ensure we have an appropriate
spread, mitigating the risk of
any industry or specific sector
spending issues
• Develop sales in new markets
1
2
4
2
4
Area of risk
A
Adverse
economic
conditions
Strategic
B
Changes in
government
legislation or
policy
Strategic
46
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Annual Report and Accounts for the year ended 30 June 2020 Type
of risk
Description
of risk
Mitigation of risk
Area of risk
C
Competitive
environment
Strategic
Existing
competitors,
powerful new
entrants and
continued
evolution of
technologies
in the lighting
industry eroding
our revenue and
profitability
D
Price
changes
E
Business
continuity
Erosion of
revenue and
profitability
Operational
Operational
The majority
of the Group’s
revenues are
from products
manufactured
in the Redditch
facility
F
Credit
risk
Financial
The Group offers
credit terms
which carry risk
of slow payment
and default
G
Movements
in currency
exchange
Financial
The Group is
exposed to
transaction
and translation
risks. With some
natural hedging
in EUR this risk
is primarily with
changes in the
GBP:USD rates
Strategic
priorities
impacted
upon
Change
in period
1
2
3
4
1
2
2
3
2
2
Possible
impact on
performance
Medium
Medium
• Offering innovative products
and service solutions that are
technologically advanced
products to enable us to
differentiate ourselves from
our competitors
•
•
Investing in research and
development activities to
produce new and
evolving product ranges
Investing in new production
equipment to ensure we can
keep costs low and maintain
barriers to new market entrants
• 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
the loss of market share from a
lack of competitiveness
• High level of importance
High
attached to environmental
management systems, health
and safety and preventative
maintenance
Insurance cover is maintained
to provide financial protection
where appropriate
Increased production flexibility
with the ability to build
products in more than
one manufacturing facility
•
•
• Credit policy includes an
Low
•
•
assessment of the bad debt risk
and management of higher risk
customers
The Group maintains a
credit insurance policy for a
significant proportion of its
debtors
The Group has increased
its sourcing of materials to
maintain a natural hedge to
offset its currency risk from
EUR receivables, whilst at the
same time buying EUR and
USD when the exchange rate
is favourable, compared to our
operational rates, to minimise
the risk
Low
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Area of risk
Type
of risk
Description
of risk
Mitigation of risk
Possible
impact on
performance
Strategic
priorities
impacted
upon
Change
in period
1
3
4
2
4
2
3
H
Cyber
security
Operational
I
Exit from the
European
Union
Strategic
A breach of IT
security could
result in the
inability to
operate systems
effectively and
efficiently or
the release of
inappropriate
information
Significant
uncertainty
remains over how
the economic
landscape might
be affected in the
next few years
• Continual review and
Medium
monitoring of potential risks
• Computers encrypted where
necessary to protect data
• Cyber security awareness
training currently being rolled
out to employees
• With the Group having a
Medium
manufacturing presence in two
EU countries, the Netherlands
and Spain, this leaves us ideally
placed to react to any negative
trade barriers that may be
imposed on the UK
• Continue to develop closer
working relationship with
these entities, sharing
product development, market
knowledge and operational
expertise to ensure we have
the flexibility to adapt to any
changes in the future
• As more details emerge we will
assess the impact; in the short
term the Group will review the
implications based on potential
outcomes
J
Global
pandemic –
COVID-19
Operational
Potential
disruption to
operations from
further outbreak
of COVID-19
•
Risk assessments, preventative
measures including
temperature screening,
distancing and hygiene
measures in place
High
• Additional component stock
held to mitigate any supply
chain disruption
•
Potential to utilise
manufacturing facilities at
other Group companies
Strategic Priorities key
Risks key
Focus on high quality products and good leadership in technology
Increase in risk
Continue to grow the customer base for Group companies
Focus on manufacturing excellence
Continue to develop high quality people
No change in risk
Decrease in risk
1
2
3
4
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Annual Report and Accounts for the year ended 30 June 2020 Tieltjes Precision Parts BV, Netherlands
49
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Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report s172 statement
Stakeholder engagement
The Group has the responsibility for managing the challenges that affect the business on a daily basis;
this also includes our impact on our key stakeholders. Our ability to engage and work constructively
with these stakeholders underpins the long-term success and sustainability of the Group.
The directors are aware of their duty under Section 172(1) of the Companies Act 2006 to act in the way they consider, in
good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and
in doing so have regard (amongst other matters) to:
• The likely consequence of any decision in the long term
• The interest of the Company’s employees
• The need to foster the Company’s business relationships with suppliers, customers and others
• The impact of the Company’s operations on the community and the environment
• The desirability of the Company maintaining a reputation for high standards of business conduct
• The need to act fairly between members of the Company.
The Board considers its key stakeholders to be its employees, customers, shareholders, suppliers and the communities
and environment we operate within.
Key stakeholders and how we engage with them:
Stakeholder group
Why we engage
How we engage
Employees
The right people, capabilities and
engagement across the Group is the
platform to drive our long-term success
Customers
Understanding the needs of our customer is
fundamental. We aim to deliver the correct
technical solution, professional service,
sustainability of products/services and
support the customer during a product’s
warrantable life and beyond
• Employee committees
• Health & safety committees
• Employee appraisals, training and
development
• Communication via web portal, notices
and company newsletter
• Group board meetings held periodically
at different company sites
• Meetings/maintaining close
relationships via regional sales or
business development teams
• Providing Continuing Professional
Development seminars and education
opportunities
• Company websites
• Customer specific events, including
trade shows
• Order execution – from lighting design,
through to delivery, installation and
commissioning
50
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Annual Report and Accounts for the year ended 30 June 2020 Stakeholder group
Why we engage
How we engage
Shareholders
Suppliers
Trust from our shareholders is key to
delivering our strategy and long-term
success. We endeavour to provide fair,
balanced and meaningful information to
shareholders and potential investors to
ensure they understand our performance
and strategy
We need to maintain reliable relationships
with suppliers for mutual benefit and
ensure they are meeting our standards,
from value for money, quality, through to
business ethics
• Trading updates at appropriate times
• Regulatory News Service
•
Investor meetings and presentations,
including company visits
• Dedicated Group website
• Annual and Interim reports
• Annual General Meetings
• Meetings and negotiations with key
suppliers
• Site visits
• Quality management reviews and audits
• Attending supplier forums and
trade shows
Communities &
Environment
The Group is committed to be a responsible
member of the community and considers
the environmental impacts of the
customer’s use of our products as well as
our own operations
• Support local and national charities
• Engagement with local MPs and
Chambers of Commerce
• Members of appropriate trade and
industry bodies
• Carbon offset scheme in place since
2009, accredited under the Woodland
Carbon Code
• Recent investment in solar panels in the
UK and Netherlands facilities
• Products and systems support energy
saving and carbon reduction – London
Stock Exchange Green Economy mark
in 2020
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51
Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Sustainability
Environment
Greenhouse gas emissions
The table below shows the Group’s greenhouse gas emissions for the year
ended 30 June 2020.
Scope 1: Direct emissions from own operations
Scope 2: Indirect emissions from purchased energy
(mainly electricity)
Total Scope 1 and Scope 2 emissions
Intensity metric: tonnes of CO2 equivalent per £1m of sales
Tonnes
of CO2
equivalent
1,821
989
2,810
24.79
The methodology used to calculate our emissions uses current government
published conversion factors.
The Group is committed to minimising the environmental impact of both
its manufacturing processes and its products. However, even with the
most responsible approach some carbon dioxide (CO2) will be released into
the atmosphere as an indirect result of factory and selling activities and
customers’ use of luminaires.
In 2009 an ambitious carbon-offsetting scheme was launched to help
compensate for these emissions. The scheme is now accredited under the
Woodland Carbon Code and now has 149,849 trees planted. The Group
requires around 8,000 plantings per annum to offset the CO2 produced by our
operations.
Global Energy Use
The table below shows the Group’s energy use for the year ended 30 June 2020.
Electricity
Gas
Total
UK
GWh
2.884
5.041
7.925
Rest of
World
GWh
0.458
0.034
0.492
Total
GWh
3.342
5.075
8.417
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.
Charitable Gifts
During the year the Group
gave £24,349 (2019: £27,733) for
charitable purposes. This is made
up of donations to UK charities for
children’s welfare of £390, cancer
care of £414, healthcare of £1,527,
educational schemes of £2,695,
emergency aid of £1,300, Oxfam
£2,110 and local causes of £15,913.
Modern Slavery
Our Modern Slavery Act disclosure
is published on our corporate
website (www.fwthorpe.co.uk) in the
company documents section.
The Green Economy Mark (above) identifies London-
listed companies and funds that generate between
50% and 100% of total annual revenues from
products and services that contribute to the global
green economy.
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Annual Report and Accounts for the year ended 30 June 2020 FW Thorpe, making a meaningful difference: our contributions in 2020
Economic – we generate value
Contribution to UK economy
We are investing in the future
We support the national wage bills
£18.0m
Tax paid, collected
£1.3m
Capitalised R&D expenditure
£32.7m
(2019: £17.9m)
(2019: £1.8m)
(2019: £31.5m)
Community
£24,349
Charitable donations
31
Number of charities
(2019: £27,733)
(2019: 26)
Innovation
11
Patents
7
Granted
4
Pending
688
People employed
(2019: 666)
16
Apprentice employment
(2019: 15)
Employee
engagement
Environment
149,849
Total trees
planted
321,236
kWh of electricity per annum
from solar panels
2,810 tonnes
CO2 offset per annum
2019/20
(2019: 149,849)
(2019: 224,470)
(2019: 2,558)
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53
Stock Code: TFW www. fwthorpe.co.ukOur GovernanceOur FinancialsBusiness OverviewStrategic Report Our
Governance
Board of Directors
Directors’ Report
Statement of Directors’
Responsibilities
Directors’ Remuneration Report
Independent Auditors’ Report
to the Members of FW Thorpe Plc
56
58
64
65
69
Swansea University
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Board of Directors
Mike Allcock
Chairman, Joint Group
Chief Executive
Craig Muncaster
Joint Group Chief
Executive, Group
Financial Director and
Company Secretary
James Thorpe
Business Development
Director, Thorlux
Lighting
David Taylor
Managing Director,
Philip Payne
Appointment/Background:
Appointment/Background:
Appointment/Background:
Appointment/Background:
Mike joined FW Thorpe Plc
in 1984 as an apprentice
working his way to Technical
Director for Thorlux Lighting
in 1998, taking responsibility
for the Company’s design
programme. He was appointed
Group Technical Director in
2001 and became Managing
Director of Thorlux Lighting
in 2003. Mike is a Chartered
Electrical Engineer and a
Fellow of the Institution of
Engineering and Technology.
He is passionate about
developing innovative, high
technology, market leading
products. He became Joint
Group Chief Executive of FW
Thorpe in 2010 and Chairman
in July 2017.
Key Areas of Expertise/
Responsibility:
Lighting & Controls
Technology, Product Design/
Management, Industry
Knowledge, Marketing,
Strategy
Tenure
1
1
6
56
After graduating in Business
Administration, Craig
qualified as a Chartered
Management Accountant
in 2000. He has spent
time in the manufacturing
and engineering sectors,
previously as UK Financial
Director for Durr, which
included a number of overseas
ventures and projects for
the wider Group. He joined
FW Thorpe in 2010 and was
appointed Joint Group Chief
Executive in July 2017.
Key Areas of Expertise/
Responsibility:
Financial Management,
Commercial/Legal Risk,
Investor Relations, Mergers
& Acquisitions, Company
Secretarial
James graduated from Swansea
University with a BSc in 2000.
He spent 13 years in the IT
industry, involved in a variety
of public and private sector
contracts before joining FW
Thorpe in 2013. During his
time as Business Development
Manager at Thorlux, he has
been responsible for securing a
number of high profile projects
which have contributed to the
growth of revenue derived
from the healthcare sector.
James is the great grandson
of the Company founder and
was appointed as a director in
July 2017.
Key Areas of Expertise/
Responsibility:
Sales & Marketing, Business
Development, Digital
Marketing
David joined FW Thorpe in
1978 and on completion of a
commercial apprenticeship
leading to an HNC in Business
Studies he worked in various
roles at Thorlux Lighting and
elsewhere within the Group.
In 1996, he became Managing
Director of Philip Payne
Limited.
Key Areas of Expertise/
Responsibility:
Manufacturing, Business
Management, Financial
Management, Industry
Knowledge
<5 years
<10 years
>10 years
Annual Report and Accounts for the year ended 30 June 2020
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Committee key
R
Remuneration Committee
Andrew Thorpe
Non-Executive Director
Peter Mason
Non-Executive Director
Ian Thorpe
Non-Executive Director
Tony Cooper
Non-Executive Director
Appointment/Background:
Appointment/Background:
Appointment/Background:
Appointment/Background:
Andrew is the grandson of the
Company founder, Frederick
William Thorpe. After serving
an apprenticeship with the
Company, he has worked in
various parts of the business,
leading to the positions
of Export Sales Director,
Manufacturing Director and
then Managing Director of
Thorlux Lighting. In 2000,
he became Joint Group
Chief Executive and in 2003
Group Chairman, positions
he held until July 2017. In
July 2019 Andrew became a
non-executive director and
member of the remuneration
committee.
Key Areas of Expertise/
Responsibility:
R
Manufacturing, Product
Design/Management,
Sales & Marketing, Industry
Knowledge, Strategy,
Governance
Independent Auditors
PricewaterhouseCoopers LLP
Donington Court
Pegasus Business Park
Castle Donington
DE74 2UZ
Bankers
Lloyds
Church Green East
Redditch
Worcestershire
B98 8BZ
After studying Electrical
Engineering at Aberdeen
University, Peter qualified as
a Chartered Accountant with
Price Waterhouse in 1976. He
spent time with Planet Group
and TI Group before joining
FW Thorpe in 1987 as Finance
Director. He became Joint
Chief Executive in July 2000.
In June 2010 he became a
non-executive director and
Chairman of the remuneration
committee following the
appointment of his successor.
Key Areas of Expertise/
Responsibility:
R
Financial Management,
Governance, Company
Secretarial, Industry
Knowledge
Ian, grandson of the Company
founder, was Manufacturing
Director of Thorlux Lighting
from 1978 until 1993 when he
became Personnel Director.
He became a non-executive
director on 1 October 1997
and is a member of the
remuneration committee.
Key Areas of Expertise/
Responsibility:
R
Manufacturing, Human
Resources, Governance,
Industry Knowledge
Tony graduated from
Loughborough University
with a B.Tech in Production
Engineering and Management
in 1984 and became a
Chartered Engineer in
1988. He worked in various
manufacturing industries,
including Mars Electronics
and Thomas & Betts, before
joining Thorlux Lighting as
Manufacturing Director in
1998. Tony became a non-
executive director in April 2020.
Key Areas of Expertise/
Responsibility:
Manufacturing, Business
Management, Industry
Knowledge, Project
Management
Solicitors
Keystone Law
48 Chancery Lane
London
WC2A 1JF
Pinsent Masons LLP
19 Cornwall Street
Birmingham
B3 2FF
Nominated Adviser
N+1 Singer
12 Smithfield Street
London
EC1A 9BD
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
BN99 6DA
Registered Office
Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH
Registered No
FW Thorpe Plc is registered in
England and Wales No. 317886
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur FinancialsOur GovernanceBusiness Overview
Directors’ Report
The directors present their Directors’
report with the audited consolidated
financial statements of the Group and
the Company for the financial year
ended 30 June 2020.
Principal Activity
The main activity of the Group
continues to be the design,
manufacture and supply of
professional lighting equipment.
Each company within the Group
operates in a different market of
the lighting sector.
Business Review
The trading results for the year
are set out in the Consolidated
Income Statement on page 78
and the Group’s financial position
at the end of the year is set out in
the Consolidated and Company
Statements of Financial Position
on page 80. A review of the
performance of the business during
the financial year and expected
future developments are contained
in the Chairman’s Statement, the
Operational Performance section and
the Financial Performance section
which form part of the Strategic
Report.
Key Performance Indicators
The directors consider the main
financial key performance indicators
(KPIs) to be those disclosed on page
22 (financial highlights). The two
most important KPIs to the business
are revenue and operating profit.
The directors monitor non-financial
areas of the business relating to
energy saving and environmental
responsibility, market and product
development, customer service and
product support on a regular basis.
Objectives are set for each company
within the Group incorporating
financial and non-financial
targets which have appropriate
measurements that reflect their
nature. These are monitored regularly
at local and Group Board level. During
the year a number of objectives were
achieved, some impacted by COVID-19
in the final quarter of the year.
Principal Risks and
Uncertainties
The table on pages 46 to 48
details what we consider to be the
principal risks and uncertainties to
the business, and how we seek to
manage and mitigate these risks.
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.
Details of other risk management
procedures are included within the
internal control section of this report
and in the financial risk section within
the accounting policies (note 1).
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.
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 control 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.
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.
Other Areas of Control
During the year and continuing
after the year end, the Board has
operated a formal risk identification
and evaluation process as part of a
continuous review of the Group’s
internal controls. This process
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
Proposed Dividend
Details of the proposed dividend are
disclosed in the Financial Performance
section on pages 42 and 43.
Directors
The directors of the Company during
the year and at the date of this report
are set out on pages 56 and 57.
The directors retiring by rotation are
M Allcock, A B Thorpe, A M Cooper
who, being eligible, offer themselves
for re-election. M Allcock has a
service contract terminable on 24
months’ notice.
Directors’ Share Interests
The details of the directors’ share
interests are set out in the directors’
remuneration report on page 67.
Directors’ Indemnities
As permitted by the Articles of
Association, the directors have the
benefit of an indemnity which is
a qualifying third party indemnity
provision as defined by section 234
of the Companies Act 2006. The
indemnity was in force throughout
the last financial year and is currently
in force. The Company also purchased
and maintained throughout the
financial year directors’ and officers’
liability insurance in respect of itself
and its directors.
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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 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:
P D Mason
Non-executive director and
Chairman of the committee.
A B Thorpe
Non-executive director.
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 65 to 68.
Where there is a requirement for a
senior personnel or subsidiary board
appointment a sub-committee is
formed. Any appointment to the
Group Board 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.
Substantial Shareholdings
At 30 September 2020, the Company
had received notification of the
following interests in 3% or more of
the issued share capital, excluding
holdings of directors:
Liontrust Investment
Partners LLP
6,228,630 (5.4%)
C M Brangwin
7,231,550 (6.2%)
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 where possible and, if
appropriate, by meeting with major
shareholders at other times during
the year. See Notice of Meeting –
AGM 2020.
Directors’ Authority to Issue
Shares
In previous years, at the Annual
General Meeting, shareholders
have been asked to pass resolutions
to authorise the directors to allot
shares for cash or to grant rights
to subscribe for, or to convert any
security into, shares in the Company
and to allow them to do so (and also
to sell treasury shares) in certain
circumstances without first offering
the shares in question to existing
shareholders.
As the directors have no intention
of exercising these authorities, there
will be no resolution to grant these
powers at the forthcoming Annual
General Meeting.
This will not, however, prevent shares
from being allotted or treasury
shares being sold to individuals who
exercise options under any share
option scheme of the Company.
Purchase of Own Shares
Resolution number 8 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
Alternative Investment Market 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 11,893,559 ordinary shares
representing 10% of the Company’s
issued ordinary share capital at 30
September 2020 and a nominal value
of £118,936.
The minimum price per ordinary
share payable by the Company
(exclusive of expenses) will be 1p.
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
Alternative Investment Market on
the five business days immediately
preceding the date of each purchase.
The Company may either cancel
any shares which it purchases under
this authority or transfer them into
treasury, and subsequently sell or
transfer them out of treasury or
cancel them. 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 2021. However,
in order to maintain the Board’s
flexibility of action it is envisaged
that it will be renewed at future
Annual General Meetings.
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Corporate Governance
The Company’s shares are traded on the Alternative Investment Market (AIM) of the London Stock Exchange Plc.
Previously the Company was not required to comply with the Principles of Good Governance and Code of Best Practice
(“The UK Corporate Governance Code”, or the “Code”).
Following a change to the AIM rules in 2018, from 28 September 2018, the Company has adopted the Quoted
Companies Alliance’s “Corporate Governance Guidelines for Smaller Quoted Companies” (the QCA Code) which the
Board believes is appropriate due to the size and complexity of the Company.
There are ten principles of the QCA code and the following table sets out in broad terms how we comply at this point in time.
Extent of
current
compliance
Compliant
Principle
1
Establish a strategy
and business model
which promote
long-term value for
shareholders
Compliant
2
Seek to
understand and
meet shareholders’
needs and
expectations
Commentary
Further disclosure
Find out more in the
Strategic Report
on pages 08 to 53
Read about our
Strategy on pages
16 and 17
Read about our
Business Model on
pages 14 and 15
Find out more in the
Directors’ Report
on page 58
The Group’s business strategy is detailed in
our Annual Report & Accounts and focuses
on delivering long-term growth and stability,
achieved through four key strategic priorities:
• Focus on high quality products and good
leadership in technology
• Continue to grow the customer base for
Group companies
• Focus on manufacturing excellence
• Continue to develop high quality people
Meetings are held with shareholders as
required; this includes visits to our various
company locations being organised and
encouraged where possible. In addition, all
announcements include contact details for
shareholders to contact the Company if they so
choose.
The AGM is another forum for dialogue with
our shareholders. The Notice of Meeting is sent
to shareholders at least 21 days before the
meeting.
Any feedback during these meetings is
encouraged and acted upon where appropriate.
3
Take into account
wider stakeholder
and social
responsibilities and
their implications for
long-term success
Compliant
Feedback from employees, customers, suppliers
and other stakeholders is actively encouraged.
Our employees are an important stakeholder
group and we actively encourage dialogue with
the Company via various employee committees
within our companies. Reports from these
meetings are distributed to the Board.
Find out more
in the Strategic
Report on pages
08 to 53 and in our
Sustainability
section on pages 52
and 53
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Commentary
Further disclosure
Extent of
current
compliance
Compliant
Principle
4
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation
Partially
Compliant
Total of eight directors, four executive directors
and four non-executive directors.
5
Maintain the
Board as a well-
functioning,
balanced team led
by the Chair
The Board operates a continuous risk
identification and evaluation process. The
results are utilised by the Board to manage any
significant risks.
In addition, the executive directors regularly
visit all operating sites and review financial and
commercial issues with an executive director
responsible for each individual company.
The Board has overall responsibility for the
system of internal control and for reviewing its
effectiveness throughout the Group.
Internal financial control is driven by Group
finance who visit each company to assess
compliance against key controls. This includes
regular financial reporting that is compared
against plan and previous year’s performance.
The non-executives are not considered fully
independent. The Board considers that the
non-executive directors are appropriate as they
bring significant experience and expertise in the
sector. In addition, as the directors retire on a
three-year rotation, shareholders have a regular
opportunity to ensure that the composition of
the Board is in line with their interests.
There is a Remuneration Committee but no
Audit Committee, with matters that would
normally be tabled at an Audit Committee put
to the full Board.
The current composition of the Board provides
the necessary skills, experience and capabilities
for the size and context of the Group.
The composition and succession of the Board
are subject to review, considering the future
needs of the Group.
Compliant
6
Ensure that between
them the directors
have the necessary
up-to-date
experience, skills
and capabilities
Find out more
about our
Principal Risk and
Uncertainties on
pages 44 to 48 and
in the Directors’
Report on page 58
Find out more in
Our Governance
on pages 56 to 75
Read about our
Board of Directors
on pages 56 and 57
Read our Directors’
Report on pages 58
to 63
Find out more in
Our Governance
on pages 56 to 75
Read about our
Board of Directors
on pages 56 and 57
Read our Directors’
Report on pages 58
to 63
61
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur FinancialsOur GovernanceBusiness Overview Directors’ Report continued
Extent of
current
compliance
Partially
Compliant
Commentary
Further disclosure
There is no formal evaluation process;
however, the Chairman is responsible for
Board performance and accordingly actively
encourages feedback on the content and
function of board meetings.
The composition and succession of the Board
are subject to constant review, considering the
ever-changing needs of the Group. In addition,
the directors retire by rotation every three years
giving shareholders the opportunity to ensure
that the Board is aligned with their interests.
Compliant
Our core aim is for long-term growth and
stability.
Principle
7
Evaluate Board
performance
based on clear and
relevant objectives,
seeking continuous
improvement
8
Promote a corporate
culture that is based
on ethical values and
behaviours
Find out more in the
Strategic Report
on pages 08 to 53
Read about our
Strategy on pages
16 and 17
Find out more in the
Directors’ Report
on pages 58 to 63
Read about our
Board of Directors
on pages 56 and 57
Find out more
online at:
www.fwthorpe.co.uk
The Group management team is passionate
about developing the business for the benefit of
the shareholders, employees and customers.
With our focus on excellence, we ensure our
Group’s culture is consistent with the aim of
long term growth and stability. In order to
achieve and maintain such a culture, we invest
in training our employees, as mentioned in the
Annual Report and Accounts.
The Board as a whole is responsible for
robust governance practices. The roles and
responsibilities of each director are clear and
responsibilities understood.
The Board meets at least eight times each year,
with additional meetings as required.
The Company communicates through the
Annual Report and Accounts, full-year and
interim announcements, the AGM and one-
to-one meetings with existing or potential
shareholders.
A range of corporate information is also
available on the Company’s website.
Meetings with shareholders, employee groups,
management and other representative groups
provide a platform for raising any concerns
relating to corporate governance.
Compliant
Compliant
9
Maintain
governance
structures and
processes that
are fit for purpose
and support good
decision making by
the Board
10
Communicate
how the Company
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders
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They have also produced an analysis
that demonstrates that the Group
could cover its cash commitments
even if there were zero sales over
the following year from approving
these accounts. For this reason, they
continue to adopt the going concern
basis in preparing the accounts.
Approval of Strategic and
Directors’ Reports
The directors confirm that the
information contained within the
Strategic Report on pages 08 to 53
and the Directors’ Report on pages
58 to 63 is an accurate representation
of the Group’s strategy and
performance.
By order of the Board
Craig Muncaster
Joint Chief Executive, Group Financial
Director and Company Secretary
30 September 2020
Registered Office:
Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH
Company Registration Number:
317886
The Board considers that the
Company applies the principles of
best practice with the exception of
the matters listed below:
• There are no independent Board
members.
• The Board does not have an
independent audit committee.
• The Board does not have a
nominations committee.
• There is no formal evaluation
process of Board performance.
The Board believes 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.
Statement on the
Provision of Information
to Independent Auditors
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.
Independent Auditors
The auditors,
PricewaterhouseCoopers LLP, have
expressed their willingness to
continue in office and a resolution for
their reappointment will be proposed
at the next Annual General Meeting.
Going Concern
The directors confirm they are
satisfied that the Group and
Company have adequate resources,
with £44.4m cash and £18.6m short
term deposits, to continue in business
for the foreseeable future factoring
in the expected impact of Covid-19.
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63
Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur FinancialsOur GovernanceBusiness Overview Statement of Directors’ Responsibilities
in respect of the Financial Statements
The directors are responsible for
preparing the Annual Report and the
financial statements in accordance
with applicable law and regulation.
• make judgements and accounting
estimates that are reasonable and
prudent; and
• prepare the financial statements
Directors’ confirmations
In the case of each director in office
at the date the Directors’ Report is
approved:
•
•
so far as the director is aware,
there is no relevant audit
information of which the Group
and Company’s auditors are
unaware; and
they have taken all the steps
that they ought to have taken
as a director in order to make
themselves aware of any relevant
audit information and to establish
that the Group and Company’s
auditors are aware of that
information.
By order of the Board
Craig Muncaster
Joint Chief Executive, Group Financial
Director and Company Secretary
30 September 2020
on the going concern basis unless
it is inappropriate to presume
that the Group and Company will
continue in business.
The directors are also responsible for
safeguarding the assets of the Group
and Company and hence for taking
reasonable steps for the prevention
and detection of fraud and other
irregularities.
The directors are responsible for
keeping adequate accounting records
that are sufficient to show and
explain the Group and Company’s
transactions and disclose with
reasonable accuracy at any time the
financial position of the Group and
Company and enable them to ensure
that the financial statements comply
with the Companies Act 2006.
The directors are responsible for the
maintenance and integrity of the
Company’s website. Legislation in
the United Kingdom governing the
preparation and dissemination of
financial statements may differ from
legislation in other jurisdictions.
Company law requires the directors
to prepare financial statements for
each financial year. Under that law the
directors have prepared the Group
financial statements in accordance
with International Financial Reporting
Standards (IFRSs) as adopted by
the European Union and Company
financial statements in accordance
with International Financial Reporting
Standards (IFRSs) as adopted by the
European Union. Under company
law the directors must not approve
the financial statements unless they
are satisfied that they 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 and Company
for that period. In preparing the
financial statements, the directors are
required to:
•
•
select suitable accounting policies
and then apply them consistently;
state whether applicable IFRSs as
adopted by the European Union
have been followed for the Group
financial statements and IFRSs
as adopted by the European
Union have been followed for the
Company financial statements,
subject to any material departures
disclosed and explained in the
financial statements;
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Directors’ Remuneration Report
The Board has prepared this report to
the shareholders, taking into account
sections 420 to 422 of the Companies
Act 2006 and AIM Rule 19.
Performance Graph
The graph below shows the comparative data for the FTSE AIM share index
and the FTSE Fledgling share index, rebased to 100, as these are considered to
be the most appropriate comparative indices for the Company’s business.
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 conditions
of employment.
Remuneration Committee
The current members of the
Remuneration Committee are the
non-executive directors P D Mason
(Chairman of the Committee), I A
Thorpe, and A B 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 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.
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.
Total shareholder return
250
200
150
100
50
30-06-2015
FW Thorpe
AIM All Share
FTSE Fledgling
30-06-2016
30-06-2017
30-06-2018
30-06-2019
30-06-2020
The remuneration package consists
of the following elements:
1. 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.
3. Long term incentive scheme. This
scheme consists of the “Executive
Share Ownership Plan” (ESOP)
details of which are shown on
page 68.
Non-Executive Directors
The Board as a 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.
Their benefits in kind consist of the
provision of health insurance.
Directors’ Service Contracts
M Allcock has a service contract
terminable on two years’ notice.
C Muncaster, D Taylor and J E Thorpe
have service contracts terminable
on one year’s notice. A B Thorpe, P D
Mason, I A Thorpe and A M Cooper
do not have formal service contracts
with the Company.
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Directors’ Emoluments (Audited)
Executive
directors
M Allcock
D Taylor
C Muncaster
J E Thorpe
Non-executive
directors
A B Thorpe
I A Thorpe
P D Mason
A M Cooper *
2020
Salary/
fees
£’000
213
113
240
118
34
34
34
96
882
2020
Bonus
£’000
138
71
147
90
2020
Benefits
£’000
21
13
20
20
–
–
–
51
497
14
15
5
12
120
2020
Total
£’000
372
197
407
228
48
49
39
159
1,499
2019
Total
£’000
416
239
414
210
206
43
33
260
1,821
2020
Share
options
£’000
27
54
20
–
2019
Share
options
£’000
26
52
19
–
–
–
–
7
108
50
–
–
6
153
2020
Total
£’000
399
251
427
228
48
49
39
166
1,607
2019
Total
£’000
442
291
433
210
256
43
33
266
1,974
*
A M Cooper relinquished his role as as an executive director, becoming a non-executive director on 2 April 2020.
The directors’ emoluments exclude contributions to the pension scheme.
Directors’ Pension Arrangements
M Allcock is a deferred member and D Taylor a pensioner member of the defined contribution scheme of the FW
Thorpe Retirement Benefits Scheme and they have a final salary guarantee as they were previously members of
the defined benefit section. A M Cooper is a deferred member and J E Thorpe an active member of the defined
contribution section of the FW Thorpe Retirement Benefits Scheme. A M Cooper has a personal pension plans to which
the Company contributed.
I A Thorpe, A B Thorpe and P D Mason are retired members of the defined benefit section.
The FW Thorpe Retirement Benefits Scheme is a funded, HMRC 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. M Allcock’s and D Taylor’s pensionable salary includes an average of the previous three years’ profit
bonus. Defined contribution members contribute up to 5% of basic salary and the Company contributes up to 17%.
M Allcock, D Taylor and A M Cooper have ceased being active members of the FW Thorpe Retirement Benefits
Scheme and C Muncaster has ceased being an active member of his personal pension scheme due to HMRC limits on
lifetime allowances and annual contributions. Subsequently the Company has entered into pension compensation
arrangements with these four directors and J E Thorpe to compensate them for the loss of these employer pension
contributions. During the financial year the Company paid pension compensation to M Allcock of £167,942 (2019:
£145,755), A M Cooper £7,414 (2019: £10,697), C Muncaster £40,724 (2019: £34,882), D Taylor £19,132 (2019: £9,393) and to
J E Thorpe £9,290 (2019: £5,881).
All the executive directors are covered by life assurance benefit of four times pensionable salary. In addition, the
defined benefit scheme members are entitled to a spouse’s pension on death.
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There are no directors, excluding those classified as pensioners, having accrued entitlements under the defined benefit
section of the pension scheme.
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.
J E Thorpe
2020
£’000
12
2019
£’000
10
A M Cooper has a personal pension which is not part of the Company scheme, and the following contributions have
been made during the year.
A M Cooper
2020
£’000
8
2019
£’000
10
CEO Pay Ratio
FW Thorpe being a UK listed company with more than 250 employees is required to disclose annually the ratio of the
CEO’S pay to the lower quartile, median and upper quartile pay of their UK employees. These details are shown in the
table below.
Year
2019-20
Method
Option A
25th percentile pay ratio
24:1
Median pay ratio
15:1
75th percentile pay ratio
8:1
Option A was chosen as it represents the most accurate means of identifying the percentiles. The comparison is based
on data for the year ended 30 June 2020. The table below sets out the salary and total pay and benefits for the three
quartiles.
Base salary
Total remuneration
25th percentile pay
20,104
28,367
Median pay
29,833
45,272
75th percentile pay
46,818
87,374
Directors’ Shareholdings
The directors listed below were in office during the year. Directors’ interests in the share capital of the Company at
30 June 2020 and 1 July 2019 were as follows:
Executive directors
M Allcock
D Taylor
C Muncaster
J E Thorpe
Non-executive directors
A B Thorpe
I A Thorpe
P D Mason
A M Cooper
Ordinary shares of
1p Beneficial
2020
175,500
132,896
50,000
1,371,450
2019
159,500
116,413
35,000
1,371,450
27,682,700
25,840,352
1,626,370
112,224
27,682,700
25,840,352
1,626,370
112,224
The market price of the Company’s shares at the beginning and end of the financial year was 317p and 301p
respectively, and the range of market prices during the year was from 225p to 363p.
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Executive Share Ownership Plan (ESOP)
Share options were granted during 2014, under the Company’s ESOP, to the Company’s executive directors and certain
directors of subsidiary companies. The plan allows the vesting of options subject to the achievement of performance
targets, being annual growth of pre-tax Earnings Per Shares in excess of RPI plus 3% over a five-year period. The options
that were granted to the executive directors are detailed in the table below:
Date Granted
Share Options
Exercise price (p)
M Allcock
A B Thorpe
C Muncaster
24 October 2014 24 October 2014 24 October 2014 24 October 2014 24 October 2014
200,000
124
200,000
124
200,000
124
200,000
124
200,000
124
A M Cooper
D Taylor
During the year the third tranche of shares of this ESOP vested as the performance conditions were met in the financial
year ended 30 June 2017, options vested and exercised in the year are shown in the table below. The fifth tranche of shares
for this scheme relating to the year ended 30 June 2019 were forfeit as the performance conditions were not met.
Number at 1 July 2019
Awarded
Vested
Exercised
Forfeit
Lapsed
Number at 30 June 2020
A B Thorpe
120,000
–
40,000
–
(40,000)
–
80,000
M Allcock
140,000
–
40,000
(20,000)
(40,000)
–
80,000
D Taylor
120,000
–
40,000
(40,000)
(40,000)
–
40,000
A M Cooper
155,161
–
40,000
(4,839)
(40,000)
–
110,322
C Muncaster
165,000
–
40,000
(15,000)
(40,000)
–
110,000
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 2020 to 30 September 2020.
Approved by the Board and signed on its behalf by:
Craig Muncaster
Joint Chief Executive, Group Financial Director and Company Secretary
30 September 2020
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Annual Report and Accounts for the year ended 30 June 2020 Independent Auditors’ Report
to the Members of FW Thorpe Plc
Report on the audit of the financial statements
Opinion
In our opinion, FW Thorpe Plc’s Group financial statements and Company financial statements (the “financial
statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 June 2020 and of the
Group’s profit and the Group’s and the Company’s cash flows for the year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted
by the European Union and, as regards the Company’s financial statements, as applied in accordance with the
provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report and Accounts (the “Annual Report”),
which comprise: the Consolidated and Company Statements of Financial Position as at 30 June 2020; the Consolidated
Income Statement and Consolidated Statement of Comprehensive Income, the Consolidated and Company Statements
of Cash Flows, the Consolidated Statement of Changes in Equity, and the Company Statement of Changes in Equity
for the year then ended; and the notes to the financial statements, which include a description of the significant
accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law.
Our responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial
statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of
the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we
have fulfilled our other ethical responsibilities in accordance with these requirements.
Our audit approach
Overview
• Overall Group materiality: £860,000 (2019: £880,000), based on 5% of three year average
profit before tax and before profit on disposal of property (2019: profit before tax and
before profit on disposal of property).
• Overall Company materiality: £729,000 (2019: £680,000), based on 5% of three year
average profit before tax and before profit on disposal of property (2019: profit before
tax and before profit on disposal of property).
Materiality
Audit scope
Key audit
matters
•
In establishing the overall approach to the Group audit, we identified three reporting
units, which, in our view, required an audit of their complete financial information both
due to their size and risk characteristics: Thorlux Lighting (the Company), Lightronics and
Famostar. The Group engagement team audited Thorlux Lighting whilst Lightronics and
Famostar were audited by a non-PwC component audit team located in the Netherlands.
The work performed by the component auditor was subject to review by the Group
engagement team and the work performed over areas considered to be of significant
importance to the audit has fed into our key audit matters.
Impairment consideration relating to COVID-19 (Group and Company);
•
• Valuation of the share appreciation rights repurchase obligation (Group and Company);
• Valuation of warranty provision (Group and Company); and
• Capitalisation of internal development costs (Group and Company).
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Independent Auditors’ Report continued
to the Members of FW Thorpe Plc
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements, for example
in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. As in all of our audits we also addressed the risk of management override of internal
controls, including evaluating whether there was evidence of bias by the directors that represented a risk of material
misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the
audit of the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) identified by the auditors, including those which had the greatest effect
on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate
opinion on these matters. This is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Impairment consideration
relating to COVID-19
In respect of trade receivables (excluding balances owed by Group
undertakings):
Refer to critical accounting estimates and
judgements in note 1 to the financial
statements and note 9 for Intangible
assets, note 10 for Investment in
subsidiaries and note 16 for Trade and
other receivables.
The ongoing economic uncertainty due
to COVID-19 requires the directors and
auditors to consider the impact on the
valuation of various assets on the Group
and Company financial statements.
Group and Company
• We have assessed the level of trade receivable balances which
remain unpaid at the year end and have traced a sample of amounts
received after the year end to bank statements; and
• We have assessed management’s calculation of the expected credit
loss provision for third party trade receivables by reviewing the
credit insurance in place, track record of the business in receiving
payment and assessing the probability that undue amounts will be
paid in light of the current economic conditions of the customer
base.
In respect of balances owed by Group undertakings:
• The expected credit loss model prepared by the client has
considered a range of potential outcomes, which are then
probability weighted depending on the future underlying
performance of the entities. When considering these models we
have applied sensitivity analysis to the key inputs, which include
the probability of, and loss given, default. We have also considered
management’s estimates through comparison to historical and
future business performance in line with contractual terms and
position of the business at the year end; and
• We found that the valuation of balances owed from Group
undertakings after making impairment provisions were consistent
with the evidence obtained.
In respect of Goodwill and Investment in subsidiaries:
• We have reviewed the impairment assessments produced by
management for the various cash generating units of the Group
and subsidiaries of the Company and checked the technical and
arithmentic accuracy to ensure compliance with IAS 36; and
• We have performed sensitivity analysis on the key assumptions to
assess the extent to which the assumptions would need to change
to cause an impairment and assessed the likelihood of various
scenarios.
Based on the work undertaken we believe that, where required, an
appropriate provision has been recognised.
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Annual Report and Accounts for the year ended 30 June 2020 Key audit matter
How our audit addressed the key audit matter
Valuation of share appreciation
rights repurchase obligation
(Group and Company)
The valuation of the repurchase obligation involves assessing estimates
with respect to the expected EBITDA at redemption and judgement in
assessing the expected redemption date.
Based on the historical performance of Lightronics and Famostar,
the wider macro-economic conditions, our audit work over the
forecast information and discussions with Lightronics’ and Famostar’s
management, the assumptions on growth and the judgement on timing
were considered reasonable.
We ensured there were no changes in the split in the share appreciation
rights percentage holdings between previous investors and
management through enquiries with management, review of board
minutes and recalculation of the shareholder appreciation liability.
We considered the accounting for each tranche and ensured it was
compliant with the requirements of IAS 39 – “Financial Instruments:
Recognition and measurement” and IFRS 2 – “Share-based payment”.
We found that the valuation of the share appreciation rights repurchase
obligation was consistent with the evidence obtained.
Refer to critical accounting estimates and
judgements in note 1 to the financial
statements and note 20 trade and other
payables.
As part of the acquisition of Lightronics
in FY15 and Famostar in FY18, share
appreciation rights equivalent to 35% of
the acquired business were sold back to
the previous investors and Lightronics
management. The Group and Company
are obliged to re-purchase these rights
at an EBITDA (Earnings before interest,
tax, depreciation and amortisation
expense) multiple (based on an average
of the previous two years) by FY21 with
the option to exercise being held by the
previous investors and management.
Where the share appreciation rights
are due to the previous investors,
this is accounted for as contingent
consideration. The share appreciation
rights in relation to the previous
management who remain employed
is accounted for as a cash settled share
based payment. Any re-valuation of the
contingent consideration is recognised
immediately, whilst any re-valuation of
the total share based payment charge
is spread across the remaining option
period, with both elements charged to
administrative expenses.
The valuation of the repurchase
obligation involves judgement and
estimates with respect to the expected
EBITDA at redemption and the
redemption date.
Group and Company
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to the Members of FW Thorpe Plc
Key audit matter
How our audit addressed the key audit matter
We have audited the specific provisions held at year-end by inspecting
correspondence to confirm rectification is required and recalculating
the provision amount based on material cost and estimated labour and
installation expenditure;
We have enquired with management and reviewed board minutes to
ensure that no specific rectification issues have been identified which
were not provided for at year-end;
We have corroborated the actual failure rates against the expected
failure rate used to calculate the provision, where no known rectification
issues have been identified; and
We have reviewed and challenged the appropriateness of any other
judgement used in the estimation of the provision.
We found the valuation of the warranty provision was consistent with
the evidence obtained.
We have assessed the development activities performed by the Group
against the criteria for capitalising internal development costs under
IAS 38;
We have performed testing over the amounts capitalised in the year by
agreeing payroll amounts to payslips and assessing the percentage of
payroll costs capitalised with respect to the employee and their role in
the development of products; and
We have assessed the amortisation period of three years across the
Group with reference to the product launches and knowledge of the
industry.
We found that the accuracy of the capitalised development costs was
consistent with the evidence obtained.
Valuation of warranty provision
(Group and Company)
Refer to critical accounting estimates and
judgements in note 1 to the financial
statements and note 23 provisions.
The Group and Company makes
provisions for warranties where it is
obliged to repair or replace faulty goods
under the terms and conditions of sale.
The typical warranty provision offered
is for a period of five years although
longer periods are offered by Lightronics
and Famostar on certain product lines.
Amounts have been provided based on
known faults at the year-end date where
rectification will be due and also based
on expected failure rates as applied to
sales made which are within the warranty
period.
The valuation of the warranty provision
involves judgement with respect to the
expected failure rate especially when
applied to new products at the start of
their warranty period.
Group and Company
Capitalisation of internal development
costs (Group and Company)
Refer to critical accounting estimates and
judgements in note 1 to the financial
statements and note 9 intangibles.
The Group undertakes development
activities on new products and such
internal development costs are
capitalised where allowable under IAS
38 – “Intangible Assets.” Judgement has
been applied in considering whether
the requirements for capitalising such
internal development costs under IAS
38 have been met, the level and nature
of costs which should be capitalised and
also the period over which the capitalised
costs should be amortised.
Group and Company
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Annual Report and Accounts for the year ended 30 June 2020 How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account the structure of the Group and the Company, the accounting
processes and controls, and the industry in which they operate.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the
nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and
in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for
benchmark applied
Group financial statements
Company financial statements
£860,000 (2019: £880,000).
5% of three year average profit before tax
and before profit on disposal of property.
Based on the benchmarks used in the
annual report, profit before tax is the
primary measure used by the shareholders
in assessing the performance of the Group,
and is a generally accepted auditing
benchmark. A three year average has
been used based on our judgement that
the FY20 results were impacted by a short
term downturn due to COVID-19 and not a
permanent rebasing of profitability.
£729,000 (2019: £680,000).
5% of three year average profit before tax
and before profit on disposal of property.
Based on the benchmarks used in the
annual report, profit before tax is the
primary measure used by the shareholders
in assessing the performance of the Group,
and is a generally accepted auditing
benchmark. A three year average has
been used based on our judgement that
the FY20 results were impacted by a short
term downturn due to COVID-19 and not a
permanent rebasing of profitability.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was between £400,000 and £729,000.
We agreed with the directors that we would report to them misstatements identified during our audit above £43,000
(Group audit) (2019: £50,000) and £36,000 (Company audit) (2019: £34,000) as well as misstatements below those
amounts that, in our view, warranted reporting for qualitative reasons.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you
where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not
appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast
significant doubt about the Group’s and Company’s ability to continue to adopt the going concern basis of accounting
for a period of at least twelve months from the date when the financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the
Group’s and Company’s ability to continue as a going concern.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur FinancialsOur GovernanceBusiness Overview Independent Auditors’ Report continued
to the Members of FW Thorpe Plc
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and
our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the financial
statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the
extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and,
in doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit, or otherwise appears to be materially misstated. If we identify an apparent material
inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material
misstatement of the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the
UK Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us
also to report certain opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report
and Directors’ Report for the year ended 30 June 2020 is consistent with the financial statements and has been
prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course
of the audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation
of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the Company’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or the Company or to cease operations, or
have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in
accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these
opinions, 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.
74
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Annual Report and Accounts for the year ended 30 June 2020 Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been
received from branches not visited by us; or
certain disclosures of directors’ remuneration specified by law are not made; or
the Company financial statements are not in agreement with the accounting records and returns.
•
•
We have no exceptions to report arising from this responsibility.
David Teager (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
East Midlands
30 September 2020
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur FinancialsOur GovernanceBusiness Overview Our
Financials
78
79
80
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Consolidated and Company
Statements of Financial Position
Consolidated Statement of
Changes in Equity
Company Statement of
Changes in Equity
Consolidated and Company
Statements of Cash Flows
83
Notes to the Financial Statements 84
128
Notice of Meeting
131
Financial Calendar
82
81
FW Thorpe Carbon Offsetting Scheme,
Devauden
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Consolidated Income Statement
For the year ended 30 June 2020
Continuing operations
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Other operating income
Operating profit (before profit on disposal)
Profit on disposal of property
Operating profit
Finance income
Finance expense
Profit before income tax
Income tax expense
Profit for the year
Notes
2020
£’000
2019
£’000
2
3
5
5
6
113,342
(63,351)
49,991
(13,434)
(20,489)
264
16,332
–
16,332
708
(1,097)
15,943
(2,629)
13,314
110,643
(60,264)
50,379
(13,182)
(19,840)
292
17,649
1,917
19,566
1,049
(1,046)
19,569
(3,429)
16,140
Earnings per share from continuing operations attributable to the equity holders of the Company during
the year (expressed in pence per share)
Basic and diluted earnings per share
– Basic
– Diluted
Notes
7
7
2020
pence
11.45
11.40
2019
pence
13.91
13.83
The notes on pages 84 to 127 form part of these financial statements.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the
Company income statement.
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Annual Report and Accounts for the year ended 30 June 2020 Consolidated Statement of Comprehensive Income
For the year ended 30 June 2020
Profit for the year:
Other comprehensive income/(expenses)
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations
Items that will not be reclassified to profit or loss
Revaluation of financial assets at fair value through other comprehensive income
Actuarial loss on pension scheme
Movement on unrecognised pension scheme surplus
Taxation
22
22
Notes
2020
£’000
13,314
2019
£’000
16,140
229
229
(834)
(2,039)
1,869
13
(991)
153
153
(142)
(374)
191
24
(301)
Other comprehensive expense for the year, net of tax
(762)
(148)
Total comprehensive income for the year attributable to equity shareholders
12,552
15,992
The notes on pages 84 to 127 form part of these financial statements.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview Consolidated and Company Statements of Financial Position
As at 30 June 2020
Assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in subsidiaries
Investment property
Financial assets at amortised cost
Equity accounted investments and joint arrangements
Financial assets at fair value through other
comprehensive income
Total non-current assets
Current assets
Inventories
Trade and other receivables
Financial assets at amortised cost
Other financial assets at fair value through profit or loss
Short-term financial assets
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Lease liabilities
Current income tax liabilities
Total current liabilities
Net current assets
Non-current liabilities
Other payables
Lease liabilities
Provisions for liabilities and charges
Deferred income tax liabilities
Total non-current liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Capital redemption reserve
Foreign currency translation reserve
Retained earnings
At 1 July
Profit for the year attributable to the owners
Other changes in retained earnings
Total equity
Group
Company
Notes
2020
£’000
2019
£’000
2020
£’000
2019
£’000
8
9
10
11
12
13
14
15
16
12
17
18
19
20
21
20
21
23
24
25
26
26
26
30,574
21,032
–
1,987
1,800
–
3,772
59,165
25,296
21,256
625
–
18,580
44,422
110,179
169,344
(36,185)
(220)
(831)
(37,236)
72,943
(67)
(417)
(2,721)
(601)
(3,806)
(41,042)
128,302
1,189
1,526
137
2,764
25,353
21,687
–
2,006
3,567
936
3,683
57,232
25,506
21,502
–
387
26,483
30,807
104,685
161,917
(21,912)
–
(1,935)
(23,847)
80,838
(12,804)
–
(2,404)
(699)
(15,907)
(39,754)
122,163
1,189
1,266
137
2,535
11,980
4,074
14,581
10,130
12,338
–
3,772
56,875
16,914
22,133
625
–
18,580
37,218
95,470
152,345
(27,964)
–
–
(27,964)
67,506
–
–
(795)
(398)
(1,193)
(29,157)
123,188
1,189
1,526
137
–
117,036
13,314
(7,664)
122,686
128,302
107,527
16,140
(6,631)
117,036
122,163
114,398
13,326
(7,388)
120,336
123,188
11,185
4,192
14,581
9,131
12,115
936
3,683
55,823
18,354
20,594
–
387
26,483
24,771
90,589
146,412
(17,290)
–
(931)
(18,221)
72,368
(10,242)
–
(466)
(493)
(11,201)
(29,422)
116,990
1,189
1,266
137
–
105,582
16,063
(7,247)
114,398
116,990
The notes on pages 84 to 127 form part of these financial statements.
The financial statements on pages 78 to 127 were approved by the Board on 30 September 2020 and signed on its
behalf by
Mike Allcock
Craig Muncaster
Company Registration Number: 317886
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Annual Report and Accounts for the year ended 30 June 2020 Consolidated Statement of Changes in Equity
For the year ended 30 June 2020
Share
capital
£’000
1,189
Share
premium
account
£’000
1,017
Capital
redemption
reserve
£’000
137
Notes
Foreign
currency
translation
reserve
£’000
2,382
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
153
Retained
earnings
£’000
Total
equity
£’000
107,527 112,252
16,140
(374)
16,140
(374)
191
191
(142)
(142)
24
–
24
153
–
–
–
153
15,839
15,992
–
–
–
–
–
1,189
–
1,189
249
–
–
–
249
1,266
–
1,266
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
137
–
137
–
–
–
–
–
–
–
–
–
–
–
–
2,535
–
(117)
(6,299)
86
(6,330)
249
(117)
(6,299)
86
(6,081)
117,036 122,163
–
2,535
(265)
(265)
116,771 121,898
–
–
–
–
–
–
13,314
(2,039)
13,314
(2,039)
1,869
1,869
(834)
(834)
81
(68)
81
(68)
229
–
229
–
–
–
229
12,323
12,552
–
–
–
–
1,189
260
–
–
260
1,526
–
–
–
–
137
–
–
–
–
2,764
–
(6,468)
60
(6,408)
260
(6,468)
60
(6,148)
122,686 128,302
22
22
14
24
27
28
22
22
14
24
24
27
28
Balance at 1 July 2018
Comprehensive income
Profit for the year to 30 June 2019
Actuarial loss on pension scheme
Movement on unrecognised pension
scheme surplus
Revaluation of financial assets at fair
value through other comprehensive
income
Movement on associated deferred tax
Exchange differences on translation of
foreign operations
Total comprehensive income
Transactions with owners
Shares issued from exercised options
Purchase of own shares
Dividends paid to shareholders
Share based payment charge
Total transactions with owners
Balance at 30 June 2019
Adjustments on first time adoption of
IFRS16 (net of tax) *
Restated balance at 1 July 2019
Comprehensive income
Profit for the year to 30 June 2020
Actuarial loss on pension scheme
Movement on unrecognised pension
scheme surplus
Revaluation of financial assets at fair
value through other comprehensive
income
Movement on associated deferred tax
Impact of deferred tax rate change
Exchange differences on translation of
foreign operations
Total comprehensive income
Transactions with owners
Shares issued from exercised options
Dividends paid to shareholders
Share based payment charge
Total transactions with owners
Balance at 30 June 2020
The notes on pages 84 to 127 form part of these financial statements.
*
The impact of adopting IFRS 16 on 1 July 2019 is detailed in Note 1 of the Notes to the Financial Statements.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview Company Statement of Changes in Equity
For the year ended 30 June 2020
Balance at 30 June 2018
Adjustment on first time adoption of
IFRS 9 (net of tax)
Restated balance at 1 July 2018
Comprehensive income
Profit for the year to 30 June 2019
Actuarial loss on pension scheme
Movement on unrecognised pension
scheme surplus
Revaluation of financial assets at fair
value through other comprehensive
income
Movement on associated deferred tax
Total comprehensive income
Shares issued from exercised options
Purchase of own shares
Dividends paid to shareholders
Share based payment charge
Total transactions with owners
Balance at 30 June 2019
Adjustment on first time adoption of
IFRS16 (net of tax) *
Restated balance at 1 July 2019
Comprehensive income
Profit for the year to 30 June 2020
Actuarial loss on pension scheme
Movement on unrecognised pension
scheme surplus
Revaluation of financial assets at fair
value through other comprehensive
income
Movement on associated deferred tax
Impact of deferred tax rate change
Total comprehensive income
Transactions with owners
Shares issued from exercised options
Dividends paid to shareholders
Share based payment charge
Total transactions with owners
Balance at 30 June 2020
Notes
22
22
14
24
27
28
22
22
14
24
24
27
28
Share
capital
£’000
1,189
–
1,189
–
–
–
–
–
–
–
–
–
–
–
1,189
Share
premium
account
£’000
1,017
Capital
redemption
reserve
£’000
137
Retained
earnings
£’000
105,582
Total
equity
£’000
107,925
–
1,017
–
137
(616)
104,966
(616)
107,309
–
–
–
–
–
–
249
–
–
–
249
1,266
–
–
–
–
–
–
–
–
–
–
–
137
–
16,063
(374)
16,063
(374)
191
191
(142)
(142)
24
15,762
–
(117)
(6,299)
86
(6,330)
114,398
24
15,762
249
(117)
(6,299)
86
(6,081)
116,990
1
1
–
–
1,189
1,266
137
114,399
116,991
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
13,326
(2,039)
13,326
(2,039)
1,869
1,869
(834)
(834)
81
(58)
12,345
81
(58)
12,345
–
–
–
–
1,189
260
–
–
260
1,526
–
–
–
–
137
–
(6,468)
60
(6,408)
120,336
260
(6,468)
60
(6,148)
123,188
The notes on pages 84 to 127 form part of these financial statements.
*
The impact of adopting IFRS 16 on 1 July 2019 is detailed in Note 1 of the Notes to the Financial Statements.
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Annual Report and Accounts for the year ended 30 June 2020 Consolidated and Company Statements of Cash Flows
For the year ended 30 June 2020
Notes
29
Group
2020
£’000
Company
2019
£’000
2020
£’000
2019
£’000
23,231
(3,848)
19,383
25,038
(3,476)
21,562
12,958
(1,896)
11,062
15,460
(1,808)
13,652
Cash flows from operating activities
Cash generated from operations
Tax paid
Net cash generated from operating activities
Cash flows from investing activities
Purchases of property, plant and equipment
Proceeds from sale of property, plant and equipment
Purchase of intangibles
Purchase of investment property
Disposal of investment property
Purchase of available for sale investments
Net sale of financial assets at fair value through
other comprehensive income
Proceeds from sale of other financial assets at fair value
through Profit and Loss account
Property rental and similar income
Dividend income
Net withdrawal/(deposit) of short-term financial assets
Interest received
Net receipt/(issue) of loan notes
Net cash received from/(used) in investing activities
Cash flows from financing activities
Net proceeds from the issuance of ordinary shares
Purchase of own shares
Proceeds from loans
Repayment of borrowings
Settlement of lease liabilities
Payment of lease liabilities
Payment of lease interest
Dividends paid to Company’s shareholders
Net cash used in financing activities
Effects of exchange rate changes on cash
Net increase in cash in the year
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
(6,988)
212
(1,719)
–
–
(61)
–
387
92
187
7,903
322
1,156
1,491
260
–
192
(203)
(1,011)
(265)
(36)
(6,468)
(7,531)
272
13,615
30,807
44,422
(6,852)
3,796
(2,417)
–
12
–
70
–
205
225
(11,193)
403
2,575
(13,176)
249
(117)
–
(197)
–
–
–
(6,299)
(6,364)
117
2,139
28,668
30,807
(2,641)
182
(1,472)
(1,237)
–
(61)
–
387
386
4,368
7,903
492
(837)
7,470
260
–
–
–
–
(3)
–
(6,468)
(6,211)
126
12,447
24,771
37,218
27
The notes on pages 84 to 127 form part of these financial statements.
(2,726)
306
(2,071)
(1,708)
3,479
–
70
–
394
4,204
(11,193)
797
1,356
(7,092)
249
(117)
–
–
–
–
–
(6,299)
(6,167)
45
438
24,333
24,771
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview Notes to the Financial Statements
For the year ended 30 June 2020
1 Accounting Policies
The principal accounting policies applied in the preparation of these consolidated financial statements and company
financial statements (the “financial statements”) are set out below. These policies have been consistently applied to all
years presented, unless otherwise stated.
FW Thorpe Plc is incorporated in England and Wales. The Company is domiciled in the UK. The Company is a public
limited company, limited by shares, which is listed on the Alternative Investment Market (AIM) of the London Stock
Exchange. The address of its registered office is Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH,
United Kingdom.
Basis of preparation
The consolidated and company financial statements of FW Thorpe Plc have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the European Union and in accordance with the
Companies Act 2006. The financial statements have been prepared on a going concern basis, under the historical cost
convention except for the financial instruments measured at fair value either through other comprehensive income or
profit and loss per the provisions of IFRS9.
The Group adopted for the first time IFRS 16 “Leases” for the year ended 30 June 2020. There are no other standards
that are not yet effective that are expected to have a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.
The consolidated financial statements are presented in Pounds Sterling, which is the Company’s functional and
presentation currency, rounded to the nearest thousand.
The preparation of financial information in conformity with the basis of preparation described above requires the use of
certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying
the Company’s and Group’s accounting policies. The areas involving a higher degree of judgement or complexity, or
areas where assumptions and estimates are significant to the consolidated financial information, are disclosed in the
critical accounting estimates and judgements section.
The Company has elected to take the exemption under section 408 of the Companies Act 2006 from presenting the
Company income statement.
Going concern
The directors confirm they are satisfied that the Group and Company have adequate resources, with £44.4m cash and
£18.6m short term deposits, to continue in business for the foreseeable future factoring in the expected impact of
Covid-19. They have also produced an analysis that demonstrates that the Group could cover its cash commitments
even if there were zero sales over the following year from approving these accounts. For this reason, they continue to
adopt the going concern basis in preparing the accounts.
Basis of consolidation
The financial statements for FW Thorpe Plc incorporate the financial statements of the Company and its subsidiary
undertakings.
A subsidiary is a company controlled directly by the Group and all the subsidiaries are wholly owned by the Group. The
Group achieves control over the subsidiaries by being able to influence financial and operating policies so as to obtain
benefits from their activities.
Intra-group transactions, balances, income and expenses are eliminated in preparing consolidated financial statements.
Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies
adopted by the Group.
The Group uses the acquisition method of accounting to account for business combinations. The consideration
transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the
equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability
resulting from a contingent consideration agreement. Acquisition related costs are expensed as incurred. Identifiable
assets acquired and liabilities and contingent liabilities assumed on a business combination are measured initially
at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an
acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the
recognised amounts of the acquiree’s identifiable net assets.
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Equity accounted investments and joint arrangements
Under IFRS 11, ‘Joint Arrangements’, investments in joint arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal
structure of the joint arrangement. FW Thorpe Plc only has joint operations.
Joint operations
FW Thorpe Plc recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its
share of any jointly held or incurred assets, liabilities, revenues and expenses.
Equity accounted investments
Under the equity method of accounting, the investments are initially recognised at cost and adjusted thereafter to
recognise the group’s share of the post-acquisition profits or losses of the investee in profit or loss, and the group’s
share of movements in other comprehensive income of the investee in other comprehensive income. Dividends
received or receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the
investment.
Where the Group’s share of losses in an equity-accounted investment equals or exceeds its interest in the entity,
including any other unsecured long-term receivables, the group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the group and its associates and joint ventures are eliminated to the extent
of the group’s interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence
of an impairment of the asset transferred. Accounting policies of equity-accounted investees have been changed where
necessary to ensure consistency with the policies adopted by the Group.
Revenue recognition
The Group recognises revenue earned from contracts based on individual performance obligations using the five-step
model. Revenue from contracts with customers is recognised when control of the goods or services are transferred
to the customer at an amount that reflects the consideration the Group is entitled to in exchange for those goods or
services, excluding VAT, trade discounts and rebates.
The Group has generally concluded that it is the principal in its revenue arrangements. The amount of revenue is not
considered to be reliably measurable until all contingencies relating to the sale have been resolved. The Group bases its
estimates on historical results, taking into consideration the type of customer, the type of transaction and the specifics
of each arrangement. The normal credit terms are 30 to 90 days from delivery, or completion of the service provided.
Revenue from external customers is derived from the supply of light fittings and services to support the sale of these
light fittings. These services include surveying, project management, installation and commissioning. The transaction
price for both the light fittings and the service agreements are at fair value as if each of those services are provided
individually.
Revenue Stream
Light fittings
Services
Revenue Recognition
Revenue is recognised at the point in time when control of the asset is transferred
to the customer, generally on delivery of the goods
Revenue is recognised over time when the service is performed
The Group considers whether there are other promises in the contract that are separate performance obligations to
which a portion of the transaction price needs to be allocated (e.g. service agreements). In determining the transaction
price for the sale of goods, the Group considers the effects of variable consideration, the existence of significant
financing components, non-cash consideration, and consideration payable to the customer (if any).
Interest income
Interest income is recognised on a time proportion basis using the effective interest method. When a receivable is
impaired the Group reduces the carrying amount to its recoverable amount, being the estimated cash flow discounted
at the original effective interest rate of the instrument, and continues unwinding the discount as interest income.
Interest on impaired loans is recognised using the original effective interest rate.
Dividend income
Dividend income is recognised when the right to receive payment is established.
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Segment reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, is identified as the Group Board.
The Group is organised into ten operating segments based on the products and customer base in the lighting market.
The largest businesses, on an ongoing basis, are Thorlux and Lightronics Participaties B.V. (which includes the business
of Famostar Emergency Lighting B.V.) . The seven remaining operating segments have been aggregated into the “other
companies” reportable segment based upon their size, comprising the entities Philip Payne Limited, Solite Europe
Limited, Portland Lighting Limited, TRT Lighting Limited, Thorlux Lighting L.L.C., Thorlux Australasia Pty Limited and
Thorlux Lighting GmbH.
Pension costs
The Group operates a hybrid defined benefit and defined contribution pension scheme. The Group’s hybrid pension
scheme provides benefits to members based upon the following:
• Service before 1 October 1995, benefits provided are defined benefit in nature (the ”pure“ defined benefit element);
• Service after 1 October 1995, has two elements:
− For members joining pre-1 October 1995, benefits provided are the maximum of their defined contribution
pension and their defined benefit pension (the ”defined benefit underpin“ element);
− For members joining post-1 October 1995, benefits provided are defined contribution in nature (the “pure
defined contribution” element).
The contributions of all three elements are paid into one pension scheme, where the contributions and assets are
segregated and ring-fenced from each other. The assets of the scheme are invested and managed independently
of the finances of the Group. Pension costs are assessed in accordance with the advice of an independent qualified
actuary. Costs include the regular cost of providing benefits, which it is intended should remain at a substantially level
percentage of current and expected future earnings of the employees covered. Variations from the regular pensions
cost are spread evenly through the income over the remaining service lives of current employees. Contributions made
to the defined benefit scheme are charged to the income statement in the period in which they are made.
The liability or surplus recognised in the statement of financial position in respect of defined benefit pension plans is
the present value of the defined benefit obligation at the statement of financial position date less the fair value of plan
assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated
annually by independent actuaries using the projected unit credit method. In the defined benefit underpin element of
the scheme the liabilities reflect the greater of the defined contribution or defined benefit liabilities.
For the defined benefit underpin element of the scheme each member is tested to see whether the pension on a
defined contribution or defined benefit basis is higher. The liabilities shown in the pensions note are based on the
greater of the two liabilities for each member, which in almost all cases is the defined benefit liability. For the service
cost, again tests are performed to see which is the higher for each member out of the Company’s share of the defined
contribution payments or the Company’s share of accruing benefits on a defined benefit basis. The higher of these two
figures for each member is then used to give the total service cost; again the defined benefit cost is the higher for the
vast majority of members.
The present value of the defined benefit obligation is determined by discounting the estimated future cash outflows
using interest rates of high quality corporate bonds that are denominated in the currency in which the benefits will be
paid, and that have terms to maturity approximating to the terms of the related pension liability.
Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or
credited to equity in the statement of comprehensive income in the period in which they arise.
Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the
employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are
amortised on a straight-line basis over the vesting period.
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For defined contribution plans and pure defined contribution elements, the Group pays contributions to publicly or
privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no
further payment obligations once the contributions have been paid. The contributions are recognised as employee
benefit expense in the income statement as they fall due, or as an accrued or prepaid expense. Prepaid contributions
are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. A defined
benefit surplus is only recognised if it meets the following criteria: if the Group has an unconditional right to a refund;
or if the Group can realise it at some point during the life of the plan or when the plan liabilities are settled. If the criteria
are not met then a defined benefit surplus is not recognised.
Foreign currencies
Transactions in foreign currency are converted to sterling using the exchange rate applicable to the date of the
transaction. Foreign currency gains and losses resulting from the settlement of foreign currency transactions at a
different time are recognised in the income statement. Currency exchange differences arising from holding monetary
assets or liabilities in a foreign currency are fair valued at the statement of financial position date in accordance with
prevailing exchange rates and resulting gains or losses are recognised in the income statement.
Taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the
statement of financial position date in the countries where the Company’s subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable
tax regulation is subject to interpretation and establishes provisions where appropriate on the basis of amounts
expected to be paid to the tax authorities.
Deferred income 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 consolidated financial statements. However, the
deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other
than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the
statement of financial position date and are expected to apply when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available
against which the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and joint ventures,
except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that
the temporary difference will not reverse in the foreseeable future.
Dividend distribution
Final dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s financial statements
in the period in which the dividends are approved by the Company’s shareholders.
Interim dividends are recognised as a liability in the Group’s financial statements when approved by the directors.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses where
applicable. Cost includes the original purchase price together with the costs attributable to bringing the asset to its
working condition for its intended use.
Depreciation is calculated on a straight-line basis to write down the cost less estimated residual value of all plant and
equipment assets by equal instalments over their expected useful life. The rates generally applicable are:
Freehold land
Buildings
Plant and equipment
Nil
2%–10%
10%–50%
The assets’ residual values and useful lives are reviewed and adjusted, if appropriate, at each statement of financial position
date. Assets are reviewed for impairment where there is an indication that the carrying value may not be recoverable.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised
within administrative expenses in the income statement.
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Leases
IFRS 16 replaced IAS 17 ‘Leases’ and requires lessees to recognise right-of-use assets and lease liabilities for all leases
apart from short-term and low value leases. The Group adopted IFRS 16 on 1 July 2019 using the simplified transition
approach and has therefore not disclosed comparative amounts.
On adoption of IFRS16, the Group recognised lease liabilities in relation to leases that had previously been classified
as ‘operating leases’ under the principles of IAS17. The liabilities were measured at the present value of the remaining
lease payments using an appropriate incremental borrowing rate. The weighted average lease rate used was 5.5%.
Right-of-use assets have been measured on transition as if the new rules had always been applied with the difference
to the lease liability value recognised as an adjustment to opening retained earnings at 1 July 2019.
The majority of leases in the Group have arisen from acquisition of companies as the Group usually purchases assets.
Consequently, the adoption of IFRS 16 does not have a significant impact on the financial statements.
Financial Impact – Group
As reported in the Financial Statements for the year ended 30 June 2019 the Group had future aggregate minimum
lease payments due under non-cancellable operating leases as follows:
Within one year
Within two to five years
Over five years
Land and
buildings
£’000
311
1,061
293
1,665
30 June
2019
Total
£’000
575
1,377
293
2,245
Other
£’000
264
316
–
580
The reconciliation of operating lease commitments disclosed at 30 June 2019 to lease liabilities recognised at 1 July
2019 is as follows:
Lease liabilities recognised on adoption
Operating lease commitments disclosed as at 30 June 2019
Discounted using the borrowing rate
Less: short-term and low value leases recognised on a straight-line basis as expense
Lease liability recognised at 1 July 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Right-of-use assets recognised at 1 July 2019
Properties
Equipment
Motor vehicles
Total right-of-use assets
Deferred Tax asset recognised at 1 July 2019
Lease modification in respect of terminated lease July 2019
NBV 1 July 2019
Lease creditor 1 July 2019
Overall adjustment to retained earnings as at 1 July 2019
88
£’000
(2,245)
483
52
(1,710)
(373)
(1,337)
(1,710)
1 July 2019
£’000
929
32
397
1,358
5
(929)
1,011
82
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On adoption of IFRS 16, the property right-of-use asset for Thorlux Australasia PTY Limited was assessed to have a
carrying value of £nil, resulting in an impairment of £250,000. This impairment is included in the opening adjustment to
retained earnings.
For the year ended 30 June 2020 the impact on the Income Statement is as follows:
Finance costs have increased by £36,000, depreciation by £228,000 and other operating costs reduced by £301,000
resulting in an overall increase in profit before tax of £37,000.
Financial Impact – Company
Within the company, adoption of IFRS 16 resulted in retained earnings brought forward increasing by £1,000 with no
material impact on right-of-use asset and lease liabilities.
Short term leases and low value assets
For these leases, payments made under them, are charged to the income statement on a straight-line basis over the
term of the lease.
Intangible assets
Development costs
The Group undertakes development activities on an ongoing basis. Part of these costs relate to projects where the
benefit is received in the short term (less than one year) and part relates to longer term projects where the benefit is
expected to be received for several years to come. Costs associated with the shorter term activities are expensed as
and when they are incurred. Costs associated with the longer term projects are capitalised as an intangible asset and
amortised over the expected life of the benefit at 33.33% per annum commencing when the asset is available for use
within the business. Development costs are recognised as intangible assets when the following criteria are met:
It is technically feasible to complete the intangible asset so that it will be available for use;
•
• Management intends to complete the intangible asset and use or sell it;
• There is an ability to use or sell the intangible asset;
•
• Adequate technical, financial and other resources to complete the development and to use or sell the intangible
It can be demonstrated how the intangible asset will generate probable future economic benefits;
asset are available; and
• The expenditure attributable to the intangible asset during its development can be reliably measured. Other
development expenditures that do not meet these criteria are recognised as an expense as incurred.
Development costs previously recognised as an expense are not recognised as an asset in a subsequent period.
The economic success for development activities is uncertain and carrying amounts are reviewed at each statement of
financial position date for impairment in accordance with IAS 36.
Development assets are valued at cost less accumulated amortisation and any impairment losses.
Fishing rights
Fishing rights are stated at cost less accumulated impairment where applicable. The rights are not amortised, but
assessed annually for impairment.
Goodwill
Goodwill is stated at cost less accumulated impairment where applicable. 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. Goodwill is reviewed for impairment at least annually or more frequently if events or changes in
circumstances indicate a potential impairment. An impairment loss is recognised for the amount by which the asset’s
carrying amount exceeds its recoverable amount.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those
cash-generating units or groups of cash-generating units that are expected to benefit from the business combination
in which the goodwill arose.
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Software costs
Software costs are stated at cost less accumulated amortisation and impairment where applicable. Amortisation
is calculated on a straight-line basis to write down the cost less estimated residual value over its useful life. The
amortisation rates are between 20% and 50% per annum.
Patent costs
Patents are stated at cost less accumulated amortisation. Amortisation is calculated on a straight-line basis to write
down the cost less estimated residual value over its useful life. The amortisation rate is 20%.
Other intangible assets
An intangible asset acquired in a business combination is recognised at fair value to the extent it is probable that the
expected future economic benefits attributable to the asset will flow to the Group and that its cost can be measured
reliably. Intangible assets principally relate to brand names and technology which were valued discounting estimated
future net cash flow from the asset. The cost of intangible assets is amortised through the income statement on a
straight-line basis over their estimated economic life. The rates generally applicable are:
Technology
Brand name
14%
14%–20%
Investment properties
Investment properties are recognised at cost, and then subsequently cost less accumulated depreciation and (if
applicable) any accumulated impairment losses. Freehold land is not depreciated.
In the Company accounts land and buildings (and integral fixtures and fittings) not occupied by the Company are
included within investment property.
Investments in subsidiaries
Investments in subsidiaries are held at cost less impairment. Cost includes directly attributable costs of investment.
Financial Assets
(i) Classification
The Group classifies its financial assets in the following measurement categories:
•
•
those to be measured subsequently at fair value (either through OCI or the income statement); and
those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms
of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in the income statement or OCI. For
investments in equity instruments that are not held for trading, this will depend on whether the Group has made an
irrevocable election at the time of initial recognition to account for the equity investment at fair value through other
comprehensive income (FVOCI).
The Group reclassifies debt investments when and only when its business model for managing those assets changes.
(ii) Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group commits
to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial
assets have expired or have been transferred and the Group has transferred substantially all the risks and rewards of
ownership.
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(iii) Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at
fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial
asset. Transaction costs of financial assets carried at FVPL are expensed in the income statement.
Financial assets with embedded derivatives are considered in their entirety when determining whether their cash flows
are solely payment of principal and interest.
Debt instruments
Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the
cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt
instruments:
• Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely
payments of principal and interest are measured at amortised cost. Interest income from these financial assets is
included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is
recognised directly in the income statement together with foreign exchange gains and losses. Impairment losses
are included in either administrative expenses, or finance costs in the income statement dependent on the type of
asset impaired.
• FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’
cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying
amount are taken through OCI, except for the recognition of impairment gains or losses, interest income and foreign
exchange gains and losses which are recognised in the income statement. When the financial asset is derecognised,
the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in
finance income or costs. Interest income from these financial assets is included in finance income using the effective
interest rate method. Foreign exchange gains and losses are presented in administrative expenses and impairment
expenses are included in either administrative expenses, or finance costs in the income statement.
• FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a
debt investment that is subsequently measured at FVPL is recognised in the income statement in the period in
which it arises.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected
to present fair value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair
value gains and losses to the income statement following the derecognition of the investment. Dividends from such
investments continue to be recognised in the income statement as finance income when the Group’s right to receive
payments is established.
Changes in the fair value of financial assets at FVPL are recognised in the income statement as applicable. Impairment
losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from
other changes in fair value.
(iv) Impairment
The Group assesses on a forward looking basis the expected credit losses associated with its debt instruments carried
at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For trade receivables, the Group applies the simplified approach permitted by IFRS 9, which requires expected lifetime
losses to be recognised from initial recognition of the receivables, see accounting policy for trade receivables for
further details.
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Inventories
Inventories 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, obsolete and other stock lines based on the net realisable value.
Trade receivables
Trade receivables are recognised initially at fair value and the Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss allowance for all trade receivables and contract assets.
To measure the expected credit losses, trade receivables have been grouped based on shared credit risk characteristics
and the days past due. The expected loss rates are based on the payment profiles of sales over a period 12 months
up to the end of the relevant financial year, and the corresponding historical credit losses experienced within this
period. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic
factors affecting the ability of the customers to settle the receivables, as significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments.
The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is
recognised in the income statement within “distribution costs”. When a trade receivable is uncollectable, it is written
off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are
credited against “distribution costs” in the income statement.
Non-current assets and disposal groups held for sale
Non-current assets and disposal groups are classified as assets held for sale when their carrying amount is to be
recovered principally through a sale transaction and a sale is considered highly probable. They are stated at the lower
of their carrying amount and fair value less costs to sell if their carrying amount is to be recovered principally through a
sale transaction rather than through continuing use and a sale is considered highly probable.
Short-term financial assets
Short-term financial assets are defined as cash term deposits with banks with an original term of three months and over.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, on demand deposits and short-term deposits with banks with
an original term less than three months.
Current asset investments
Current asset investments are valued at fair value. Changes in fair value are recognised in the income statement.
Trade payables
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
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Provisions
Provisions are recognised in the statement of financial position when a Group company has a present obligation (legal
or constructive) as a result of a past event; it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation; and a reliable estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the expenditure required to settle the present obligation at the
statement of financial position date.
If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that
reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan,
and the restructuring has either commenced or has been announced to those affected by it. In accordance with the
Group’s published environmental policy and applicable legal requirements, a provision for site restoration in respect of
contaminated land is recognised when land is contaminated.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Group from a contract
are lower than the unavoidable cost of meeting its obligations under the contract.
Warranty
The Group provides for expected warranty costs covering both specific known warranty claims and calculating
expected future warranty claims in order to estimate the expected costs that will arise in respect of products sold
within the remaining warranty periods. The expected future warranty claims provision is calculated by assessing
historical data, industry failure rates and the Group’s knowledge of products to determine the percentage of sales that
should be provided for to cover future associated warranty costs.
Critical accounting estimates and judgements
The presentation of the annual financial statements in conformity with IFRS as adopted by the EU requires the Directors to
make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and
liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various
other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimate is revised and in any future periods affected. The key estimates and
judgements used in the financial statements are as follows:
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Estimates
Goodwill/Investment in subsidiaries
The Group and the Company undertake impairment reviews for cash generating units (CGU) at least
annually to assess the carrying value of Goodwill/investment in subsidiaries and other intangible
assets. These reviews apply either discounted cash flows forecast, including terminal values and
growth factors if appropriate, or EBITDA multiples to the forecast financial performance of the CGU.
Note 9 contains details of reviews that have been carried out.
Warranty
The Group provides for expected warranty costs covering both specific known warranty claims
and calculating expected future warranty claims in order to estimate the expected costs that will
arise in respect of products sold within the remaining warranty periods. The usual warranty period
provided is 5 years. The expected future warranty claims provision is calculated by assessing
historical data, industry failure rates and the Group’s knowledge of products to determine the
percentage of sales that should be provided for to cover future associated warranty costs. Note
23 contains details of the warranty provision. If the failure rate assumption used in the provision
calculation were to increase by 5%, then the resulting provision would be higher by £90,000.
Lightronics share appreciation rights
The Group has an obligation to purchase the share appreciation rights from the management
and former shareholders of the Lightronics business. To calculate the expected share appreciation
repurchase value the Group has considered the recent and budgeted future performance of the
Lightronics business analysing forecasted EBITDA, revenue and costs upon which the obligation is
based. This analysis is reviewed and updated each year and, if necessary, adjustments are made to
ensure that the provision value reflects the best current estimate of settlement with movements
recognised as a share based payment charge. If the forecast EBITDA assumption were to increase
by 5%, the resulting deferred consideration would increase by £300,000. Notes 20 and 28 contain
details of the share appreciation rights.
Famostar share appreciation rights
The Group has an obligation to purchase the share appreciation rights from the same rights
holders as for the Lightronics business. To calculate the expected share appreciation repurchase
value the Group has considered the recent and budgeted future performance of the Famostar
business analysing forecasted EBITDA, revenue and costs upon which the obligation is based. This
analysis is reviewed and updated each year and, if necessary, adjustments are made to ensure that
the provision value reflects the best current estimate of settlement with movements recognised
as a share based payment charge. If the forecast EBITDA assumption were to increase by 5%, the
resulting deferred consideration would increase by £108,000. Notes 20 and 28 contain details of the
share appreciation rights.
Retirement benefit obligations
The Group recognises its obligations to employee retirement benefits. The quantification of these
obligations is subject to significant estimates and assumptions regarding life expectancy, discount
and inflation rates and the rate of increase in pension payments. In making these assumptions
the Group takes advice from an independent qualified actuary about which assumptions best
reflect the nature of the Group’s obligations to employee retirement benefits. These assumptions
are regularly reviewed by our actuaries Cartwright Benefit Consultants Ltd to ensure their
appropriateness. Note 22 contains details of the retirement benefit obligations.
Taxation
The investments made by the Group in research and development have resulted in patents being
granted for features that are incorporated in the products the Group sells. This enables the Group
to benefit from the patent box tax relief provided by the Government reducing the corporation tax
liability. Note 6 contains details of the benefit received from patent box tax relief.
Inter-company loan impairment
The Company provides for expected credit losses that may arise from under-performing loans to
subsidiary companies. The expected credit loss is calculated by looking at historical performance
and the Company’s knowledge of how the subsidiary is likely to perform in the future. Note 12
contains details of inter-company loan impairments based on an expected credit loss assumption
of 45%. If the expected credit loss assumption was to increase to 55% there would be an extra
charge of £267,000 to the Company.
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Judgements Warranty
The Group provides for expected warranty costs covering both specific known warranty claims
and calculating expected future warranty claims. In determining this provision the Group uses its
knowledge of its products in the application of failure rates for new products at the start of their
warranty period.
Development costs
The Group undertakes development activities and the commercial viability of these activities is
assessed on a continual basis; as such the Group assesses each new project to determine whether
development costs incurred should be capitalised within intangible assets or recognised as
an expense within administrative expenses. The Group determines this classification based on
the future value of the work based on past experience of similar development projects and the
feedback from the marketplace about future expectations for technological development.
Lightronics share appreciation rights
The Group has an obligation to purchase the share appreciation rights from the management
and former shareholders of the Lightronics business over the period to 2021. In determining the
expected purchase price the Group has assumed the repurchase will be made in 2021 thereby
assessing the expected purchase price at this date.
Famostar share appreciation rights
The Group has an obligation to purchase the share appreciation rights from the management
and former shareholders of the Lightronics business over the period to 2021. In determining the
expected purchase price the Group has assumed the repurchase will be made in 2021 thereby
assessing the expected purchase price at this date.
Retirement benefit obligations
The Group recognises its obligations to employee retirement benefits. Where the fair value of the
pension plan assets exceeds the present value of the defined benefit obligation the Group consider
the amount which can be recognised as an asset within the statement of financial position in
line with the requirements of IAS 19. A defined benefit surplus is only recognised if it meets the
following criteria: if the Group has an unconditional right to a refund; or if the Group can realise it
at some point during the life of the plan or when the plan liabilities are settled. As these criteria are
not met the Group has decided not to recognise a net retirement benefit asset.
Inter-company loan impairment
The Company recognises expected credit losses that may arise from under-performing loans to
subsidiary companies based on its expectations of when these loans will be settled.
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Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, commodity price
risk and security price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses
on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial
performance. The Group may use derivative financial instruments to hedge certain risk exposures.
(a) Market risk
(i) Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the euro, US dollar, Australian dollar and Arab Emirate dirham. Foreign exchange risk arises
from future commercial transactions denominated in a currency that is not the entity’s functional currency as well as
bank account balances, trade and other receivables as well as trade and other payables denominated in currencies
other than sterling and net investments in foreign operations. The Group has carried out an exercise to evaluate the
effect of a movement of 1% in each currency other than sterling, and the results are not significant. The risk is managed
by maintaining relatively low currency balances and selling or buying currency when required.
(ii) Price risk
The Group is exposed to equity securities price risk because of investments held by the Group and classified on the
consolidated statement of financial position either as financial assets at fair value through other comprehensive income
or at fair value through profit or loss.
The Group has investments in UK listed securities of other entities and these are publicly traded on the London Stock
Exchange. The nature of the list of investments held means the investments can go up and down in value.
The Group holds money market funds which are designated at short term investments and also a range of quoted
securities which are designated as financial assets at fair value through other comprehensive income. Management
has performed an analysis and do not believe there to be a material sensitivity to changes in underlying price indices
arising from these holdings.
(iii) Commodity price risk
The Group has an exposure to the risk of commodity price changes, in particular, metals. The Group seeks to minimise
the risk by agreeing prices with major suppliers in advance.
(iv) Interest rate risk
The Group is exposed to interest rate risk because it has cash investments and short-term financial assets which are
mostly interest-bearing. The effect of a reduction in interest rates is to reduce financial income. The Group has no
exposure to the risk of increased interest cost other than pension scheme interest cost.
(b) Credit risk
Credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, derivative financial
instruments and deposits with banks and financial institutions, as well as credit exposures to wholesale and retail
customers, including outstanding receivables and committed transactions. For banks and financial institutions, only
independently rated parties with a minimum Fitch rating of F1 are accepted. If wholesale customers are independently
rated, these ratings are used. Otherwise, if there is no independent rating, risk control assesses the credit quality of
the customer, taking into account its financial position, past experience and other factors. Individual risk limits are
set based on internal or external ratings in accordance with limits set by the Board. The utilisation of credit limits is
regularly monitored.
(c) Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the ability to
close out market positions. Management monitors rolling forecasts of the Group’s liquidity reserve, which comprises
cash and cash equivalents together with short-term financial assets (note 18) on the basis of expected cash flow. All
external current liabilities are expected to mature within four months.
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Capital risk management
The Group’s policy has been to maintain a strong capital basis in order to maintain investor, customer, creditor and
market confidence. This sustains future development of the business, safeguarding the Group’s ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders,
return capital to shareholders or issue new shares. From time to time the Group purchases its own shares in the market;
the timing of these purchases is dependent on market prices, to ensure such transactions are sufficiently beneficial for
the Company, its earnings per share and returns to investors. The Group continues to seek to maintain the balance of
these returns, while strengthening the reserves and equity position of the Company, via continued profitability and
structured growth.
The Group has a long-standing policy not to utilise debt within the business, providing a robust capital structure even
within the toughest economic conditions. The Group’s significant cash resources allow such a position, but also require
close management to ensure that sufficient returns are being generated from these resources. The Group’s policy with
regard to the cash resources is to ensure they generate sufficient returns, whether by investment in business activities,
such as plant and equipment, or assessing suitable opportunities to grow the business, or the physical investment of
these funds to ensure appropriate returns to investors.
The Group is able to maintain its current capital structure because there are no externally imposed capital
requirements, and there were no changes in the Group’s approach to capital management during the year.
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern
in order to provide returns for shareholders and benefits for other stakeholders, and to maintain an optimal capital
structure to reduce the cost of capital.
Fair value estimation
Financial instruments
Financial instruments that are measured at fair value are disclosed in the consolidated financial statements in
accordance with the following fair value measurement hierarchy:
i. Quoted prices (unadjusted) in active markets for identical assets and liabilities (level 1)
ii.
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly
(that is, as prices), or indirectly (that is, derived from prices) (level 2)
iii. Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3)
The fair value of financial instruments that are not traded in an active market is determined by using valuation
techniques.
These valuation techniques maximise the use of observable market data where it is available and rely as little as
possible on entity specific estimates. If all significant inputs required to fair value an instrument are observable, the
instrument is included in level 2.
Other assets and liabilities
The carrying value less impairment provision of trade receivables and payables are assumed to approximate their fair
values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available to the Group for similar financial instruments.
Share capital
Ordinary shares are classified as equity.
Where any Group company purchases the Company’s equity share capital (treasury shares), the consideration paid,
including any directly attributable incremental costs (net of income taxes), is deducted from the equity attributable to
the Company’s equity holders until the shares are cancelled or reissued. Where such shares are subsequently reissued,
any consideration received, net of any directly attributable incremental transaction costs and the related income tax
effects, is included in equity attributable to the Company’s equity holders.
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Share based payments
Senior executives of the Group receive remuneration in the form of share based payments through the executive share
ownership plan and other employees through a “SAYE” scheme. The fair value of the shares or share options granted is
recognised over the vesting period to reflect the value of the employee services received. The charge relating to grants
to employees of the Company is recognised as an expense in the profit and loss account.
The fair value of options granted, excluding the impact of any non-market vesting conditions, is calculated using
established option pricing models. The probability of meeting non-market vesting conditions, which include
profitability targets, is used to estimate the number of share options which are likely to vest.
Cash-settled share based payments
The Group has cash-settled share based payments for holders of share appreciation rights holders. A liability is
recognised equal to the calculated future fair value as at the date of the statement of financial position.
2 Segmental Analysis
(a) Business segments
The segmental analysis is presented on the same basis as that used for internal reporting purposes. For internal
reporting FW Thorpe is organised into ten operating segments based on the products and customer base in the
lighting market – the largest business is Thorlux, which manufactures professional lighting systems for industrial,
commercial and controls markets. The businesses in the Netherlands, Lightronics and Famostar, are material
subsidiaries and disclosed separately as Netherlands companies.
The seven remaining operating segments have been aggregated into the “other companies” reportable segment based
upon their size, comprising the entities Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT
Lighting Limited, Thorlux Lighting L.L.C., Thorlux Australasia Pty Limited, Thorlux Lighting GmbH.
FW Thorpe’s chief operating decision-maker (CODM) is the Group Board. The Group Board reviews the Group’s internal
reporting in order to monitor and assess performance of the operating segments for the purpose of making decisions
about resources to be allocated. Performance is evaluated based on a combination of revenue and operating profit.
Assets and liabilities have not been segmented, which is consistent with the Group’s internal reporting.
Netherlands
companies
£’000
Other
companies
£’000
Inter-
segment
adjustments
£’000
Total
continuing
operations
£’000
31,340
234
31,574
4,125
16,387
4,021
20,408
1,412
–
(7,419)
(7,419)
645
Thorlux
£’000
65,615
3,164
68,779
10,150
62,304
3,551
65,855
11,578
31,059
372
31,431
3,620
17,280
3,567
20,847
2,398
–
(7,490)
(7,490)
53
11,578
3,620
2,398
53
113,342
–
113,342
16,332
(389)
15,943
110,643
–
110,643
17,649
1,917
19,566
3
19,569
Year to 30 June 2020
Revenue to external customers
Revenue to other group companies
Total revenue
Operating profit
Net finance expense
Profit before income tax
Year to 30 June 2019 (restated)
Revenue to external customers
Revenue to other group companies
Total revenue
Operating profit (before disposal of property)
Profit on disposal of property
Operating profit
Net finance income
Profit before income tax
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Inter segment adjustments to operating profit consist of property rentals on premises owned by FW Thorpe Plc,
adjustments to profit related to stocks held within the Group that were supplied by another segment and elimination
of profit on transfer of assets between Group companies. The prior year segmental reporting has been restated to
provide comparatives of the Netherlands companies together.
(b)i Geographical analysis
The Group’s business segments operate in four main areas, the UK, the Netherlands, the rest of Europe and the rest of
the World. The home country of the company, which is also the main operating company, is the UK.
UK
Netherlands
Rest of Europe
Rest of the World
2020
£’000
69,657
28,748
12,265
2,672
113,342
2019
£’000
68,706
28,227
11,185
2,525
110,643
(b)ii Geographical analysis by product types
The Group’s main business segments primary revenue stream is the sale of light fittings, with some ancillary services
and commissioning supporting this revenue stream.
2020 (£'000)
UK
Netherlands
Rest of Europe
Rest of the World
2019 (£’000)
UK
Netherlands
Rest of Europe
Rest of the World
Light
Fittings
66,733
28,748
12,231
2,671
110,383
Light
Fittings
66,359
28,224
11,150
2,521
108,254
Services
2,924
–
34
1
2,959
Services
2,347
3
35
4
2,389
Total
69,657
28,748
12,265
2,672
113,342
Total
68,706
28,227
11,185
2,525
110,643
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3 Operating Profit
Profit on sale of Property, Plant & Equipment
Depreciation of investment property
Depreciation of Property, Plant & Equipment
– owned property
– right-of-use assets
Operating lease rentals
– property
– other
Amortisation of intangible assets
Share appreciation rights (with associated share based payment charges)
Cost of inventories recognised as an expense
Research and development expenditure credit
Government grants
Currency gains in income statement
Services provided by the Company’s auditors
Fees payable to Company’s auditors for audit of financial statements
Fees payable to the Company’s auditors and its associates for other services
Audit of Company’s subsidiaries
Other assurance services
2020
£’000
(118)
19
2,993
228
–
–
2,577
1,978
45,110
(249)
(192)
(461)
2020
£’000
210
–
–
210
2019
£’000
(2,116)
58
2,508
–
382
388
2,456
2,175
44,659
(292)
–
(69)
2019
£’000
131
42
6
179
It is the Group’s practice to employ PricewaterhouseCoopers LLP on assignments additional to their statutory audit
duties where their expertise and experience with the Group are important.
4 Employee Information
The average monthly number of employees employed by the Group (including executive directors) during the year is
analysed below:
Average headcount
Production
Sales and distribution
Administration
Total average headcount
Employment costs of all employees
(including executive directors)
Wages & salaries
Social security costs
Other pension costs
Group
Company
2020
Number
293
184
211
688
2019
Number
273
177
216
666
2020
Number
178
107
145
430
2019
Number
170
100
149
419
Group
Company
2020
£’000
27,957
3,262
1,504
32,723
2019
£’000
26,891
3,138
1,453
31,482
2020
£’000
17,803
1,965
969
20,737
2019
£’000
17,342
1,931
896
20,169
Included in wages and salaries are £1,821,000 (2019: £1,652,000) of temporary employees costs.
Other pension costs include contributions to pension schemes and other employer’s pension related charges
comprising life assurance of £80,000 (2019: £93,000), pension administration and professional charges of £119,000 (2019:
£130,000) and private pension schemes amounting to £15,000 (2019: £15,000).
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 4 Employee Information continued
Contributions to the defined contribution section amounted to £258,000(2019: £251,000) and contributions to other
schemes administered independently of the FW Thorpe pension schemes amounted to £849,000 (2019: £796,000).
Directors’ Emoluments
Aggregate emoluments
Contributions to money purchase schemes
Group
Company
2020
£’000
1,607
19
1,626
2019
£’000
1,974
20
1,994
2020
£’000
1,356
19
1,375
2019
£’000
1,683
20
1,703
At 30 June 2020 no retirement benefits were accruing to any director (2019: N/A) under the defined benefit scheme and
to J E Thorpe (2019: J E Thorpe) under the defined contribution scheme. Additionally compensation payments for the
loss of pension contributions totalling £245,000 (2019: £207,000) were made to 5 (2019: 5) directors.
Highest paid director
Total of emoluments and amounts receivable
Group
Company
2020
£’000
427
2019
£’000
442
2020
£’000
427
2019
£’000
442
Compensation payments for the loss of pension contributions for the highest paid director were £41,000 (2019:
£146,000).
The key management personnel are the Group Board directors.
Further details are provided in the directors’ remuneration report on pages 65 to 68.
5 Net Finance Income/Expense
Finance income
Current assets
Interest receivable
Non-current assets
Fair value adjustments on loans
Dividend income on financial assets at fair value through other comprehensive income
Net rental income
Loan interest
Gain on disposal of financial assets
Finance cost
Current liabilities
Interest payable
Lease liability interest expense
Share appreciation rights distribution
Non-current assets
Loss on settlement of loan notes
Loan interest
Net finance (expense)/ income
2020
£’000
2019
£’000
293
312
23
187
64
141
–
708
2
36
958
–
101
1,097
(389)
–
225
224
213
75
1,049
1
–
922
9
114
1,046
3
The share appreciation rights distribution are the dividends from Lightronics Participaties B.V. and Famostar Emergency
Lighting B.V. due to the former management of Lightronics Participaties B.V.
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6 Income Tax Expense
Analysis of income tax expense in the year:
Current tax
Current tax on profits for the year
Adjustments in respect of prior years
Total current tax
Deferred tax
Origination and reversal of temporary differences
Total deferred tax
Income tax expense
2020
£’000
3,691
(981)
2,710
(81)
(81)
2,629
2019
£’000
3,963
(609)
3,354
75
75
3,429
The tax assessed for the year is lower (2019: lower) than the standard rate of corporation tax in the UK of 19.00% (2019:
19.00%). The differences are explained below:
Profit before income tax
Profit on ordinary activities multiplied by the standard rate in the UK of 19.00% (2019: 19.00%)
Effects of:
Expenses not deductible for tax purposes
Accelerated tax allowances and other timing differences
Adjustments in respect of prior years
Chargeable gains relief on disposal of property
Patent box relief
Foreign profit taxed at higher rate
Tax charge
2020
£’000
15,943
3,029
854
17
(981)
–
(643)
353
2,629
2019
£’000
19,569
3,718
881
55
(609)
(352)
(597)
333
3,429
The effective tax rate was 16.49% (2019: 17.52%). Adjustments in respect of prior years relates to refunds received for
prudent assumptions on additional investment allowances and patent box relief in the tax calculations.
The UK corporation tax rate of 19% (effective 1 April 2020) was substantively enacted on 17 March 2020, reversing the
previously enacted reduction in the rate from 19% to 17%.
7 Earnings Per Share
Basic and diluted earnings per share for profit attributable to equity holders of the Company
Basic earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the
Company and held as treasury shares.
Basic
Weighted average number of ordinary shares in issue
Profit attributable to equity holders of the Company (£’000)
Basic earnings per share (pence per share) total
2020
116,272,709
13,314
11.45
2019
116,060,378
16,140
13.91
Diluted earnings per share is calculated by dividing the profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the year, excluding ordinary shares purchased by the
Company and held as treasury shares, plus the number of shares earnt for share options where performance conditions
have been achieved.
Diluted
Weighted average number of ordinary shares in issue (diluted)
Profit attributable to equity holders of the Company (£’000)
Diluted earnings per share (pence per share) total
2020
116,805,366
13,314
11.40
2019
116,689,595
16,140
13.83
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 8 Property, Plant and Equipment
Group
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Right-
of-use
assets
£’000
19,720
–
19,720
3,709
(31)
(17)
171
23,552
3,712
–
3,712
662
(31)
(2)
21
4,362
23,851
–
23,851
4,016
(1,005)
17
54
26,933
14,506
–
14,506
2,331
(911)
2
27
15,955
–
2,266
2,266
192
(1,628)
–
26
856
–
908
908
228
(699)
–
13
450
Total
£’000
43,571
2,266
45,837
7,917
(2,664)
–
251
51,341
18,218
908
19,126
3,221
(1,641)
–
61
20,767
Company
Freehold
land and
buildings
£’000
Plant and
equipment
£’000
Right of
use
assets
£’000
6,374
–
6,374
110
–
–
–
6,484
2,095
–
2,095
150
–
–
–
2,245
18,304
–
18,304
2,531
(479)
–
–
20,356
11,398
–
11,398
1,623
(406)
–
–
12,615
–
13
13
–
(13)
–
–
–
–
9
9
4
(13)
–
–
–
Total
£’000
24,678
13
24,691
2,641
(492)
–
–
26,840
13,493
9
13,502
1,777
(419)
–
–
14,860
19,190
10,978
406
30,574
4,239
7,741
–
11,980
Cost
At 1 July 2019
Adoption of IFRS16
At 1 July (restated)
Additions
Disposals
Transfers
Currency translation
At 30 June 2020
Accumulated
depreciation
At 1 July 2019
Adoption of IFRS16
At 1 July (restated)
Charge for the year
Disposals
Transfers
Currency translation
At 30 June 2020
Net book amount
At 30 June 2020
Freehold
land and
buildings
£’000
Group
Plant and
equipment
£’000
18,676
3,176
(2,199)
67
19,720
3,829
546
(673)
10
3,712
21,328
3,616
(1,116)
23
23,851
13,496
1,962
(962)
10
14,506
Freehold
land and
buildings
£’000
Company
Plant and
equipment
£’000
6,260
114
–
–
6,374
1,958
137
–
–
2,095
16,286
2,553
(535)
–
18,304
10,326
1,437
(365)
–
11,398
Total
£’000
40,004
6,792
(3,315)
90
43,571
17,325
2,508
(1,635)
20
18,218
Total
£’000
22,546
2,667
(535)
–
24,678
12,284
1,574
(365)
–
13,493
16,008
9,345
25,353
4,279
6,906
11,185
Cost
At 1 July 2018
Additions
Disposals
Currency translation
At 30 June 2019
Accumulated depreciation
At 1 July 2018
Charge for the year
Disposals
Currency translation
At 30 June 2019
Net book amount
At 30 June 2019
Freehold land which was not depreciated at 30 June 2020 amounted to £774,000 (2019: £769,000) (Group) and £500,000
(2019: £500,000) (Company).
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Group 2020
Cost
At 1 July 2019
Additions
Write-offs and transfers
Currency translation
At 30 June 2020
Accumulated
amortisation
At 1 July 2019
Charge for the year
Write-offs and transfers
Currency translation
At 30 June 2020
Net book amount
At 30 June 2020
Goodwill
£’000
Development
costs
£’000
Technology
£’000
14,921
–
–
195
15,116
246
–
–
2
248
7,292
1,322
(1,275)
18
7,357
3,441
1,715
(1,275)
21
3,902
2,956
–
–
44
3,000
1,504
371
–
33
1,908
Brand
name
£’000
1,304
–
–
19
1,323
801
162
–
17
980
Software
£’000
Patents
£’000
Fishing
rights
£’000
Total
£’000
2,202
397
(26)
–
2,573
1,178
329
(26)
–
1,481
150
–
–
–
150
150
–
–
–
150
182 29,007
1,719
(1,301)
276
182 29,701
–
–
–
–
–
–
–
–
7,320
2,577
(1,301)
73
8,669
14,868
3,455
1,092
343
1,092
–
182 21,032
Write-offs relate to development assets where no further economic benefits will be obtained.
Group 2019
Cost
At 1 July 2018
Additions
Write-offs and transfers
Currency translation
At 30 June 2019
Accumulated
amortisation
At 1 July 2018
Charge for the year
Write-offs and transfers
Currency translation
At 30 June 2019
Net book amount
At 30 June 2019
Goodwill
£’000
Development
costs
£’000
Technology
£’000
14,786
–
–
135
14,921
249
–
–
(3)
246
6,779
1,791
(1,293)
15
7,292
3,062
1,662
(1,293)
10
3,441
2,924
–
–
32
2,956
1,117
372
–
15
1,504
Brand
name
£’000
1,291
–
–
13
1,304
599
193
–
9
801
Software
£’000
Patents
£’000
Fishing
rights
£’000
Total
£’000
1,789
592
(178)
(1)
2,202
1,128
229
(178)
(1)
1,178
150
–
–
–
150
150
–
–
–
150
182 27,901
2,383
(1,471)
194
29,007
–
–
–
182
–
–
–
–
–
6,305
2,456
(1,471)
30
7,320
14,675
3,851
1,452
503
1,024
–
182
21,687
Amortisation and impairment of £2,577,000 (2019: £2,456,000) is included in the administrative expenses. Included
in goodwill are amounts of £2,618,000 (2019: £2,618,000) arising from the acquisition of Portland Lighting Limited in
2011, €7,784,000 (£7,091,000) (2019: €7,784,000 (£6,976,000)) arising from the acquisition of Lightronics Participaties
B.V. in 2015 and €5,057,000 (£4,607,000) (2019: €5,057,000 (£4,532,000)) arising from the acquisition of Famostar
Emergency Lighting B.V. in December 2017. This goodwill is not amortised. The goodwill for Lightronics, Famostar
and Thorlux Australasia is revalued annually to the closing exchange rate, as it is denominated in euros and Australian
dollars respectively, with the movement recorded in exchange differences on translation of foreign operations in the
Statement of Changes in Equity.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 9 Intangible Assets continued
The Group tests intangible assets annually for impairment, or more frequently if there are indications of impairment, for
each relevant cash generating unit (CGU). CGUs in the Group comprise the entities FW Thorpe Plc, Lightronics Participaties
B.V., Lightronics B.V., Philip Payne Limited, Solite Europe Limited, Portland Lighting Limited, TRT Lighting Limited, Thorlux
Lighting L.L.C., Thorlux Australasia Pty Limited, Thorlux Lighting GmbH and Famostar Emergency Lighting B.V.
For Portland Lighting Limited the value in use has been determined using cashflow projections covering a five year
period with a terminal value all discounted at a rate of 6.3%. For prudence, no growth has been assumed from 2023.
For an impairment to be required, the discount rate would need to exceed 11.77% (Group) and 9.27% (Company:
investments in subsidiaries).
For the other CGUs an EBITDA analysis is computed to compare against the net carrying value of the goodwill and other
intangible assets for each CGU as appropriate. A multiple based on a six times EBITDA, that we consider a reasonable
multiple for the sector, is used in these computations, except for Famostar B.V. where an EBITDA multiple of five and a
half has been used.
Due to the timing of the acquisitions that gave rise to the majority of our goodwill held, our assessment also considers
business performance and likely net realisable value, which must be assessed as part of settlement of related share
appreciation rights. At expected levels of EBITDA we consider that our goodwill is fully recoverable with headroom
on the Lightronics and Famostar CGUs of £16m in the Group and £7m in the Company (investments in subsidiaries,
financial assets at amortised cost and amounts due from group companies).
Company 2020
Cost
At 1 July 2019
Additions
Write-offs and transfers
At 30 June 2020
Accumulated amortisation
At 1 July 2019
Charge for the year
Write-offs and transfers
At 30 June 2020
Net book amount
At 30 June 2020
Development
costs
£’000
Software
£’000
Patents
£’000
Fishing
rights
£’000
5,275
1,081
(1,275)
5,081
2,258
1,279
(1,275)
2,262
2,183
391
–
2,574
1,190
311
–
1,501
150
–
–
150
150
–
–
150
182
–
–
182
–
–
–
–
Total
£’000
7,790
1,472
(1,275)
7,987
3,598
1,590
(1,275)
3,913
2,819
1,073
–
182
4,074
Write-offs relate to development assets where no further economic benefits will be obtained.
Company 2019
Cost
At 1 July 2018
Additions
Write-offs and transfers
At 30 June 2019
Accumulated amortisation
At 1 July 2018
Charge for the year
Write-offs and transfers
At 30 June 2019
Net book amount
At 30 June 2019
Development
costs
£’000
Software
£’000
Patents
£’000
Fishing
rights
£’000
5,098
1,470
(1,293)
5,275
2,295
1,256
(1,293)
2,258
1,601
583
(1)
2,183
985
206
(1)
1,190
150
–
–
150
150
–
–
150
182
–
–
182
–
–
–
–
Total
£’000
7,031
2,053
(1,294)
7,790
3,430
1,462
(1,294)
3,598
3,017
993
–
182
4,192
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For development costs, the Group capitalises employee costs and directly attributable material costs necessary to
design, construct and test new and improved product ranges and technology. These costs are only capitalised where
they meet all the criteria set out in IAS 38.
Where development costs relate to products or technologies that are not expected to generate future economic
benefits, do not meet the requirements of IAS 38 or relate to research, they are charged to the income statement.
10 Investments in Subsidiaries
The cost of investment in subsidiaries is as follows:
Investment in subsidiaries – cost
The movement in the investment and provisions is as follows:
At 1 July 2019
At 30 June 2020
Company
2020
£’000
14,581
2019
£’000
14,581
Costs
£’000
14,581
14,581
Provision
£’000
–
–
Impairment for investments in subsidiaries has been considered within the headroom shown in note 9.
11 Investment Property
Cost
At 1 July
Additions
Disposals
At 30 June
Accumulated depreciation
At 1 July
Charge for the year
Disposals
At 30 June
Net book amount
At 30 June
Group
Company
2020
£’000
2,259
–
–
2,259
253
19
–
272
2019
£’000
2,271
–
(12)
2,259
195
58
–
253
2020
£’000
10,211
1,237
–
11,448
1,080
238
–
1,318
2019
£’000
10,593
1,708
(2,090)
10,211
1,378
254
(552)
1,080
1,987
2,006
10,130
9,131
The following amounts have been recognised in the income statement:
Rental income
Direct operating expenses arising from investment
properties that generate rental income
Group
Company
2020
£’000
142
2019
£’000
198
2020
£’000
408
2019
£’000
421
(98)
(95)
(316)
(270)
The investment property and land owned by the Group consists of property held for investment purposes, a property
with land and fishing rights by the River Wye, and land designated for woodland in Monmouthshire. The associated
fishing rights for the property by the River Wye are included in intangible assets.
Investment property of £1,296,000 (2019: £1,296,000) is freehold land and therefore not depreciated; the property
element includes accumulated depreciation of £272,000 (2019: £253,000) which relates to the property occupied by
Mackwell Electronics Limited. This investment property has been independently valued and has a market value that is
not materially higher than its cost.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 11 Investment Property continued
An external fair value exercise of the land by the River Wye and the land in Monmouthshire was last undertaken in June
2019 resulting in a valuation of £1.57m, which is greater than the carrying value of those specific investment properties.
The directors’ valuation of this investment property for the year ended 30 June 2020 shows no material change.
The Company’s investment properties consist of land and buildings used by subsidiaries in their normal course
of business. The Company receives rental income from the subsidiaries for the use of these premises and incurs
amortisation costs.
Each investment property generates rental income.
12 Financial Assets at Amortised Cost
The Group classifies its financial assets at amortised cost only if both of the following criteria are met:
•
•
the asset is held within a business model whose objective is to collect the contractual cash flows; and
the contractual terms give rise to cash flows that are solely payments of principal and interest.
Financial assets at amortised cost include the following debt investments. The Group applied the expected credit risk
model to calculate the impairment provision.
Mackwell Electronics Limited
Following the disposal of Mackwell Electronics Limited on 2 December 2011, the Group acquired loan notes of
£2,000,000 as part of the consideration. £Nil was repaid during the year (2019: £100,000), leaving a balance due at 1%
over the Bank of England base rate of £377,000 (2019: £377,000).
This debt investment is considered to be underperforming, and therefore the impairment provision is determined
as lifetime expected credit losses. As at the date of these financial statements, the Group and Company have made
a provision of £177,000 (2019: £200,000) for these loan notes. A payment of £20,000 was received on 30 July 2020
enabling a reduction in the provision of £23,000 (2019: £Nil).
During 2018, £1,500,000 in new loans were provided to Mr N Brangwin, a director and main shareholder in Mackwell
Electronics Limited, making a total of £1,800,000, with interest payable at 4% over the Bank of England base rate. This
loan is secured against Mr Brangwin’s shareholding in FW Thorpe Plc. No repayment was received during the year.
This debt investment is considered to have a minimal risk of default due to the collateral that is held as security, and
therefore the impairment provision is determined as 12 months expected credit losses. As at the date of these financial
statements, no provision was recorded.
Therefore the total balance due from Mackwell and its directors is £2,000,000 (2019: £1,977,000) after provisions.
Lightronics Participaties B.V.
Part of the acquisition of Lightronics Participaties B.V. included partial funding of the 35% share appreciation rights
held by existing shareholders and management. During the year €367,000 was repaid and at the date of the financial
statements, the loan notes balance was €nil (2019: €367,000) equating to £nil (2019: £328,000) at the end of year
exchange rate.
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Famostar Emergency Lighting B.V.
Part of the acquisition of Famostar Emergency Lighting B.V. included partial funding of the 35% share appreciation
rights held by the existing rights holders in Lightronics Participaties B.V. This was achieved by the issue of a loan of
€1,640,000. During the year €941,000 was repaid and at the date of the financial statements, the loan notes balance was
€467,000 (2019: €1,408,000) equating to £425,000 (2019: £1,262,000) at the end of year exchange rate. The loan notes are
repayable on or before 30 June 2021 and attract an interest rate of 5%.
This debt investment has shown no significant increase in credit risk since the inception of the loan, and therefore the
impairment provision is determined as 12 months expected credit losses. As at the date of these financial statements,
no provision was recorded.
The Group’s maximum exposure to credit risk in respect of financial assets at amortised cost from Famostar and
Lightronics is £425,000 which represents their carrying value at 30 June 2020. Of this balance, the Group exposure to
credit risk on these receivables is £425,000.
We assess the credit risk of our loan note receivables, based on the creditworthiness of the counterparty, history of
repayment and security in place, and where required provisions are made.
At 1 July
Issued
Repaid
Fair value adjustment
Exchange rate movement
At 30 June
Analysis of total financial assets at amortised cost
Non-current loans and receivables
Current loans and receivables
Group
Company
2020
£’000
3,567
–
(1,136)
23
(29)
2,425
2019
£’000
6,139
–
(2,583)
–
11
3,567
2020
£’000
12,115
2,283
(1,484)
(114)
163
12,963
Group
Company
2020
£’000
1,800
625
2,425
2019
£’000
3,567
–
3,567
2020
£’000
12,338
625
12,963
2019
£’000
13,482
1,632
(2,988)
(124)
113
12,115
2019
£’000
12,115
–
12,115
The £2,283,000 loan issued by the Company was to Lightronics Participaties B.V. for the purchase of the property
occupied by Famostar Emergency Lighting B.V..
The debt investment to Lightronics Participaties B.V. of €10,626,000 (£9,680,000) has shown no significant increase in
credit risk since the inception of the loan, and therefore the impairment provision is determined as 12 months expected
credit losses. As at the date of these financial statements, no provision was recorded.
The debt investment to Thorlux Lighting L.L.C. of £1,118,000 is considered to be underperforming and therefore the
impairment provision is determined as lifetime expected credit losses. As at the date of these financial statements, the
Company has made a provision of £261,000 (2019: £124,000) for these loan notes based on an expected credit loss of 45%.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 13 Equity Accounted Investments and Joint Arrangements
The Group has a joint operation in the United Arab Emirates. Thorlux Lighting L.L.C. is registered in the United Arab
Emirates and operates from a sales office in Abu Dhabi. The Group has applied the proportionate consolidation
method of accounting to recognise this interest. Additions of £nil (2019: £nil) reflects the 49% of the share capital the
Company owns of this joint operation.
The Group invested €1,200,000 for 40% of the share capital of Luxintec S.L., a company based in Spain, in 2016. In the
year, this has been reclassified to financial assets at fair value through other comprehensive income as the Group is not
able to assert influence over the management of this investment.
The Group assesses on a forward looking basis the associated expected credit losses and the impairment methodology
applied depends on whether there has been a significant increase in credit risk, as allowed under IFRS 9. As at the date
of these financial statements, no provision was recorded for the Group.
Group
Company
At 1 July
Reclassification to financial assets at fair value through other
comprehensive income
At 30 June
2020
£’000
936
(936)
–
2019
£’000
936
–
936
14 Financial Assets at Fair Value through Other Comprehensive Income
Group and Company
Beginning of year
Net additions
Loss on disposal
Reclassification from equity accounted investments and joint arrangements
Reclassification to trade and other receivables
Revaluation
2020
£’000
936
(936)
–
30 June
2020
£’000
3,683
61
–
936
(74)
(834)
3,772
2019
£’000
968
(32)
936
30 June
2019
£’000
3,820
75
(70)
–
–
(142)
3,683
Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group
commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights
to receive cash flows from the investments have expired or have been transferred and the Group has transferred
substantially all risks and rewards of ownership. Financial assets at fair value through other comprehensive income are
subsequently carried at fair value.
An impairment of £407,000 (2019: £nil) is included in the revaluation amount of £834,000 for the investment in Luxintec
S.L. based on the fair value assessment of this investment.
Financial assets at fair value through other comprehensive income comprise:
i) Listed equity in the UK, and are denominated in UK pounds. None of these assets is either past due or impaired; and
ii) The investment in Luxintec S.L. that has been reclassified from equity accounted investments in the year.
The Group assesses at the end of each reporting year whether there is objective evidence that a financial asset or a
group of financial assets is impaired. For equity investments classified as financial assets at fair value through other
comprehensive income, a significant or prolonged decline in the fair value of the security below its cost is evidence
that the assets are impaired. If any such evidence exists for financial assets at fair value through other comprehensive
income, the cumulative loss – measured as the difference between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously recognised in profit or loss – is removed from equity
and recognised in the Consolidated Income Statement. Impairment losses recognised in the Consolidated Income
Statement on equity instruments are not reversed through the Consolidated Income Statement.
109
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 15 Inventories
Raw materials
Work in progress
Finished goods
Group
Company
2020
£’000
16,257
2,964
6,075
25,296
2019
£’000
17,329
2,862
5,315
25,506
2020
£’000
8,654
2,379
5,881
16,914
2019
£’000
10,987
2,357
5,010
18,354
The value of the inventory provision is £3,308,000 (2019: £3,006,000) for the Group and £1,702,000 (2019: £1,494,000) for
the Company.
16 Trade and Other Receivables
Current
Trade receivables
Other receivables
Prepayments and accrued income
Amounts owed by subsidiaries
Total
Group
Company
2020
£’000
18,945
941
1,370
–
21,256
2019
£’000
19,427
734
1,341
–
21,502
2020
£’000
12,064
833
986
8,250
22,133
2019
£’000
11,406
538
1,035
7,615
20,594
Amounts owed by subsidiaries, except cash balances, are unsecured, interest free and have no fixed date for
repayment. Amounts owed in relation to cash balances generate interest in line with the Group’s deposit facilities.
Trade receivables past due date not provided
Group
Company
2020
£’000
1,734
2019
£’000
1,303
2020
£’000
1,157
2019
£’000
548
A significant proportion of the amounts past due date were settled shortly after the end of the financial year, and taken
together with the credit insurance policy and good credit history, the directors consider that there is no impairment
and the trade receivables are therefore stated at their fair value, which equals their book value.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected
loss allowance for all trade receivables and contract assets. A significant proportion of the trade receivables are insured.
The policy covers 90% of the debt in the event of a claim for default, where the customer is in severe financial difficulty.
No bad debt provision is made in respect of trade receivables from Government departments or agencies. There
were no material changes to the value of expected credit losses on adoption of IFRS 9. At 30 June 2020 the bad debt
provision for the Group amounted to £154,000 (2019: £54,000) and for the Company £27,000 (2019: £2,000).
No provision is held against trade receivables that are not yet due, due to the good credit history and expected financial
performance of customers and the overall exposure is considered low due to levels of credit insurance in place. Credit
limits are reviewed at least every 6 months to assess and amend, where appropriate, the credit limit offered to
customers.
Included in amounts owed by subsidiaries are provisions for expected credit losses for Thorlux Lighting L.L.C. of
£442,000 (2019: £359,000) and Thorlux Australasia PTY Limited of £497,000 (2019: £418,000), based on an expected
credit loss of 45%.
During the year the following amounts were written off (excluding amounts owed by subsidiaries):
Bad debts written off
Bad debts recovered
Net bad debt expense
110
Group
Company
2020
£’000
47
(41)
6
2019
£’000
26
(21)
5
2020
£’000
41
(40)
1
2019
£’000
16
(11)
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 16 Trade and Other Receivables continued
At 30 June 2020, trade receivables were due to the Group and Company in the following currency denominations:
Due in £ sterling
Due in € euro
Due in UAE dirham
Due in Australian dollars
Due in $ United States dollars
Group
Company
2020
£’000
12,525
5,826
312
128
154
18,945
2019
£’000
12,917
5,615
433
370
92
19,427
2020
£’000
11,192
718
–
–
154
12,064
2019
£’000
10,215
1,099
–
–
92
11,406
The other assets within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned
above. The Group does not hold any collateral as security.
17 Other Financial Assets at Fair Value Through Profit and Loss
The Group and Company had units in a sterling cash fund. At 30 June 2020 this amounted to £nil (2019: £387,000).
Sterling cash fund
18 Short-term Financial Assets
Group and Company
Beginning of year
Net (withdrawals)/ deposits
30 June
2020
£’000
–
30 June
2019
£’000
387
2020
£’000
26,483
(7,903)
18,580
2019
£’000
15,290
11,193
26,483
The short-term financial assets consist of term cash deposits in sterling with an original term in excess of three months.
The banks where the deposits are held have a minimum rating of “A” by Fitch, with a specific rating of “F1” for short-
term funds.
19 Cash and Cash Equivalents
Cash at bank and in hand
Group
Company
2020
£’000
44,422
2019
£’000
30,807
2020
£’000
37,218
2019
£’000
24,771
The banks where the funds are held have a minimum rating of “A” by Fitch, with a specific rating of “F1” for short-term funds.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 20 Trade and Other Payables
Current liabilities
Trade payables
Contract liabilities
Other payables
Social security and other taxes
Accruals and deferred income
Amounts owed to subsidiaries
Non-current liabilities
Other payables
Group
Company
2020
£’000
9,069
414
16,948
2,447
7,307
–
36,185
2019
£’000
11,547
–
1,630
2,275
6,460
–
21,912
2020
£’000
6,018
414
12,826
1,236
5,085
2,385
27,964
2019
£’000
8,296
–
347
664
4,603
3,380
17,290
67
67
12,804
12,804
–
–
10,242
10,242
Amounts owed to subsidiaries, except cash balances, are unsecured, interest free and have no fixed date of repayment.
Amounts owed in relation to cash balances generate interest in line with the Group’s deposit facilities.
Included within other payables in current liabilities is a commitment to purchase the outstanding share appreciation
rights (deferred consideration) in the subsidiaries Lightronics Participaties B.V. and Famostar Emergency Lighting B.V. of
£15,550,000 (2019 non-current £12,757,000), including a loan of £1,971,000 (2019 non-current: £2,139,000) from Spuiweg
Holding B.V. For the Company, the commitment to purchase the outstanding share appreciation rights (deferred
consideration) is £12,429,000 (2019: £10,242,000).
Non-current liabilities relates to post employment benefits at Thorlux Australasia Pty Limited and Thorlux Lighting L.L.C.
21 Lease liabilities
Right-of-use assets
As detailed in the accounting policies note the Group adopted IFRS 16 on 1 July 2019.
At 1 July 2019
Additions*
Depreciation charge for the year
Lease termination
Currency translation
At 30 June 2020
* Additions comprise increases to right-of-use assets as a result of entering into new leases.
At 1 July 2019
Depreciation charge for the year
At 30 June 2020
Group
Property
£’000
929
–
–
(929)
–
–
Plant and
Equipment
£’000
32
56
(23)
–
2
67
Motor
vehicles
£’000
397
136
(205)
–
11
339
Company
Motor
vehicles
£’000
4
(4)
–
Total
£’000
1,358
192
(228)
(929)
13
406
Total
£’000
4
(4)
–
Lease liabilities
Lease liabilities recognised at 30 June 2020 total £637,000 of which £220,000 is due within one year and £417,000 due
after more than one year. There are no options to either extend or terminate early lease agreements.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 21 Lease liabilities continued
Maturity analysis
The timing of the payments due over the remaining lease term for these liabilities is as follows:
Within one year
More than one but less than five years
More than five years
Total due including interest
The total cash paid on these leases during the year was £301,000.
Expense relating to short-term leases
Expense relating to low value leases
Total
£’000
251
444
11
706
£’000
234
8
22 Pension Scheme
The Group operates a funded hybrid pension scheme for employees in the UK. 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 basis of the Group’s hybrid pension scheme is to provide benefits to members based on the
following:
• For service prior to 1 October 1995, the benefits provided are defined benefit in nature.
• For service from 1 October 1995, the benefits provided have two elements depending on the date that the member
joined the pension scheme.
• For members joining before 1 October 1995, benefits provided are the higher of their defined contribution pension
and their defined benefit pension.
• For members joining on or after 1 October 1995, benefits provided are defined contribution in nature.
The contributions of the pure defined contribution, the defined benefit underpin and pure defined benefit elements
are paid into one pension scheme, where the contributions and assets are segregated and ring-fenced from each other.
For the defined benefit underpin element of the scheme, each member is tested to see whether the pension on a
defined contribution or defined benefit basis is higher. The liabilities shown in the pensions note are based on the
greater of the two liabilities for each member, which in almost all cases is the defined benefit liability. For the service
cost, again, tests are performed to see which is the higher for each member out of the Company’s share of the defined
contribution payments or the Company’s share of accruing benefits on a defined benefit basis. The higher of these two
figures for each member is then used to give the total service cost; again the defined benefit cost is the higher for the
vast majority of members.
The assets of the scheme are held separately from the assets of the Group, being invested in Managed Funds.
Contributions by the Group to the scheme during the year ended 30 June 2020 amounted to £616,000 (2019: £606,000).
Contributions are determined by an independent qualified actuary on the basis of triennial valuations using the Project
Unit Method.
The date of the most recent actuarial valuation was 30 June 2018, and at that date the value of the fund was
£39,556,000. This was sufficient to cover 102% 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
3.40%
5.05%
2.60%
2.60%
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 22 Pension Scheme continued
The figures at 30 June 2018 have been updated as at the Statement of Financial Position dates in order to assess the
additional disclosures required under IAS 19 as at 30 June 2020 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 2.55% pa or RPI if less
Life expectancy at age 65 – men
Life expectancy at age 65 in 20 years – men
Life expectancy at age 65 – women
Life expectancy at age 65 in 20 years – women
2020
3.30%
3.30%
1.40%
2.30%
3.10%
2.10%
22.5 years
23.6 years
24.7 years
25.9 years
2019
3.50%
3.50%
2.10%
2.50%
3.30%
2.20%
2018
3.40%
3.40%
2.70%
2.40%
3.20%
2.10%
2017
3.50%
3.50%
2.60%
2.50%
3.30%
2.20%
2016
3.00%
3.00%
2.90%
2.00%
2.90%
2.00%
22.5 years 23.1 years 23.0 years 23.0 years
23.5 years 24.8 years 24.7 years 24.0 years
24.7 years 25.4 years 25.3 years 25.0 years
25.9 years 27.2 years 27.1 years 26.0 years
The Statement of Financial Position figures required under IAS 19 are as follows:
30 June 2020
30 June 2019
30 June 2018
30 June 2017
30 June 2016
Expected
long-
term rate
of return
%
Value
£’000
1.4% 11,003
1.4% 29,549
1.4% 2,300
Expected
long-
term rate
of return
%
Value
£’000
2.70% 12,570
2.70% 26,618
2,387
2.70%
Expected
long-
term rate
of return
%
Value
£’000
2.70% 13,154
2.70% 24,769
1,665
2.70%
Expected
long-
term rate
of return
%
Value
£’000
2.60% 12,152
2.60% 25,859
413
2.60%
Expected
long-
term rate
of return
%
Value
£’000
2.90% 14,968
2.90% 19,311
1,237
2.90%
42,852
41,575
39,588
38,424
35,516
(42,583)
(39,437)
(37,259)
(37,710)
(33,731)
269
2,138
2,329
714
1,785
Equities
Bonds
Other
Total market
value of assets
Present value
of scheme
liabilities
Surplus in the
scheme
Amounts recognised in Statement of Financial Position
The amounts recognised in the Statement of Financial Position are determined as follows:
Present value of funded obligations
Fair value of plan assets
Surplus in the scheme
Less restriction of surplus recognised in the Statement of Financial Position
Asset recognised in the Statement of Financial Position
2020
£’000
(42,583)
42,852
269
(269)
–
2019
£’000
(39,437)
41,575
2,138
(2,138)
–
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 22 Pension Scheme continued
Movement in defined benefit obligation
The movement in the defined benefit obligation over the year is as follows:
At 1 July
Current service cost
Interest cost
Contributions by plan participants
Actuarial loss
Benefits paid
At 30 June
Movement in the fair value of the plan assets
The movement in the fair value of the plan assets of the year is as follows:
At 1 July
Expected return in plan assets
Actuarial gains
Employer contributions
Employee contributions
Benefits paid
At 30 June
Amounts recognised in Income Statement
The amounts recognised in the Income Statement are as follows:
Current service cost
Actuarial loss recognised in Statement of Comprehensive Income for the year
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
Net interest income
Restriction of decrease in pension scheme surplus
Actuarial loss recognised in the Statement of Comprehensive Income
Cumulative actuarial loss recognised in the Statement of Comprehensive Income at 1 July
Actuarial loss recognised in the Statement of Comprehensive Income for the year
Cumulative actuarial loss recognised in the Statement of Comprehensive Income at 30 June
2020
£’000
(39,437)
(446)
(818)
(328)
(3,302)
1,748
(42,583)
2020
£’000
41,575
864
1,217
616
328
(1,748)
42,852
2020
£’000
446
2020
£’000
1,217
(171)
(3,131)
46
1,869
(170)
2020
£’000
(4,447)
(2,039)
(6,486)
2019
£’000
(37,259)
(423)
(992)
(298)
(2,195)
1,730
(39,437)
2019
£’000
39,588
1,058
1,755
606
298
(1,730)
41,575
2019
£’000
423
2019
£’000
1,755
(294)
(1,901)
66
191
(183)
2019
£’000
(4,073)
(374)
(4,447)
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 22 Pension Scheme continued
The restriction in the scheme surplus is excluded from the cumulative actuarial gain recognised in the Statement of
Comprehensive Income. As a result of the most recent valuation, and in light of the non-recognition of the pension
scheme surplus, the recovery plan liability of £189,000 (2019: £189,000) is included in Other Payables.
The expected return on plan assets is determined by considering the expected returns available on the assets
underlying the current investment policy. Expected yields on fixed interest investments are based on gross redemption
yields as at the Statement of Financial Position date. Expected returns on equity and property investments reflect long-
term real rates of return experienced in the respective markets.
The actual return on plan assets over the year ended 30 June 2020 was £2,081,000 (2019: £2,813,000) or 3.1% (2019:
7.1%). The Group expects to pay £634,000 contributions (2019: £636,000) into the pension scheme during the
forthcoming year.
History of experience gains and losses recognised in the Statement of Comprehensive Income
2020
2019
2018
2017
2016
£’000
% £’000
% £’000
% £’000
% £’000
%
Difference between the expected
and actual return on scheme assets
Percentage of scheme assets
Experience (gain)/ loss
on scheme liabilities
Percentage of the present
value of scheme liabilities
Changes in assumptions
underlying the present value
of the scheme liabilities
Percentage of the present value
of scheme liabilities
Movement in recovery plan liability
Percentage of the present
value of scheme liabilities
Net interest income
Percentage of the present
value of scheme liabilities
Amount which has been
recognised in the SOCI
1,217
1,755
592
2,121
2,612
3%
(171)
(294)
0%
4%
1%
1.5%
6%
214
(1,129)
(1,401)
(0.6%)
3%
(3,131)
(1,901)
632
(2,254)
(2,609)
–
46
7%
0%
0%
–
66
5%
0%
0%
–
21
(1.7%)
0%
0%
–
51
6%
0%
0%
–
113
(2,039)
(374)
1,459
(1,211)
(1,285)
5%
1%
4%
3%
7%
4%
8%
0%
0%
4%
Sensitivity analysis
The impact on the defined benefit obligation of changes in the significant assumptions is shown approximately below:
Assumption varied
As at 30 June 2020
Discount rate 0.5% p.a. higher
Increase in salaries 0.5% p.a. higher
Pension Increase (in payment and in deferment) 0.5% p.a. higher
Life expectancy one year longer
Defined
Benefit
Obligation
£m
42.6
40.7
42.8
43.6
43.7
The figures assume that each assumption is changed independently of the others. Therefore, the disclosures are only a
guide because the effect of changing more than one assumption is not cumulative.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 23 Provisions for Liabilities and Charges
At 1 July 2018
Additions
Utilisation
Currency translation
At 1 July 2019
Additions
Utilisation
Surplus
Currency translation
At 30 June 2020
Analysis of total provisions
Non-current
Total
WEEE
provision
£’000
102
–
–
–
102
–
–
–
Group
Warranty
provision
£’000
2,062
399
(176)
17
2,302
559
(200)
(65)
–
102
23
2,619
Total
£’000
2,164
399
(176)
17
2,404
559
(200)
(65)
23
2,721
WEEE
provision
£’000
102
–
–
–
102
–
–
–
–
102
2019
£’000
2,404
2,404
Company
Warranty
provision
£’000
334
40
(10)
–
364
368
(39)
–
–
693
Company
2020
£’000
795
795
Total
£’000
436
40
(10)
–
466
368
(39)
–
–
795
2019
£’000
466
466
Group
2020
£’000
2,721
2,721
WEEE provision
A potential liability exists for the future cost of disposal of products under the WEEE legislation for a transitional period
between the adoption of the WEEE legislation in the European Union in August 2005 and the effective date in the UK of
1 July 2007.
From 1 July 2007 the Group has followed Regulation 9 of the legislation and amended the terms of sale to its customers
so that the customer is responsible for the actual costs of WEEE at the time of disposal.
Although the timescale of the utilisation of this provision cannot be predicted with certainty, it is expected that it will
not be utilised before 30 June 2021.
Warranty provision
The usual warranty period provided by Group companies is 5 years and the provision for warranty is based on expected
claims over the remaining warranty period. This is calculated in accordance with the accounting policy estimates
section included in note 1.
24 Deferred Income Tax
Deferred income tax assets and liabilities are offset where there is a legally enforceable right to offset current tax
assets against current tax liabilities and when the deferred income taxes relate to the same fiscal authority. The offset
amounts are as follows:
Deferred tax assets
Deferred tax liabilities
Net deferred tax liabilities
Group
Company
2020
£’000
–
(601)
(601)
2019
£’000
–
(699)
(699)
2020
£’000
–
(398)
(398)
2019
£’000
–
(493)
(493)
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 24 Deferred Income Tax continued
The net movement on the deferred income tax account is as follows:
Beginning of year
Adoption of IFRS 16
Income statement credit/(charge)
Tax credited directly to equity
Currency translation
End of year
Group
Company
2020
£’000
(699)
5
81
13
(1)
(601)
2019
£’000
(647)
–
(75)
24
(1)
(699)
2020
£’000
(493)
1
71
23
–
(398)
2019
£’000
(421)
–
(96)
24
–
(493)
The movement in Group deferred income tax assets and liabilities during the year, without taking into consideration
the offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax asset
At 1 July 2018
Charged to the income statement
At 1 July 2019
Charged to the income statement
At 30 June 2020
Deferred tax liabilities
At 1 July 2018
Charged/(credited) to the income statement
Credited directly to equity
Currency translation
At 1 July 2019
Adoption of IFRS 16
Charged/(credited) to the income statement
Credited directly to equity
Currency translation
At 30 June 2020
Accelerated tax
depreciation
£’000
76
75
–
(1)
150
–
107
13
–
270
Research &
development
£’000
654
12
–
2
668
–
(100)
69
1
638
Accelerated tax
depreciation
£'000
8
(8)
–
–
–
Fair value &
other timing
differences
£’000
(75)
(20)
(24)
–
(119)
(5)
(88)
(95)
–
(307)
Total
£'000
8
(8)
–
–
–
Total
£’000
655
67
(24)
1
699
(5)
(81)
(13)
1
601
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 24 Deferred Income Tax continued
The movement in the Company deferred income tax liabilities during the year is as follows:
Deferred tax liabilities
At 1 July 2018
Charged/(credited) to the income statement
Credited directly to equity
At 1 July 2019
Adoption of IFRS 16
Charged/(credited) to the income statement
Credited directly to equity
At 30 June 2020
Accelerated tax
depreciation
£’000
35
77
–
112
–
58
13
183
Research &
development
£’000
462
39
–
501
–
(45)
59
515
Fair value &
other timing
differences
£’000
(76)
(20)
(24)
(120)
(1)
(84)
(95)
(300)
The deferred income tax credited to equity during the year is as follows:
Deferred tax credited to equity
Tax on revaluation of financial assets at fair value through other
comprehensive income
25 Share Capital
Group
Company
2020
£’000
13
13
2019
£’000
24
24
2020
£’000
23
23
Total
£’000
421
96
(24)
493
(1)
(71)
(23)
398
2019
£’000
24
24
Authorised, allotted and fully paid
118,935,590 ordinary shares of 1p each (2019: 118,935,590 ordinary shares of 1p each)
The ordinary shareholders each have one vote per share.
Group and Company
2020
£’000
2019
£’000
1,189
1,189
Movements in treasury shares included in share capital
At 1 July
Shares issued from treasury
Shares repurchased
At 30 June
Group and Company
Group and Company
2020
£’000
28
(2)
–
26
2020
No. of
shares
2,814,932
(209,839)
–
2,605,093
2019
£’000
30
(2)
–
28
2019
No. of
shares
2,969,546
(200,614)
46,000
2,814,932
There were no new shares issued during the year (2019: nil). 209,839 (2019: 200,614) shares were issued from treasury
for the exercise of share options, of which the Company repurchased nil (2019: 46,000). There are 1,044,482 (2019:
1,606,711) share options outstanding at the year end.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 26 Other Reserves
Share premium account
Capital redemption reserves
Foreign currency translation reserve
27 Dividends
Dividends paid during the year are outlined in the tables below:
Dividends paid (pence per share)
Final dividend
Interim dividend
Total
Group
Company
2020
£’000
1,526
137
2,764
4,427
2019
£’000
1,266
137
2,535
3,938
2020
£’000
1,526
137
–
1,663
2020
4.10
1.46
5.56
2019
£’000
1,266
137
–
1,403
2019
4.00
1.43
5.43
A final dividend in respect of the year ended 30 June 2020 of 4.20p per share, amounting to £4,886,000 (2019:
£4,763,000) is to be proposed at the Annual General Meeting on 19 November 2020 and, if approved, will be paid on
26 November 2020 to shareholders on the register on 30 October 2020. The ex-dividend date is 29 October 2020. These
financial statements do not reflect this dividend payable.
Dividends proposed (pence per share)
Final dividend
Dividends paid
Final dividend
Interim dividend
Total
Dividends proposed
Final dividend
2020
4.20
2020
£’000
4,770
1,698
6,468
2020
£’000
4,886
2019
4.10
2019
£’000
4,639
1,660
6,299
2019
£’000
4,763
28 Share Based Payment Charge
Equity settled scheme
The Group operates a share based remuneration scheme, created to motivate and retain those employees responsible
for the continued success of the Group.
The Executive Share Ownership Plan (ESOP) allows for the vesting of options subject to the achievement of
performance targets, being annual growth of pre-tax Earnings per Share in excess of RPI plus 3% over a five-year
period. The Group also operates a Save As You Earn (SAYE) scheme for UK based employees that matures in October
2021. Rather than issue new shares, the Company will utilise shares that are already held in treasury to satisfy options.
Under IFRS 2, an expense is recognised in the income statement for share based payments, calculated on the fair value
at the grant date. The application of IFRS 2 gave rise to a charge of £60,000 (2019: £86,000) for the year.
At 30 June 2020, there were 310,322 options exercisable (2019: 190,161) under the ESOP or SAYE schemes.
120
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 28 Share Based Payment Charge continued
a) Details of changes in the number of awards outstanding during the year are set out below:
Outstanding at 1 July 2019
Exercised during the year
Forfeited during the year
Outstanding at 30 June 2020
ESOP Scheme
SAYE Scheme
Total
Exercise
price
(p/s)
124
124
–
124
Options
426,550
–
(22,390)
404,160
Exercise
price
(p/s)
209
–
–
209
Options
1,606,711
(209,839)
(352,390)
1,044,482
Options
1,180,161
(209,839)
(330,000)
640,322
The weighted average contractual life of the share based payments outstanding at the end of the year is 4.3 years for
the ESOP scheme and 1.8 years for the SAYE scheme.
b) Fair value calculations
The fair value of the share options granted during the year were calculated using the methods, principal assumptions
and data set out below:
Method used
Date of grant
Share price at date of grant (p/s)
Exercise price (p/s)
Expected option life (years)
Vesting period (years)
Expected volatility
Expected dividend yield
Risk free rate
Fair value per share (p/s)
ESOP Scheme
Black–Scholes
24 October 2014
124
124
3 – 7
3 – 7
23% – 28%
3.02%
1.06% – 1.90%
18.61 – 21.07
SAYE Scheme
Black–Scholes
15 July 2016
233
209
5
5
27%
1.90%
0.91%
54.84
Expected volatility was determined by calculating the annualised standard deviation over the daily changes in the
share price, and measured against historical share price movements over the number of years vesting period prior to
the grant of the options.
Cash-settled share based payment charge
Arising from the acquisition of Lightronics Participaties B.V. and Famostar Emergency Lighting B.V., the Group entered
into a cash-settled share based payment arrangement with certain employees of Lightronics Participaties B.V.
Under this arrangement, the Group is committed to purchase the 43% of the share appreciation rights held by these
employees, between the third and sixth anniversaries of the acquisition, calculated by a pre-determined earnings
multiple used to value the initial investment.
Under IFRS 2, an expense is recognised in the income statement for share based payments, calculated on the fair value
at the settlement date. The application of IFRS 2 gave rise to a charge of £1,151,000 (2019: £790,000) for the year. The
total liability at 30 June 2020 was £2,752,000 (2019: £1,601,000).
The fair value of the share based payment (being calculated by estimating the additional payment due to the relevant
employees), was reviewed during the year based on current performance. This review resulted in an annual increase in
the share based payment charge of £317,000 (2019: £343,000).
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 29 Cash Generated from Operations
Cash generated from continuing operations
Profit before income tax
Depreciation charge
Depreciation of investment property
Amortisation of intangibles
Profit on disposal of property, plant and equipment
Profit on disposal of investment property
Net finance expense/(income)
Retirement benefit contributions in excess of current
and past service charge
Impairment of equity accounted investments
Share based payment charge
Research and development expenditure credit
Effects of exchange rate movements
Changes in working capital
– Inventories
– Trade and other receivables
– Payables and provisions
Total cash generated from operations
Group
Company
2020
£’000
15,943
3,221
19
2,577
(118)
–
389
(170)
–
1,211
(249)
(219)
238
571
(182)
23,231
2019
£’000
19,569
2,508
58
2,456
(2,116)
–
(3)
(183)
–
855
(292)
(48)
(4,025)
2,428
3,831
25,038
2020
£’000
14,117
1,777
238
1,590
(109)
–
(4,961)
(170)
–
1,211
(174)
(81)
1,439
(1,358)
(561)
12,958
2019
£’000
17,544
1,574
254
1,462
(137)
(1,942)
(5,650)
(183)
32
855
(215)
(30)
(4,230)
1,426
4,700
15,460
30 Capital commitments
Capital expenditure contracted for at the statement of financial position date but not yet incurred is as follows:
Property, plant and equipment
Group
Company
2020
£’000
46
2019
£’000
918
2020
£’000
45
2019
£’000
635
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 31 Financial Instruments by Category
All financial instruments measured at fair value are categorised as level 2 in the fair value measurement hierarchy,
whereby the fair value is determined by using valuation techniques, except for £3,243,000 (2019: £4,070,000) of fixed
rate listed investments included in financial assets at fair value through other comprehensive income and other
financial assets at fair value through profit or loss that are classified as level 1. The valuation techniques for level 2
instruments use observable market data where it is available, for example quoted market prices, and rely less on
estimates.
The accounting policies for financial instruments have been applied to the line items below:
Group
30 June 2020
Assets as per statement of financial position
Financial assets at amortised cost
Financial assets at fair value through Other
Comprehensive Income
Trade and other receivables
Short-term financial assets
Cash and cash equivalents
Total
Group
30 June 2019
Assets as per statement of financial position
Financial assets at amortised cost
Financial assets at fair value through other
comprehensive income
Financial assets at fair value through
the profit and loss
Trade and other receivables
Short-term financial assets
Cash and cash equivalents
Total
Financial assets
at amortised
cost
£’000
Financial assets
at fair value
through other
comprehensive
income
£’000
Financial assets
at fair value
through the
profit and loss
£’000
2,425
–
19,886
18,580
44,422
85,313
–
3,772
–
–
–
3,772
–
–
–
–
–
–
Financial assets
at amortised
cost
£’000
Financial assets
at fair value
through other
comprehensive
income
£’000
Financial assets
at fair value
through
the profit
and loss
£’000
3,567
–
–
20,161
26,483
30,807
81,018
–
3,683
–
–
–
–
3,683
–
–
387
–
–
–
387
Total
£’000
2,425
3,772
19,886
18,580
44,422
89,085
Total
£’000
3,567
3,683
387
20,161
26,483
30,807
85,088
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 31 Financial Instruments by Category continued
Financial assets
at amortised
cost
£’000
Financial assets
at fair value
through other
comprehensive
income
£’000
Financial assets
at fair value
through
the profit
and loss
£’000
12,963
–
21,147
18,580
37,218
89,908
–
3,772
–
–
–
3,772
–
–
–
–
–
–
Financial assets
at amortised
cost
£’000
Financial assets
at fair value
through other
comprehensive
income
£’000
Financial assets
at fair value
through
the profit
and loss
£’000
12,115
–
–
19,559
26,483
24,771
82,928
–
3,683
–
–
–
–
3,683
–
–
387
–
–
–
387
Total
£’000
12,963
3,772
21,147
18,580
37,218
93,680
Total
£’000
12,115
3,683
387
19,559
26,483
24,771
86,998
Company
30 June 2020
Assets as per statement of financial position
Financial assets at amortised cost
Financial assets at fair value through other
comprehensive income
Trade and other receivables
Short-term financial assets
Cash and cash equivalents
Total
Company
30 June 2019
Assets as per statement of financial position
Financial assets at amortised cost
Financial assets at fair value through other
comprehensive income
Financial assets at fair value through
the profit and loss
Trade and other receivables
Short-term financial assets
Cash and cash equivalents
Total
The above analysis excludes prepayments.
Liabilities as per statement of financial position
Trade and other payables (excluding statutory liabilities)
Deferred consideration
Post employment benefits
Lease liabilities
Group
Company
30 June
2020
£’000
18,188
15,550
67
637
30 June
2019
£’000
19,634
12,757
47
–
30 June
2020
£’000
14,299
12,429
–
–
30 June
2019
£’000
16,625
10,242
–
–
Financial liabilities are measured at amortised cost.
Contractual cash flows relating to current financial liabilities are all due within one year, and are equal to their carrying
value. Included in other payables (deferred consideration) is an interest bearing loan, of which the principal amount
of €2.2m (£2.0m) is due for repayment within one year. Interest is contractually due to be paid annually until maturity,
and is estimated at current rates to be €110,000 (£100,000) per year. Furthermore liabilities arising to repurchase share
appreciation rights are non-interest bearing are all due within one year.
The Group and Company did not have derivative financial instruments at 30 June 2020 or 30 June 2019. All assets and
liabilities above are considered to be at fair value.
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 32 Related Party Transactions
The following amounts relate to transactions between the Company and its related undertakings:
2020
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Thorlux Lighting L.L.C.
Lightronics Participaties B.V.
Thorlux Australasia PTY Limited
Thorlux Lighting GmbH
Famostar Emergency Lighting B.V.
2019
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Thorlux Lighting L.L.C.
Lightronics Participaties B.V.
Thorlux Australasia PTY Limited
Thorlux Lighting GmbH
Famostar Emergency Lighting B.V.
Purchases
of goods
£’000
648
537
–
2,028
–
125
–
–
–
Purchases
of goods
£’000
790
722
1
1,271
–
183
–
–
–
Sales
of goods
£’000
145
259
–
1,235
405
359
756
–
4
Sales
of services
£’000
86
178
67
223
–
–
–
–
–
Purchase
of services
£’000
–
–
–
–
–
–
–
471
–
Sales
of goods
£’000
177
394
–
1,342
654
466
519
–
–
Sales
of services
£’000
80
178
26
192
–
–
–
–
–
Purchase
of services
£’000
–
–
–
10
–
–
–
–
–
Dividends
paid to
Company
£’000
600
600
650
–
–
1,776
–
–
–
Dividends
paid to
Company
£’000
500
500
850
–
–
2,330
–
–
–
Balances due to and from the Company by related entities were as follows:
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Thorlux Lighting L.L.C.
Lightronics Participaties B.V.
Thorlux Australasia PTY Limited
Thorlux Lighting GmbH
Famostar Emergency Lighting B.V.
Total
Amounts due to
related party at 30 June
2019
£’000
(1,021)
(1,034)
(902)
(278)
–
(22)
–
(123)
–
(3,380)
2020
£’000
(639)
(773)
(400)
(465)
–
(16)
–
(92)
–
(2,385)
Amounts due from
related party at 30 June
2019
£’000
39
78
8
1,474
305
4,191
1,480
–
40
7,615
2020
£’000
61
159
36
819
238
4,782
1,802
–
353
8,250
Trading balances arise from transactions of goods and services carried out under normal commercial terms. The Company
has loan balances due from Lightronics Participaties B.V. of €10,626,000 (£9,680,000) (2019: €8,493,000 (£7,611,000) and
Thorlux Lighting L.L.C. £1,118,000 (2019: £937,000). The Company has made provisions for receivables due from Thorlux
Australasia PTY Limited of £497,000 and £703,000 due from Thorlux Lighting L.L.C.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview 32 Related Party Transactions continued
Cash resources are managed centrally by the Company and result in balances owed to and from the Company when
cash is transferred.
The key management personnel are the Group Board directors; their interests are disclosed in the directors’
remuneration report on pages 65 to 68. There are 2 employees who are related parties (2019: 3). Total remuneration for
the year was £93,000 (2019: £87,000).
The Company owns 40% of the share capital of Luxintec S.L., a company registered in Spain. During the year the
Company sold goods to Luxintec S.L. amounting to £7,000 (2019: £6,000), purchased goods and services amounting to
£453,000 (2019: £288,000). At the year end there were trade balances due to Luxintec S.L. of £60,000 (2019: £69,000) and
£nil due from Luxintec S.L. (2019: £190).
33 Group Companies
The parent Company has the following investments as at 30 June 2020 and 30 June 2019:
Proportion of nominal value
of issued shares held by
Group and Company
Name of undertaking
Compact Lighting Limited
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Lightronics Participaties B.V.
Lightronics B.V.
Thorlux Lighting GmbH
Thorlux Australasia PTY Limited
Thorlux Lighting L.L.C.
Famostar Emergency Lighting
B.V. (investment held by
Lightronics Participaties B.V.)
Luxintec S.L.
Country of
incorporation
England
England
England
England
England
Netherlands
Netherlands
Germany
Australia
Description of
shares held
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
Ordinary £1 shares
Ordinary €0.01 shares
Ordinary €454 shares
Ordinary €1 shares
Ordinary $1 shares
United Arab Emirates Ordinary AED 1,000 shares
30 June
2020
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
Netherlands
Ordinary €100 shares
100%
Spain
Ordinary €1 shares
40%
30 June
2019
100%
100%
100%
100%
100%
100%
100%
100%
100%
49%
100%
40%
The registered office addresses of these Group companies are:
Compact Lighting Limited
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Lightronics Participaties B.V.
Lightronics B.V.
Thorlux Lighting GmbH
Thorlux Australasia PTY Limited
Thorlux Lighting L.L.C.
Famostar Emergency Lighting B.V.
Luxintec S.L.
Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH, England
Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH, England
Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH, England
Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH, England
Merse Road, North Moons Moat, Redditch, Worcestershire, B98 9HH, England
Spuiweg 19, 5145 NE Waalwijk, Netherlands
Spuiweg 19, 5145 NE Waalwijk, Netherlands
Bahnhofstrasse 72, 27404 Zeven, Germany
31 Cross Street, Brookvale, NSW 2100, Australia
Office No. 2, Ghantoot International Building, Plot No: M.14-26, Musaffah
Industrial Area, PO Box 108168, Abu Dhabi, United Arab Emirates
Florijnweg 8 6883JP Velp, Netherlands
Polígono Industrial La Encomienda, C/ Atlas 12-14, 47195 Arroyo de la
Encomienda, Valladolid, Spain
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Notes to the Financial Statements continuedFor the year ended 30 June 2020Annual Report and Accounts for the year ended 30 June 2020 33 Group Companies continued
The principal activities of these Group companies are:
Compact Lighting Limited
Philip Payne Limited
Solite Europe Limited
Portland Lighting Limited
TRT Lighting Limited
Lightronics Participaties B.V.
Lightronics B.V.
Thorlux Lighting GmbH
Thorlux Australasia PTY Limited
Thorlux Lighting L.L.C.
Famostar Emergency Lighting B.V.
Luxintec S.L.
– non-trading entity
– design and manufacture of illuminated signs
– design and manufacture of clean room lighting equipment
– design and manufacture of lighting for signs
– design and manufacture of lighting for roads and tunnels
– holding company
– design and manufacture of external and impact resistant lighting
– sales support function
– sale of lighting equipment to industrial and commercial markets
– sale of lighting equipment to industrial and commercial markets
– design and manufacture of illuminated signs
– design and manufacture of LED luminaires and lenses
For the year ended 30 June 2020, Compact Lighting Limited, Philip Payne Limited, Solite Europe Limited, Portland
Lighting Limited and TRT Lighting Limited are exempt from the requirements of the Companies Act 2006 relating to
the audit of individual financial statements by virtue of section 479A. As a result, the Group guarantees all outstanding
liabilities to which the subsidiary company is subject. The Company registration number for Compact Lighting Limited
is 02649528, for Philip Payne Limited it is 01361523, for Solite Europe Limited it is 02295852, for Portland Lighting
Limited it is 02826511 and for TRT Lighting Limited it is 08092266.
34 Events after the Statement of Financial Position date
Subsequent to the date of the Statement of Financial Position and before the approval of these financial statements,
the Group’s subsidiary company, Lightronics Participaties B.V., experienced a fire at its facility in the Netherlands. Details
of this are included in the Chairman’s Statement on page 10. The Group’s insurance policies will cover the costs from
the disruption due to this fire and therefore no significant impact is expected on the Group’s financial statements.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview Notice of Meeting
Notice is hereby given that the Annual General Meeting of FW Thorpe Plc will be held at Merse Road, North Moons
Moat, Redditch, Worcestershire, B98 9HH on 19 November 2020 at 3:15 pm to transact the business set out below.
The 2020 Annual General Meeting will be a closed meeting, in light of the UK Government’s restrictions on public
gatherings, which are in place at the time of issuing this notice. Shareholders will not be permitted entry to the
meeting.
To receive and adopt the Annual Report and Accounts for the year ended 30 June 2020.
Ordinary business
1.
2. To declare a final dividend.
3. To re-elect Mr M Allcock as a director.
4. To re-elect Mr A B Thorpe as a director.
5. To re-elect Mr A M Cooper as a director.
6. To re-appoint 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 as an ordinary
resolution and in the case of 8 as a special resolution.
7. That the directors’ remuneration report (as set out on pages 65 to 68 of the Annual Report and Accounts) for the
year ended 30 June 2020 be approved.
8. That the Company be generally and unconditionally authorised to make market purchases (within the meaning of
section 693(4) of the Companies Act 2006) of ordinary shares of 1p each of the Company provided that:
a. the maximum number of ordinary shares hereby authorised to be acquired is 11,893,559;
b. the minimum price which may be paid for any such share is 1p;
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 Alternative Investment
Market 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 2021;
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.
Notes
1.
In light of the UK Government’s restrictions on public gatherings, it has been confirmed that attendance at a
general meeting by shareholders is not “essential for work purposes” and, accordingly, the meeting will be run as
a closed meeting and shareholders, their proxies and other attendees will not be permitted to attend and will be
refused entry. Shareholders are kindly urged to vote by proxy, appointing the Chairman of the meeting as their
proxy, rather than a named person who will not be permitted to attend the meeting.
2. Subject to the UK Government’s restrictions referred to above, copies of the directors’ service contracts will be
available for inspection during usual business hours, at the registered office of the Company on any weekday
(Saturdays and public holidays excepted) from the date of this notice until the date of the meeting and also at
the meeting for at least 15 minutes prior to, and until the conclusion of, the meeting. If you wish to inspect these
documents, please contact the Company at shareholders@fwthorpe.co.uk.
3. To be entitled to attend and vote at the meeting (and for the purposes of the determination by the Company of
the votes they may cast), members must be registered in the Register of Members of the Company at 6.30 pm on
17 November 2020 (or, in the event of any adjournment, 6.30 pm on the date which is two days before the time of
the adjourned meeting). Changes to the Register of Members of the Company after the relevant deadline shall be
disregarded in determining the rights of any person to attend and vote at the meeting.
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Annual Report and Accounts for the year ended 30 June 2020 4. A member entitled to attend and vote at the meeting is entitled to appoint a proxy or proxies to attend, speak and
vote on his or her behalf. A proxy need not also be a member but must attend the meeting to represent you and
shareholders are urged to appoint the Chairman of the meeting as their proxy, rather than a named person who will
not be permitted to attend the meeting owing to the UK Government’s restrictions.
Details of how to appoint a proxy using the form of proxy are set out in the notes on the form of proxy.
5. To appoint more than one proxy, an additional proxy form(s) may be obtained by contacting the Company’s
registrars, Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, or you may photocopy the proxy
form. Please indicate in the box next to the proxy holder’s name the number of shares in relation to which they
are authorised to act as your proxy. Please also indicate by ticking the box provided if the proxy instruction is one
of multiple instructions being given. As no other persons will be entitled to attend the meeting in person due to
the UK Government’s restrictions, shareholders are urged not to appoint more than one proxy in relation to the
meeting.
6. A reply paid form of proxy is enclosed with shareholders’ copies of this document. To be valid, it should be lodged
with the Company’s registrars, Equiniti, Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA, so as to be
received not later than 3.15 pm on 17 November 2020 or 48 hours before the time appointed for any adjourned
meeting or, in the case of a poll taken subsequent to the date of the meeting or adjourned meeting, so as to be
received no later than 24 hours before the time appointed for taking the poll.
7. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service
may do so for the Annual General Meeting and any adjournment(s) thereof by utilising the procedures described in
the CREST Manual. CREST personal members or other CREST sponsored members (www.euroclear.com), and those
CREST members who have appointed (a) voting service provider(s), should refer to their CREST sponsor or voting
service provider(s), who will be able to take the appropriate action on their behalf.
8. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a “CREST
Proxy Instruction”) must be properly authenticated in accordance with Euroclear UK & Ireland’s specifications and
must contain the information required for such instructions, as described in the CREST Manual. The message must
be transmitted so as to be received by the issuer’s agent ID RA19, by 3.15 pm on 17 November 2020 (or, in the case
of an adjournment of the Annual General Meeting, not later than 48 hours before the time fixed for the holding
of the adjourned meeting). For this purpose, the time of receipt will be taken to be the time (as determined by the
timestamp applied to the message by the CREST Applications Host) from which the issuer’s agent is able to retrieve
the message by enquiry to CREST in the manner prescribed by CREST.
9. CREST members and, where applicable, their CREST sponsors or voting service providers should note that
Euroclear UK & Ireland does not make available special procedures in CREST for any particular messages. Normal
system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the
responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or
sponsored member or has appointed (a) voting service provider(s), to procure that his CREST sponsor or voting
service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of
the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST
sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning
practical limitations of the CREST system and timings.
10. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of
the Uncertificated Securities 2001 (as amended).
11. As at 30 September 2020 (being the last practicable day prior to the publication of this notice), the Company’s
issued share capital consists of ordinary shares of 1p each, carrying one vote each. Excluding 2,605,093 shares held
in treasury, the total voting rights in the Company as at 30 September 2020 are 116,330,497.
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Stock Code: TFW www. fwthorpe.co.ukStrategic ReportOur GovernanceOur FinancialsBusiness Overview Notice of Meeting continued
12. Please note that, as shareholders will not be able to attend the meeting, the Company is proposing to allow
shareholders the opportunity to raise any issues or concerns arising from the business proposed to be conducted at
the meeting. Appropriate questions on the business of the meeting should be emailed to shareholders@fwthorpe.
co.uk before 6.00pm on 18 November 2020 and responses will be posted on the Company’s website on the day after
the meeting. The Company will answer any such question relating to the business being dealt with at the meeting,
but no such answer need be given if:
a. to do so would interfere unduly with the preparations for the meeting or involve the disclosure of confidential
information; or
b. the answer has already been given on a website in the form of an answer to a question; or
c.
it is undesirable in the interests of the Company or the good order of the meeting that the question be
answered.
By order of the Board
Craig Muncaster
Joint Chief Executive, Group Financial Director and Company Secretary
Registered Office:
Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH
30 September 2020
AGM 2020
In the light of the UK Government’s restrictions on public gatherings, which are in place at the time of issuing the notice
convening the Company’s Annual General Meeting for 2020, the Company is adopting the following arrangements in
order to ensure that the health and safety of our shareholders, directors, employees and other key stakeholders are
protected:
• The meeting will only address the formal matters contained in the notice convening the meeting.
•
In accordance with the Company’s articles of association, the quorum necessary to constitute the meeting is two
members present in person or by proxy; therefore, two members will be in attendance to form the quorum and
conduct the business.
• Attendance by additional shareholders Is not considered as “essential for work purposes” and so would not be
permitted under the current restrictions. Shareholders may not attend in person and will be refused entry to the
meeting, given the current restrictions.
• All shareholders are urged to appoint the Chairman of the meeting as their proxy, with voting instructions. Please
refer to the notes to the notice of the meeting for more information regarding proxy voting. It is emphasised
that any forms of proxy being returned via a postal service should be submitted as soon as possible, to allow for
any delays to, or suspensions of, postal services in the UK as a result of measures being implemented by the UK
Government.
• Please note that, as shareholders will not be able to attend the meeting, the Company is proposing to allow
•
shareholders the opportunity to raise any issues or concerns arising from the business to be conducted at the
meeting. Please refer to the notes to the notice of the meeting for more information.
If the arrangements for the meeting change due to the UK Government changing the current restrictions or
implementing further measures relating to the holding of general meetings prior to the meeting (including the
arrangements outlined above), the Company will issue a further communication via the regulatory news service and
on its website at www.fwthorpe.co.uk.
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Annual Report and Accounts for the year ended 30 June 2020 Financial Calendar
2020
12 October
19 November
26 November
2021
March
April
September
Posting of the Annual Report and Accounts
Annual General Meeting
Payment of final dividend
Announcement of interim results
Payment of interim dividend
Announcement of results for the year
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Stock Code: TFW www. fwthorpe.co.uk F
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Merse Road
North Moons Moat
Redditch
Worcestershire
B98 9HH
England
Tel: + 44 (0)1527 583200
Fax: + 44 (0)1527 584177
www.fwthorpe.co.uk
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