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AIMprospector

Family firm is one of AIM’s leading lights

FW Thorpe is a long-established family-controlled lighting business. The company is a paradigm of financial conservatism, using its continued business success to reward shareholders via consistent dividend increases. The company was founded in 1936 by Frederick Thorpe. Family members remain substantial shareholders today, with members of the Thorpe family owning around 54% of the equity. Frederick Thorpe’s grandson, Andrew Thorpe, is today Joint Group Chief Executive and Group Chairman. He owns 21.7% of the company.

Thorlux accounted for just over 80% of sales FW Thorpe operates through seven brands: Thorlux Lighting, Philip Payne, Sugg, Compact, Solite, Portland Lighting and TRT Lighting. The dominant brand is Thorlux Lighting. Over 60% of the products from this business are sold to the commercial sector, e.g. offices and hospitals. Philip Payne produces bespoke emergency exit signage for architects and interior designers. Clients range from Ascot racecourse and Wembley Stadium to The Ritz Hotel and Oxford’s Ashmolean Museum. Sugg lighting produces decorative and heritage outdoor lighting (i.e 8

fancy lamps). The company was established in 1837 and acquired by Thorpe in 1999. Sugg was awarded the prestigious Royal Warrant in 2008. Compact and Solite address specialist niches. Compact provides lighting to retailers. Solite specialises in installations where cleanliness is a priority — such as laboratories and kitchens. Portland Lighting makes lighting for outdoor signage/displays. TRT Lighting was recently borne out of Thorlux and is dedicated to road and tunnel lighting. In the year ending June 2014, Thorlux accounted for just over 80% of sales and over 90% of operating profit. Geographically, 87% of group sales are within the UK market. The company recently opened an office in Abu Dhabi to face the Middle East market. TRT Lighting is finding its own feet and moving toward profitability. Shareholder dividends at FW Thorpe have been increased from 0.45p in 1997 to 3.25p for 2014. In that time, the dividend was increased in every year but two (when it was

held). The 2014 payout was further augmented by a special dividend of 1.5p per share. Thorpe’s record of dividend increases in the last five years puts the company among the top twenty on AIM. Sales and profit growth have been more pedestrian. Since 2008, annual sales and net profits have progressed at 3.4% pa and 3.8% pa respectively. However, the last reported full-year numbers showed growth significantly ahead of this. There are reasons to expect that higher growth might be repeated in the future as the company has launched initiatives to improve LED margins and has made significant investments in production and warehouse capacity.

no forecasts in the market Sadly, there are no forecasts in the market for the company. However, the history of dividend increases, along with the strong balance sheet, would suggest another year of payout increases is on its way. FW Thorpe (LON:TFW) FOR Long track record of success Strong balance sheet AGAINST Controlled by the founding family Only modest growth opportunities Market cap Bid:offer P/E (historic) Yield (historic) 52week low:high

£150m 130p:135p 15.5 2.4% 120p:150p

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November 2014 AIM Prospector  
November 2014 AIM Prospector  

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