RNS Number:3838V
Dewhurst PLC
7 December 2000
CHAIRMAN'S STATEMENT
Results
I am pleased to report another year of progress for the Group. For the third
successive year we have achieved record sales and profits. Group sales were up
9% and group profits before tax were 6% ahead. All but one company in the
group registered record sales. The improvement in group profits were primarily
generated by Thames Valley Controls and the contribution from the newly
acquired Australian Lift Components. The results are a great credit to the
hard work put in by our employees and I thank them for their efforts
throughout the year. The Directors are recommending a Final Dividend of 2.5p,
making a total of 3.75p for the year, a 9% increase.
Strategy
In February, Australian Lift Components (ALC) joined the group, building upon
our stated strategy of enhancing our global network. Our objective in
acquiring the company was to allow us to add value to our Australian sales and
to improve service to our customers in this market. ALC made an excellent
contribution in its first year with us and we are very happy to welcome the
team to the Group.
Factory Reorganisation
I referred to our need to undertake a major refurbishment of our Hounslow
factory in the Interim Statement. A significant amount of planning work has
been undertaken and orders have been placed for major components of the work,
but the financial impact last year was not really significant. The major
burden will fall on the current financial year and is expected to be of the
order of #500,000 to #600,000. The largest single element of the cost is for
the replacement of our electrical distribution system, which must be done for
safety reasons. We are also reorganising our Stores and some of our production
facilities for improved workflow and efficiency.
Outlook
For the Lift Division, export demand has fallen back from peak levels for
various reasons including the high value of the pound. UK demand is expected
to be stable although we are undertaking a range of product and marketing
initiatives to build home sales for the future.
Rail and Keypad demand is currently projected to be firmer but these areas
have a tendency to be less predictable.
At the same time we are facing the costs of our refurbishment and further
increases in pension costs.
The above factors mean we face a challenging year ahead.
R M Dewhurst
Chairman
REVIEW OF OPERATIONS
Operating Highlights
The Group achieved sales growth of 9% in the year which was fairly evenly
split between organic growth and that from the acquisition. All companies
except Dupar Controls achieved record sales in the millennium year which was
an excellent achievement. Sales fell slightly in the UK but this was more than
offset by growth in overseas markets. As last year, the growth was in the Lift
market. Keypad and Rail demand fell back slightly. Overseas sales have now
reached nearly 40% of total Group sales, reducing our dependence on the UK
market.
The parent company at Hounslow achieved record sales and profits for the year.
The sales growth was achieved in a very challenging export market, against the
burden of the overvalued exchange rate. Through the year we continued to focus
on improved customer service and on-time delivery reached record levels. We
have commenced work upon our refurbishment of the Hounslow factory, starting
with the storage areas.
Thames Valley Controls again produced excellent results with record sales and
profits for the second year in a row. A continued focus on productivity
through simplifying the products and processes has helped produce these
results.
Dupar Controls in Canada has had a disappointing year. Sales fell and the
organisation did not respond effectively resulting in lower profits.
Management changes also contributed to additional costs in the year, but are
expected to resolve the problems for the future.
In the USA, The Fixture Company doubled sales, but this required additional
investment and losses widened. However we continue to build a platform for
future growth and profitability in the US market.
Our new acquisition in Australia, Australian Lift Components, achieved our
expectations in its first year and we expect it to become a valued member of
the Group.
UNITED KINGDOM
In the UK companies the strong performer was the Lift Division, which achieved
double digit sales growth. However the major portion of this growth was on
export sales.
Hounslow
Keypad Division
As outlined above, keypad sales fell back slightly last year. This was
primarily caused by Year 2000 issues impacting on Automatic Teller Machine
(ATM) demand.
The major launch of the year was a new display surround and function key
product for NCR's Personas 86 ATM, which is an enhanced drop-in replacement
for an earlier generation of through-the-wall cash machines. There were major
challenges in the design because of the limited space envelope available - the
entire vandal resistant switch mechanism is provided within an overall depth
of 11mm. This product is expected to generate significant sales in the coming
year as banks look to upgrade older machines.
We also launched a full Braille version of our popular MA range of keypads
during the year, to cater for the needs of visually impaired users.
Rail Division
The refurbishment market has again provided the bulk of business for the Rail
Division. We won a number of important contracts which have centred around the
PA51 bodyside indicator. We are pleased that National Rail Supplies (NRS) are
now stocking a number of our components and this has led to some exciting new
opportunities for our products. Generally the industry is buoyant and the
demand for our components for both new build and refurbishment should be
firmer over the coming year.
Lift Division
Growth has continued at the Lift Division in Hounslow fuelled by high demand
for products which meet the new European Lift Directive and continued growth
in the Far East.
The UK lift industry continues to be buoyant but a shortage of skilled labour
is regulating peak demand. It appears that demand will continue at current
levels for the foreseeable future, which is encouraging.
In the coming year on the lift fixture side, we will be working hard to ensure
that we can sell added value and this may require a change in the way we
present ourselves to the UK industry.
This year in the UK we have launched a new autodialler product LADS2, which
has a number of improvements over the current product range such as remote
programming and improved diagnostics. LADS2 has been well received and it will
be an important product for us in the coming year. We have also continued our
success in being selected as the fixture supplier for landmark jobs - Fujitec
UK will be using our US91 Compact 2 pushbuttons on the new HSBC Tower in
Canary Wharf.
Overseas demand for our core push button products remains strong, but we are
entering a more difficult situation in the medium term. The industry overseas
is becoming more dominated by four major multi-nationals and we have been
working hard to get closer to these companies. It is important that this
strategy is successful and we are pleased to report that one of these
companies has recently put forward Dewhurst pushbuttons as a preferred option
to their own products.
Sales focus overseas this year has been on Europe and we have appointed new
Distributors in France, Spain and Poland. It is early days with these new
partners but initial indications are promising.
Thames Valley Controls
It has been a year of consolidation at Thames Valley Controls. Last year a
great deal of work was carried out on cost reductions and productivity
improvements and this year we have benefited from those improvements. The
controller market is however extremely competitive and we have to constantly
look for improvements in those areas.
The good work that was done last year in Production Engineering has continued
and we can now put orders on to the shop floor in a fraction of the time that
it took two years ago. We are now looking to extend this type of modular
approach to our test department.
This year has seen the launch of the new Hylogic controller, which is an
entry-level product for the Hydraulic Lift market. The Hylogic has been well
received and will be an important product for us in the coming year.
NORTH AMERICA
The North American market remained strong throughout the year and both our
companies benefited from this. The Fixture Company made particular progress
with good sales growth and a new distribution agreement.
Dupar Controls
This year has been rather unsettled at Dupar Controls. We parted company with
our General Manager half way through the year and it has been difficult to
make the profit growth that we budgeted.
Following the loss of the General Manager we worked hard to resolve the
situation and we are pleased to announce that David Dunlop has joined us as
General Manager and Vice President. David has many years experience in
managing similar sized operations and we are confident that he will be able to
provide the direction that the company requires. We wish him every success in
this important role. I would also like to thank the team at Dupar for all
their hard work and commitment through a difficult year.
Demand for our fixture products remains very strong in Canada and we have
recently been chosen to supply fixtures for the new Terminal One at Toronto's
International Airport. This is an enormous infrastructure project and we are
pleased to be a part of it. Focus this year will be on shortening our lead
times and ensuring that we do provide the highest levels of service to our
customers in North America. Although David has only been with us a short time,
he has already effected a number of improvements in our processes both in the
factory and the offices and it will not be very long before our customers see
the benefits of these changes.
The Fixture Company
It has been a year of exceptional sales growth at The Fixture Company, which
has laid solid foundations for the long term. Mark Menke and his team won the
exclusive distribution of Formula Systems safety edges in the USA and this
combined with strong fixture orders has lead to our sales growth.
Formula Systems are one of the leading manufacturers of infra-red safety edges
for elevators and have an established market in the US, which we are now
working hard to grow. There is significant demand for these products,
especially in the modernisation field, but there are many alternative safety
edges, so the market is very competitive. The Formula Systems product has a
number of advantages over the competition and we are targeting for strong
growth in this area over the next twelve months.
On the fixture side, the coming year will be exciting with the launch of the
US92 and US93 in Compact 2 form and also the availability of Compact 2 with
screw down terminals. These will be important products for the US market and
will be instrumental in continuing to build our volumes there.
AUSTRALASIA
In February of this year Dewhurst plc acquired Australian Lift Components
(ALC), who are based in Sydney, Australia.
Australian Lift Components
Dewhurst have good sales of components in Australia, but the acquisition of
ALC will allow us to add a significant amount of extra value to our products
in the local market.
ALC are a well established operation who specialise in the supply of complete
lift fixtures to the Australian market. They have extensive sheet metal
capabilities and have two laser machines in house, one cutting and shaping the
faceplates and the other for marking instructions on to them. The vast
majority of car operating panels that come out of the factory include displays
and autodiallers and they are fully wired up to make installation on site
quick and easy. ALC have their own range of pushbuttons, which we will
continue to supply to the local market, but they will also increasingly supply
Dewhurst products in their fixtures. There is also the opportunity for ALC to
distribute other Group products in the market.
Figures from ALC to date have been broadly in line with our expectations. It
is our opinion that in the short to medium term there will be a slowdown in
Australia (following the boom generated by the Olympics), but long term the
outlook is good and we are excited about the opportunities this market can
bring.
ALC is headed up by the Managing Director, Chris Carroll and a team of around
25 skilled personnel. We wish them a successful future as part of the Dewhurst
Group.
D Dewhurst
06/12/00
FINANCIAL REVIEW
Results
Turnover increased by 9% from #19.9 million to #21.7 million. Operating
profits increased by #190,000 from #1,805,000 to #1,995,000. Net interest
earned fell from #80,000 to #10,000 as a result of the loan taken to finance
the investment in Australian Lift Components (ALC).
Capital Investments
Additions to fixed assets were #404,000 for the year. A major purchase was a
new CNC Vertical Machining Centre which will allow us to respond more
effectively to short run and prototyping requirements. We also purchased a new
hydraulic shear and band saw. Our continuing investment in Information
Technology focussed this year on software to link the shop floor to our
administrative systems.
Cash Flow
The group ended the year with no material change in cash and investments,
which remained at #1.7 million. This position was achieved after spending a
net #0.6 million on the acquisition of ALC. The acquisition cost #1.6 million
in total, but this was part funded by a loan of #1.0 million. The loan is
denominated in Australian Dollars to match our exposure. Trade creditors have
increased substantially because one of our major suppliers cancelled a prompt
payment discount, so we have reverted to monthly payment. Operating cash flow
was #2.0 million for the year. Dividends paid increased from #343,000 to #
366,000.
The group seeks to reduce or eliminate financial risk, to ensure sufficient
liquidity is available to meet foreseeable needs, and to invest cash assets
safely and profitably. The policies and procedures operated are regularly
reviewed and approved by the Board. By varying the duration of its fixed and
floating cash deposits, the group maximises the return on interest earned. The
group's reported trading profit was not significantly affected by currency
movement with approximately 15% being earned in foreign currencies during the
period ended 30th September 2000.
Tax and Dividends
The tax charge for the year increased to #662,000 (33.1%) from #581,000
(30.8%). The main reasons for the increased percentage were the effect of
goodwill (which is not allowable for tax) and the higher tax rates in
Australia. The proposed total dividend of 3.75p per share, up 8.7% against
last year (3.45p), is covered 3.5 times by earnings. Shareholders' funds
improved from #8.5 million to #9.5 million, with no change in the shares in
issue during the year. However shortly after the year end the company
repurchased 168,500 ordinary shares.
Consolidated profit and loss account
For the year ended 30 September 2000
2000 1999
(52 weeks) (53 weeks)
# # # #
Turnover - continuing operations 20,608,203 19,876,599
- acquisitions 1,051,903
21,660,106 19,876,599
Operating costs (19,664,938) (18,071,476)
Operating profit
- continuing operations 1,883,361 1,805,123
- acquisitions 111,807
1,995,168 1,805,123
Net interest 10,235 79,900
Profit on ordinary activities before 2,005,403 1,885,023
taxation
(662,918) (581,397)
Tax on profit on ordinary activities
Profit for the financial year 1,342,485 1,303,626
Dividends per 10p ordinary share
Interim paid of 1.25p (1999: 1.15p) (128,983) (118,664)
Proposed final of 2.50p (1999:2.30p) (253,755) (237,330)
(382,738) (355,994)
Retained profit for the financial year 959,747 947,632
Basic earnings per share 13.01p 12.46p
Diluted earnings per share 12.90p 12.36p
Consolidated balance sheet
At 30 September 2000
2000 1999
# # # #
Fixed assets
Intangible 1,327,290
Tangible
1,388,823 1,374,420
- Land and buildings
1,769,156 1,683,995
- Plant and machinery
3,157,979 3,058,415
4,485,269 3,058,415
Current assets
Stocks 4,150,620 3,492,022
Debtors 4,050,268 3,316,454
Investments 26,501 23,193
Cash at bank and in hand 1,707,376 1,702,037
9,934,765 8,533,706
Creditors
Amount falling due within one year 4,053,157 2,927,646
Net current assets 5,881,608 5,606,060
Total assets less current liabilities 10,366,877 8,664,475
Creditors: due after one year 734,254
Provisions for liabilities and charges 145,000 172,072
Net assets 9,487,623 8,492,403
Capital and reserves
Called up share capital 1,031,870 1,031,870
Share premium account 126,658 126,658
Revaluation reserve 423,001 423,001
Capital redemption reserve 96,940 96,940
Profit and loss account 7,809,154 6,813,934
Equity shareholders' funds 9,487,623 8,492,403
The financial statements were approved by the board of directors on 6
December 2000 and were signed on its behalf by:
R M Dewhust Chairman
D Dewhurst Group Managing Director - Lift Division
Consolidated cash flow statement
For the year ended 30 September 2000
2000 1999
(52 (53
weeks) weeks)
# # # #
Net cash from operating activities 1,982,424 1,959,936
Returns on investments
And servicing of finance:
Interest and dividends received 57,073 80,682
Interest paid (45,711) (782)
Interest element from finance lease rental
payments (1,127)
Net cash inflow from returns on investments
And servicing of finance 10,235 79,900
Taxation:
UK taxation (336,663) (587,269)
Overseas taxation (134,670) (104,366)
Net cash outflow from taxation (471,333) (691,635)
Capital expenditure and financial investment
Purchase of fixed assets (403,122) (582,262)
Sale of tangible fixed assets 52,462 55,978
Net cash outflow from capital expenditure and
financial investment (350,660) (526,284)
Acquisitions and disposals:
Purchase of subsidiary undertakings (1,664,321)
Net cash outflow from acquisitions (1,664,321)
Equity dividends paid (366,313) (342,603)
Net cash inflow /(outflow) before use
Of liquid resources and financing (859,968) 479,314
Management of liquid resources
Sale/(purchase) of short-term deposits 752,400 (752,400)
Financing
Bank loan 1,000,000
Bank loan repayments (93,209)
Capital element of finance lease rental
payments (41,484)
Repurchase of shares - (219,919)
865,307 (219,919)
Increase/(decrease) in cash in period 757,739 (493,005)
AGM, results and dividends
The trading profit for the period, after taxation, amounted to #1,342,485
(1999: #1,303,626).
A final dividend on the Ordinary and 'A' ordinary shares of 2.50p per 10p
share (1999: 2.30p) will be proposed at the Annual General Meeting to be held
on 29 January 2001. If approved, this dividend will be paid on 26 February
2001 to members on the register at 12 January 2001.
An interim dividend of 1.25p per share (1999: 1.15p) was paid on 4 September
2000.
These dividends absorb #382,738 (1999: #355,994) of the profit for the period
leaving a balance retained of #959,747 (1999: #947,632) which has been
transferred to group reserves.
Basis of preparation
The above financial information does not constitute full accounts within the
meaning of Section 240 of the Companies Act 1985.
The financial information for the year ended 3 October 1999 is extracted from
the Group's financial statements to that date which received an unqualified
auditors' report and have been filed with the Registrar of Companies. The
financial information for the year ended 30 September 2000 is extracted from
the Group's financial statements to that date which received an unqualified
auditors' report and will be filed with the Registrar of Companies.
The financial information presented in the preliminary announcement has been
prepared on the basis of the accounting policies set out in the most recently
published set of annual financial statements, with the exception of goodwill.
This states any difference between the cost of acquisition of a subsidiary
undertaking and the fair value of its separable net assets at acquisition is
capitalised as goodwill. Goodwill carried in the balance sheet as an
intangible asset is amortised, on a straight line basis, over a period of 10
years with such period being chosen to reflect its expected useful life.
Impairment tests on the carrying value of goodwill are undertaken at the end
of the first full financial year following acquisition and in other periods if
events or changes in circumstances indicate that the carrying value may not be
recoverable.
Earnings per share and dividend per share
Weighted average number of shares
2000 1999
No No
For basic earnings per share 10,318,698 10,464,717
Share options outstanding 85,500 85,500
For diluted earnings per share 10,404,198 10,550,217
The calculation of basic earnings per share is based on the profit
attributable to shareholders and on 10,318,698 Ordinary 10p and 'A' ordinary
10p shares, being the weighted average number of shares in issue throughout
the financial year.
For diluted earnings per share the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all share options granted to
employees outstanding at the period end.
The final proposed dividend is based on 3,594,200 Ordinary 10p shares and
6,555,998 'A' ordinary 10p shares, being the expected number of shares on the
proposed record date.
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