RNS Number:6885E
Dewhurst PLC
05 December 2002
Dewhurst plc
Preliminary Results for the year ended 30 September 2002
CHAIRMAN'S STATEMENT
Results
Group sales have achieved another record at #24.2 million, 6% up on last year.
Group profits were up 35% at #1.8 million without last year's exceptional
factory refurbishment costs. Before exceptional items profits showed a small
improvement. The main driver for the sales growth has been the Lift Division
subsidiaries, both in the UK and overseas.
During the year a major effort was required to launch the new keypad range with
a fairly aggressive stock build programme. This was done very successfully but
needed a significant effort from the implementation team. I would like to say a
special thank you to those involved in this project this year, but would also
thank all our employees around the world for their contribution to another
successful year for the Group.
Reorganisation
Following the establishment last year of LiftStore, our UK lift fixtures and
auxiliaries division, we have now further integrated our UK lift products
organisation. LiftStore and Thames Valley Controls (TVC) have been merged into a
single company named LiftStore. This company, which commenced trading in this
form on 1st October 2002, will offer our full range of products to UK customers.
The brands of Dewhurst for Pushbuttons and TVC for Controllers will remain, but
offered through a single organisation. The purpose of this change is to improve
our service to our customers, by offering a full range of products from a single
source. With availability of skilled labour declining in the industry it is
becoming ever more important for suppliers to be able to ensure the integration
of products so that the lift system works as a whole.
Management
I am very pleased to welcome Jared Sinclair to the Board. Jared has been with us
for 5 years following his training as a chartered accountant at Moores Rowland.
He has progressed over this period through a number of roles in financial
management and has now been appointed Finance Director for the Group.
After three years as a non-executive director Keith Bossard is retiring from the
Board. I would like to thank him for his energy and enthusiasm throughout the 23
years he spent with the Company. He was always ready to take on new challenges
with a positive approach. We hope he will have a full and happy retirement.
Outlook
In the Lift Division a major contract for components for home lifts is expected
to boost sales at Dupar in Canada. Australia has also bounced back from the post
Olympic lull and is projected to remain strong during the year. In the UK the
current signs are for rather patchy demand, but our aim with LiftStore is to
offer customers a wider range of products and at the same time maximise the
Group's opportunity on each project.
Rail demand tends to be project based and whilst opportunities exist the timing
of contracts is very difficult to predict.
There are good opportunities for growth in keypad product unit sales with the
launch of the new keypad range. However there are strong downward pressures on
costs and prices, which will hold back revenue growth.
The direction of the major world economies remains uncertain. It is therefore
difficult to predict the impact on our businesses. However positive action has
been taken by the Group to make the most of available opportunities.
R M Dewhurst
Chairman
REVIEW OF OPERATIONS
Operating Highlights
Group sales increased 6% overall. This year the growth came from the Lift
division subsidiaries, both in the UK and overseas. Overseas sales grew more
strongly increasing their contribution to 41% of total Group sales.
After strong growth last year Keypad division sales remained flat this year.
Rail demand also registered little change year-on-year. In the Lift Division the
largest sales gains were in Australia, though all subsidiaries reported record
sales for the year.
UNITED KINGDOM
Consolidation at Hounslow, but a strong performance from Thames Valley Controls.
At Hounslow, it was mostly a year of consolidation after the major factory
refurbishment of 2001. A small amount of electrical and stores reorganisation
carried through into the first half. The cost impact of these items was less
than #100,000 and the overall project remained within the originally targeted
costs.
Keypad Division
The major event for the keypad division in 2002 was the launch of the new EPP
keypad unit for automatic teller machines (ATM's). This unit has been designed
to offer easier configuration to customers' needs and is available in stainless
steel or polycarbonate key versions. With its third party security module the
unit meets the demanding world standards for a high security pinpad. It is
retro-fittable to existing machines and a portion of future demand is expected
to come from banks and financial institutions taking the unit to upgrade their
system security.
Rail Division
We have continued to successfully market a number of indicator and pushbutton
products to key customers in the United Kingdom. We have increased the variety
and complexity of the products and have maintained our position within the
market.
Lift Division
As the UK sales are now all channelled through LiftStore, the Hounslow business
lost many hundreds of small external customers and gained one very large
internal customer, LiftStore. There was significant focus through the year in
ensuring that the Hounslow factory worked effectively with their colleagues at
LiftStore to guarantee product availability to meet their needs.
The Hounslow Lift Division is therefore now responsible for developing and
supplying pushbutton components for all the subsidiaries as well as other export
markets.
On the new product side, this year has been exceptionally busy and it will
continue in this way during 2003. We launched the new Compact 2 Micro product
through the year and this product won the 'Best New Product under #500' category
at this year's British Lift Awards. We have also developed a new range of
Digital Display units, which will be launched in the first quarter of this year.
Inclusive Mobility and the Disability Discrimination Act are becoming high
profile issues throughout the world but particularly in the United Kingdom. The
Lift Code, EN-81, has undergone some revisions to cater for these issues. This
has meant that we have had the opportunity to develop a number of new pushbutton
products to meet this code.
In Canada, a new code again aligned to Inclusive Mobility has been introduced,
which has meant that we have had to adapt the design of all our pushbuttons
supplied to Canada. Although this was not too challenging technically, it did
throw up some serious logistical problems, which we have overcome.
Demand in the United States for products to meet the Californian code has been
quite strong and we have developed a new square plastic button, the US94 to
compliment our US92 range of circular pushbuttons.
In terms of sales, the downturn in our established Far Eastern markets that
began last year continued this year and the market is likely to follow this
pattern for some time. The increase in demand from our overseas subsidiaries as
well as other markets ensured that sales remained at a respectable level in
difficult times.
LiftStore
Having established LiftStore in July 2001 as the outlet for Dewhurst products in
the UK, they have had a full year of operation and we are now seeing some of the
benefits of this stand-alone operation starting to come through.
We aim to add value to our core pushbutton products in the UK and this is done
by incorporating these products in complete fixtures. The added focus of
LiftStore and its sales force, together with a new bespoke drawing package is
helping to make the increase in fixture sales a reality. We are confident that
our success in this area will grow over the next twelve months.
Demand for Dewhurst lift products started very strongly during the first half of
the year, but softened over the second half. This was not totally unexpected, as
the summer months always tend to be quieter. We would expect the coming year to
follow a similar trend, although there is concern for the second half of 2003.
Thames Valley Controls
Last year was a very positive one for Thames Valley Controls as the company
continued to grow sales in both controller and monitoring products.
In the Controller Division, it has essentially been a year for 'more of the
same'. We have continued with widening the scope of our Fastrack system, which
has ensured that the time taken to engineer each panel has been reduced
dramatically. Additionally though, over the year we have developed a system
which allows us to link the software used in the Fastrack system to an automated
testing module. This significantly reduces the controller testing time and
ensures consistency of the test programme.
The gestation period for orders in the Monitoring Division is relatively long
and last year was one where a great deal of background work was being done,
although this did not show in the results. This year however all that hard work
has paid off and the Monitoring Division showed a significant increase in sales
together with strong profit growth.
As the Chairman indicated in his report, this year was the last year of
operations for Thames Valley as a separate company. It was very pleasing that
the final year was so successful. It allows us to move forward in a strong
position as we introduce LiftStore as the single source company for the
excellent range of Dewhurst Group lift components. We have launched LiftStore
with a strong new brand identity and a very informative thirty eight-page
brochure illustrating the wide product range. This will be followed up early in
this current year with a new website. This new site will also serve as a basis
for new sites for all Group Companies.
NORTH AMERICA
Strong growth built on the basis of solid foundations.
Dupar Controls
Last year was indeed a year of reorganisation and consolidation at Dupar
Controls and this year we were able to benefit from that and win a considerable
amount of additional business primarily in the Canadian market.
Demand for our products continues to be strong and we are currently extending
our plant in Cambridge by a further 10,000 sq. ft. This will allow us to install
additional capital equipment and extend the office area to help satisfy this
demand and continue our growth programme.
Dewhurst at Hounslow designs all pushbutton components, but subsidiary companies
are involved at a local level in engineering solutions for their particular
customers' requirements. At Dupar a complete range of surface mount fixtures was
developed and put into production in six months for a major new customer, which
was a great achievement. The benefits of this work should be seen over the
coming years.
Early in the year we further cemented our relationship with the infrared safety
edge manufacturer Formula Systems to distribute their products in Canada. Early
indications for sales of this product in this market are good.
The Fixture Company
We continued our progress of the last two years, although the rate of
improvement slowed. However, in a year when many other companies in the United
States were suffering, we were able to grow both our fixture and our safety edge
sales.
Investment, in terms of personnel, is still an important requirement at The
Fixture Company and we have recently added new key staff in the area of sales,
engineering and accounting to ensure long-term success in this market.
AUSTRALASIA
The excellent work done in previous years to ensure long-term sales growth has
been rewarded with strong results.
Australian Lift Components
The lull in activity in the market following the Sydney Olympics has finished.
Activity in that city continues once again to be very strong and ALC have
benefited from this. As well as a strong base load, there are also a number of
major modernisation projects, again often motivated by the requirement to ensure
Inclusive Mobility around the building. These projects have further strengthened
the order book.
A key issue now is to find a new property as we are very constrained by our
existing factory. The management are therefore actively looking for new larger
premises from where we can continue our growth.
The results from the Lift Division this year have been good following last
year's concerted effort throughout the subsidiary companies to ensure that we
had a strong platform for growth. That growth has been achieved this year
through a lot of hard work from all my colleagues throughout the Division and I
would like to extend my thanks to them.
D Dewhurst
Group Managing Director - Lift Division
FINANCIAL REVIEW
Results
Turnover increased by 6% from #22.9 million to #24.2 million. Operating profits
before exceptional items and goodwill rose by #37,000, from #1,974,000 to
#2,011,000. There were no exceptional items incurred in the year, as against
#460,000 spent on the refurbishment of the factory in the previous year.
Goodwill amortisation was #142,000, up from #141,000. Net interest paid of
#15,000 rose to #32,000. Profit before tax rose from #1,359,000 to #1,837,000.
Capital Investments
Additions to fixed assets were #614,000 for the year. A major purchase at Thames
Valley Controls Ltd was a new fully integrated manufacturing system which was
implemented in the current year at both the Flint and Central Park, Hounslow
sites. This has given us greater reporting flexibility at local and group
management levels whilst enabling better utilisation of resources to improve
customer service. The same system has been selected for Australian Lift
Components Pty Ltd (ALC), which should be implemented in the coming year. We
also purchased a new laser marking system for our keypad section which will
enhance our range of products.
Cash Flow
The group ended the year with no material change in cash and investments, which
remained at #1.8 million. This position was achieved after spending a net
#561,000 on capital investments, #213,000 on repurchase of own shares, as well
as repaying #184,000 of the ALC acquisition loan. The loan is denominated in
Australian Dollars to match our exposure. Stocks, trade debtors and trade
creditors have all increased for a number of reasons. A significant proportion
of the increase is to support major contracts coming on stream at two of the
overseas subsidiary companies. Operating cash flow for the year was #2.1
million, up from #1.8 million. Dividends paid increased from #388,000 to
#406,000.
Treasury Policy
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. Other
than the hedging of the investment in ALC with an Australian denominated loan,
there is no formal policy for matching foreign currency cash flows, or matching
exposure to foreign currency net assets although a careful watch is kept on the
positions. As shown in note 24, there is no material currency exposure to the
group at the year end. The group's reported trading profit was not significantly
affected by currency movement with approximately 37% being earned in foreign
currencies during the year ended 30 September 2002.
Tax and Dividends
The current tax charge for the year rose to #660,000 (35.9%) from #503,000
(37.0%). The main reason for the drop in the current tax rate percentage is due
to the reduction of overseas tax rates in Canada and Australia. The proposed
total dividend of 4.17p per share, up 5.3% against last year 3.96p, is covered
2.9 times by earnings. Shareholders' funds improved from #9.6 million to #10.1
million, with a reduction of 328,000 shares during the year.
J C Sinclair
Finance Director
Consolidated profit and loss account
For the year ended 30 September 2002
2002 2001
# # # #
Turnover 24,184,449 22,902,771
Operating costs (22,315,830) (21,528,910)
---------------- ----------------
Operating profit before exceptional items and 2,010,715 1,974,135
amortisation of goodwill
Exceptional items - (459,747)
Amortisation of goodwill (142,096) (140,527)
--------------- ---------------
Operating profit 1,868,619 1,373,861
Net interest (31,592) (14,790)
--------------- ---------------
Profit on ordinary activities before taxation 1,837,027 1,359,071
Tax on profit on ordinary activities (659,843) (505,374)
--------------- ---------------
Profit for the financial year 1,177,184 853,697
Dividends per 10p ordinary share
Interim paid of 1.39p (2001: 1.32p) (136,940) (134,371)
Proposed final of 2.78p (2001: 2.64p) (273,883) (268,744)
(410,823) (403,115)
--------------- --------------
Retained profit for the financial year 766,361 450,582
__________ __________
Basic earnings per share 11.82p 8.41p
Diluted earnings per share 11.82p 8.36p
All amounts relate only to continuing operations.
Consolidated balance sheet
At 30 September 2002
2002
2001
# # # #
Fixed assets
Intangible 981,068 1,079,018
Tangible
- Land and buildings 1,340,440 1,361,440
- Plant and machinery 1,577,288 1,540,483
------------- -------------
2,917,728 2,901,923
--------------- --------------
3,898,796 3,980,941
Current assets
Stocks 4,662,486 4,368,467
Debtors 4,703,835 4,441,429
Investments 403,198 175,358
Cash at bank and in hand 1,402,449 1,624,340
--------------- ----------------
11,171,968 10,609,594
Creditors:
amounts falling due within one year 4,599,649 4,362,029
-------------- ---------------
Net current assets 6,572,319 6,247,565
--------------- --------------
Total assets less current liabilities 10,471,115 10,228,506
Creditors: due after one year 298,686 480,111
Provisions for liabilities and charges 109,000 155,000
--------------- -------------
Net assets 10,063,429 9,593,395
--------------- -------------
Capital and reserves
Called up share capital 985,190 1,017,970
Share premium account 157,083 157,083
Revaluation reserve 423,001 423,001
Capital redemption reserve 151,570 118,790
Profit and loss account 8,346,585 7,876,551
---------------- ---------------
Equity shareholders' funds 10,063,429 9,593,395
---------------- ----------------
The financial statements were approved by the board of directors on 4 December
2002 and were signed on its behalf by:
R M Dewhurst Chairman
D Dewhurst Group Managing Director - Lift Division
Consolidated cash flow statement
For the year ended 30 September 2002
2002 2001
# # # #
Net cash inflow from operating activities 2,076,370 1,842,304
Returns on investments
and servicing of finance:
Interest and dividends received 23,768 57,067
Interest paid (51,915) (65,122)
Interest element from finance lease rental payments
(3,445) (6,735)
-------------- -------------
Net cash outflow from returns on investments
and servicing of finance (31,592) (14,790)
Taxation:
UK taxation (372,522) (573,646)
Overseas taxation
(262,230) (125,307)
---------------- ---------------
Net cash outflow from taxation (634,752) (698,953)
Capital expenditure and financial investment:
Purchase of fixed assets (614,379) (357,071)
Sale of tangible fixed assets
53,100 22,673
---------------- ----------------
Net cash outflow from capital expenditure
& financial investment (561,279) (334,398)
Equity dividends paid
(405,684) (388,126)
---------------- ---------------
Net cash inflow before use
of liquid resources and financing 443,063 406,037
Management of liquid resources
Purchase of short-term deposits (227,840) (175,358)
Sale of investments
- 26,501
------------ ---------------
(227,840) (148,857)
Financing
Bank loan repayments (184,189) (153,891)
Capital element of finance lease rental payments (39,855) (46,764)
Issue of share capital - 38,375
Repurchase of shares
(213,070) (177,936)
--------------- ----------------
(437,114) (340,216)
-------------- -------------
Decrease in cash in year
(221,891) (83,036)
---------------- --------------
AGM, results and dividends
The trading profit for the year, after taxation, amounted to #1,177,184 (2001:
#853,697).
A final dividend on the Ordinary and 'A' ordinary shares of 2.78p per 10p share
(2001: 2.64p) will be proposed at the Annual General Meeting to be held on 3
February 2003. If approved, this dividend will be paid on 3 March 2003 to
members on the register at 17 January 2003.
An interim dividend of 1.39p per share (2001: 1.32p) was paid on 2 September
2002.
These dividends absorb #410,823 (2001: #403,115) of the profit for the year
leaving a balance retained of #766,361 (2001: #450,582) 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 30 September 2001 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 2002 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 deferred
tax. This states that deferred tax balances are recognised in respect of all
timing differences that have originated but not reversed by the balance sheet
date except that:
* deferred tax is not recognised on timing differences arising on revalued
properties unless the group has entered into a binding sale agreement and is
not proposing to take advantage of rollover relief; and
* the recognition of deferred tax assets is limited to the extent that the
group anticipates to make sufficient taxable profits in the future to absorb
the reversal of the underlying timing differences.
Deferred tax balances arising from underlying timing differences in respect of
tax allowances on industrial buildings are reversed if and when all conditions
for retaining those allowances have been met. Deferred tax balances are not
discounted. This is a change of accounting policy in order to comply with FRS19.
This change of policy had no effect on the prior year figures.
Earnings per share and dividend per share
Weighted average number of shares
2002 2001
No No
For basic earnings per share 9,955,177 10,146,095
Share options - 62,076
------------ ---------------
For diluted earnings per share 9,955,177 10,208,171
--------------- ---------------
The calculation of basic earnings per share is based on the profit attributable
to shareholders and on 9,955,177 Ordinary 10p and 'A' ordinary 10p shares, being
the weighted average number of shares in issue throughout the financial year.
For the comparative diluted earnings per share the weighted average number of
ordinary shares in issue was adjusted by assuming that all share options
exercised during that year were converted at 1 October 2000.
The final proposed dividend is based on 3,570,700 Ordinary 10p shares and
6,281,198 'A' ordinary 10p shares, being the expected number of shares on the
proposed record date.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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