TIDMDWHT
RNS Number : 1224T
Dewhurst PLC
01 December 2011
Dewhurst PLC
("Dewhurst" or the "Group")
Preliminary Results for the year ended 30 September 2011
Chairman's Statement
Results
With the continued turbulent economic climate I am pleased to be
able to report sales at record levels and operating profit before
goodwill write-off also just ahead of last year's record. Sales
were up 12% to GBP41.5 million (2010: GBP37.0 million), operating
profit before goodwill write-off was GBP4.9 million (2010: GBP4.9
million) and profit before tax was GBP4.3 million (2010: GBP4.8
million) after goodwill write-off.
Sales benefited from the first time contribution of Elevator
Research and Manufacturing (ERM) in the USA and JAS Engineering
(JAS) in Australia. We also saw improved sales from Hong Kong. The
lift market picked up over the summer and we ended the year with
stronger sales.
It has been a tough year in many respects and these results are
a real credit to the Group's employees, who have worked hard to
overcome the difficult conditions. My congratulations and thanks to
the whole team.
Property
We have put in a huge amount of work over the year preparing our
new headquarters and factory for occupation. Our plan is for a
phased move during this December and January. We should be fully
operational in the new premises by the end of January and our AGM
will take place at the new site. This will be a good opportunity
for shareholders to see the new facilities.
Acquisitions
During the year we acquired a controlling interest in ERM on the
basis of our agreement with the shareholders in July 2010. As a
result the assets of the company are now consolidated in the
Group's results. The US market has not been an easy one over the
past year and so we have felt it prudent to write down the goodwill
on acquisition by GBP0.5 million. This is disappointing, but we
still believe the business has good long term prospects in the US
market and will prove a worthwhile investment when economic
conditions improve. In the meantime we have taken action to reduce
fixed costs at the company to lower its breakeven point.
Earlier in the year we also acquired JAS, a lift fixture company
based in Sydney. JAS builds on the market position we have with ALC
in Australia, but also allows us to expand the range of sheet metal
products and services we offer to customers in New South Wales.
Outlook
The more positive feel to the lift market that started in the
summer has continued through the autumn. Despite the uncertain
financial position in Europe we expect our UK and main
international markets to remain reasonable for the first half after
which they may tail off depending on the economic environment.
Keypad sales are likely to rise due to a change in product
content, but margins will fall in percentage terms. Transport
demand remains weak due to Local Authority and Central Government
cutbacks. There will be costs this year due to the premises move
but we will be doing our best to minimise both the costs and any
disruption to our customers.
Richard Dewhurst
Chairman
Review of Operations
Operating Highlights
We anticipated that this year would not see any real improvement
over the last financial year and that has been the case. Although
not all our markets were down, indeed Australia and Canada were
quite robust, trading conditions in the UK and the USA were
extremely tough. It is therefore encouraging that towards the end
of the year these markets, particularly certain sectors in the UK,
started to show some signs of recovery.
Once again, all our employees across all companies have made a
significant contribution and we are very grateful to them for their
hard work and dedication.
UNITED KINGDOM
Dewhurst UK Manufacturing
This year has been another year of progress at Dewhurst UK
Manufacturing and although the company once again did not show a
profit, the losses were reduced on broadly flat sales.
Our programme of continuous focus on quality and errors has been
very successful. The number of errors leaving the factory gate has
fallen dramatically over the last twelve months. This helps support
our image and reputation within the lift industry. We have also
focused hard on our on time delivery and for the second year in a
row we have achieved above 95% on time delivery.
Last year's Annual Report spoke of the move to our new site at
Hampton Business Park. The move is now imminent and will take place
effectively over the Christmas period in December 2011. A great
deal of hard work has taken place to get us where we are now and
even more activity will take place over the next month as we
complete the office and factory fit out and carry out the actual
move itself. Senior management have been supported by a relatively
small team led by Keith Timberlake, Martin O'Neill and Steve Ward
who have worked tirelessly to ensure that the new building is set
up for our needs and that the move goes seamlessly. They have had
to work long hours, focus on intricate detail and remain calm at
all times, so that Dewhurst employees can look forward to their
future in the new location; we owe this team a great debt of
gratitude.
The move to Hampton Business Park also made us think long and
hard about the current structure of our UK business. The UK lift
industry was served by LiftStore out of two locations: Flint where
we make controllers and Hounslow where we supply fixtures and loose
components. The management team for LiftStore has always been based
in Flint and the management of the Hounslow operation has always
been problematic. Also, customer feedback led us to believe that
the brands we were not using in the UK, Dewhurst and Thames Valley
Controls, were stronger than that of LiftStore. The move to Hampton
was a catalyst for addressing these issues and as a result the
activities of Dewhurst UK Manufacturing and LiftStore Hounslow were
merged. This means that Dewhurst UK Manufacturing now supplies
fixtures and lift components throughout the UK as well as to Europe
and the rest of the world.
The LiftStore Flint operation has revived the Thames Valley
Controls name and their focus now is purely on controllers, control
systems and monitoring. The feedback from the market to this
significant change in our UK structure has been very positive. It
has also been well received internally.
We have not had any major new product launches this year but we
have worked hard on extending our existing product range. We have
introduced two new hall lanterns both of which appear in pictures
in this report. We have extended our offering on pressel finishes
so that customers can now choose any bespoke finish for their
pushbuttons.
On the keypad side of the business we have developed a very neat
38 key keypad for a Canadian customer who manufactures parking
payment machines. This keypad allows people to enter their licence
plate, which is then printed on their parking ticket.
LiftStore
This year began quite slowly for LiftStore as the UK lift
industry market did not show any signs of recovery. However the
second half of the year saw a significant improvement in general
market conditions. It is not easy to determine why there has been
such a marked improvement but our impression is that work has been
postponed over the last couple of years and people are now in a
situation where they cannot put off these works any longer. We have
seen this growth in both private and local authority work during
the year.
The Ethos Hall Call Destination System has been a major
development project for LiftStore for more than a year and has
absorbed a significant amount of resource. This year following all
the hard work to bring the product to market we were delighted to
win two major Ethos HCD projects. The installation of the first of
these projects is currently underway and initial reactions from the
customer are very positive. The Ethos controller, which is the
mainstay of the LiftStore product range, continues to gain market
share in the UK and now has an excellent reputation amongst both
private and public users.
The Monitoring Division has had a steady year with good sales
throughout the year. Demand for their autodialler products and
monitoring systems continues to be reasonable. The CMS Anywhere
product that was launched a number of years ago and allows
customers to monitor their lifts from any PC over the internet, has
given our monitoring products new lease of life. It provides
customers with the flexibility they require in today's world.
Traffic Management Products (TMP)
Local authority spending on bollards and road signage has been
held back throughout the year and this has made 2011 a very
challenging year. We have also seen an increasing number of
competitors enter the market for non-illuminated and solar powered
bollards. The sales team at TMP has nonetheless worked hard and
achieved a good level of sales in this difficult market.
There has been a lot of emphasis placed on development work and
a number of new designs are currently in the pipeline. The first of
these is an improved design for our self fronting bollard base,
which will be launched very shortly.
We exhibited two new sign lights at the Traffex exhibition and
these were well received. These are now moving to tooling with a
launch programmed for the second half of the financial year. We
have made the conscious decision to invest heavily in new product
development for TMP, with the aim of increasing revenue and profit
in the medium term.
Cortest
Cortest has been successful in securing larger projects this
year particularly on Private Finance Initiative contracts where we
have provided non-destructive and electrical testing services to
some of the largest highways and electrical contractors in the
UK.
As a result our customer portfolio now includes several blue
chip companies as well as our traditional mix of Local Authority
and private customers. Much of our work has remained oriented
towards street lighting and street furniture for highways and
airports but we have also completed Specialist Non-Destructive
inspections for both the Port of Dover and Bournemouth Pier,
supporting our strategy to extend our services further into the
non-highways arena.
Despite strong sales growth, margins remain under pressure as we
continue to invest in new equipment and people to drive the
business further forward in 2012.
EUROPE
Dewhurst Hungary
Having completed its third full year of operation Dewhurst
Hungary has settled down and the team there operate quite
autonomously now.
They continue to face the same problems that we have always
faced in the keypad market, where there is constant focus on price
and margins are always under pressure. We have completed some
successful value engineering projects on a number of products this
year and the focus in the New Year will be to extend such projects
more widely.
Our customers in this sector have sustained their pressure on
product and process quality. This has meant that the team in
Hungary have had to further enhance their quality processes and
procedures towards the levels found in the auto components
industry. Operating at this level is very useful for the Group as a
whole and once we have established a stable system in Hungary, we
need to look at how we can use this knowledge more widely in our
other subsidiary companies.
Demand for our keypad products has held up well and we have
shipped a significantly greater quantity of keypads in this
financial year.
NORTH AMERICA
Dupar Controls
We had another strong year of sales at Dupar and a reasonable
improvement in profits.
Dupar have continued the theme of the last few years with
further process improvements in their manufacturing plant to
streamline the labour intensive assembly of Car Operating Panels.
This has been quite successful, allowing them to increase the flow
of work through the plant. Dupar are currently setting the
benchmark for fixture production within the Group and in the coming
year we need to flow these advances through to Dewhurst UK, ERM and
ALC. We are tasking our Group Operations Director with this job and
we look forward to seeing the benefits of this project.
We launched the new US91 Optic pushbutton in this financial
year. This is an upmarket product where the braille tag to the side
of the button is permanently illuminated. It has been very well
received by the market and has already been installed in a number
of prestigious sites across North America.
Elevator Research & Manufacturing (ERM)
We acquired a majority stake in ERM at the end of 2010. It has
been a difficult time to take on a new acquisition in the United
States and the Californian market, where ERM predominantly
operates, has been weak throughout 2011. However all our
acquisitions are long term ventures and the opportunity to expand
ERM out of California and to gain sales from the Western half of
the USA remains excellent.
There are two divisions within ERM. One side designs and
manufactures lift fixtures, making this business very similar to
Dupar Controls and ALC. ERM however have a second division which
designs and manufactures lift cars, doors and entrances. The
manufacture of lift cars is a complementary business to fixtures
and is a possible opportunity in other markets.
Just after the end of the year we carried out some
organisational changes at ERM to put us in a stronger position to
move forward in the medium term.
AUSTRALASIA & ASIA
Australian Lift Components (ALC)
ALC recorded slight growth in sales over the previous year. The
growth was due to strong sales of GAL and Hollister Whitney
products, which we started to distribute in 2010. The team at ALC
have done an excellent job in promoting these products throughout
Australia.
The fixture business has proved more difficult. The demand for
new lifts in Australia has reduced and although modernisation work
has increased quite substantially there was still a contraction in
our overall market.
Lift Material
Many of the components sold by Lift Material are aimed more at
the modernisation market than that for new lifts, and Lift Material
have benefited from this swing in the market.
We continue to search for opportunities to extend our product
range and this year we have been successful in adding two new
product groups to our portfolio which should help us build sales in
the medium term.
JAS Engineering
We acquired JAS at the end of 2010. Their business is very
similar to that of ALC but they focus on smaller, shorter lead time
work and have a high level of flexibility. They are also able to
engineer and manufacture a wide range of bespoke sheet metal
fabrications for the industry.
They achieved a reasonable first year and the outlook for the
coming year looks promising.
Dewhurst Hong Kong
Dewhurst Hong Kong have had a very good second year in business.
They have built up a reputation for good service and prompt
deliveries and this has allowed them to more than double lift
component sales.
There continues to be a lot of activity in Hong Kong which is
encouraging for the future.
David Dewhurst
Group Managing Director
Financial Review
Strong Results
We experienced two sides to the unsettled UK economy with strong
demand in the lift sector in the second half of the year but poor
demand throughout the year in the transport sector as public sector
spending cuts continued. Despite this environment Dewhurst returned
a strong performance on the back of its lift and keypad products.
Revenue increased 12.2% from GBP37.0 million to GBP41.5 million
whilst operating profit before goodwill write down remained at
GBP4.9 million.
The growth in revenue principally came from our acquisitions in
the year: JAS in Australia and ERM and Winter & Bain (W&B)
in America. With the current 'soft' US market, ERM and W&B
struggled to deliver the kind of returns required for the long-term
and this resulted in an impairment of GBP0.5 million against
goodwill at the year end.
Acquisition Integration
ERM and W&B, being US corporations operating from the same
premises and under common control, were merged into one legal
organisation, ERM during May 2011. Dewhurst plc's controlling
stakes in each company became a collective 80% holding of the
combined business with the remaining 20% stake being held by ERM's
General Manager. All acquisitions have successfully implemented our
Group IT system and policies and procedures are being reviewed and
harmonised.
Solid Cash Position
Cash flow was once again very good with GBP4.0 million of cash
being generated from operations. Despite increased pension
contributions of GBP1.4m, two acquisitions totalling GBP1.8m during
the year and investment of GBP4.9m to date in the new property the
group still ended the year with cash and short-term deposits at a
very respectable GBP5.0 million. This is aligned with the Group's
philosophy of maintaining a strong cash position together with
minimal borrowing.
We started and finished the year with no borrowing but as a
precaution secured a GBP2m bank overdraft facility.
Pension Scheme Deficit
A more detailed analysis of the retirement benefit fund assets
and liabilities movements is reported in note 22 under IAS 19, but
this year has seen the scheme deficit increased further from GBP8.1
million to GBP9.3 million. Although we closed the scheme to future
accrual from 1 October 2010 and paid GBP1.4m into the scheme during
the year this was more than offset by the poor performance of
equities in the last few months of the year. The FTSE 100 index
stood at 5,128 at 30 September 2011 compared to 5,549 a year
ago.
The Group will continue to pay a fixed sum of GBP1.4 million
annually to reduce the defined benefit pension scheme deficit and
all recommendations made by the scheme's actuary to eliminate the
scheme deficit within an agreed timeframe have been fully
implemented.
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.
With just under a half of profit before tax earned and held in
foreign currencies the Group continues to hedge internally where
possible and to consider the need to use derivatives in the form of
foreign exchange contracts to manage its currency risk, as reported
in note 25.
Dividends
Dividends are accounted for when paid or approved by
shareholders, and not when proposed, therefore the proposed final
dividend for 2011 has not been accrued at the balance sheet date.
The total dividend for 2011 of 6.69p per share, up 5.2% against
last year's 6.36p, is covered 5.1 times by earnings. Total equity
improved from GBP21.1 million to GBP21.8 million.
There was no change in the number of allotted shares during the
year.
Jared Sinclair
Finance Director
For further details please contact:
Dewhurst Plc Tel: +44 (0) 208 607 7300
Jared Sinclair, Finance Director
Seymour Pierce Ltd (Nominated Adviser) Tel: +44 (0) 207 107 8000
Freddy Crossley / David Foreman (Corporate Finance)
Paul Jewell (Corporate Broking)
Consolidated income statement
For the year ended 30 September 2011
--------------------------------------------------------------------------------------------
2011 2010
Continuing operations GBP(000) GBP(000)
-------- --------- ---------
Revenue 41,487 36,975
Operating costs (37,063) (32,104)
------------------------------------------------------ -------- --------- ---------
Operating profit before goodwill write
down 4,880 4,871
Goodwill write down (456) -
------------------------------------------------------ -------- --------- ---------
Operating profit 4,424 4,871
Share of (loss)/profit
from associates (29) 6
Finance income 62 103
Finance costs (137) (153)
---------------------------------------------------------------- --------- ---------
Profit before taxation 4,320 4,827
Tax on profit (1,428) (1,339)
------------------------------------------------------ -------- --------- ---------
Profit for the financial year 2,892 3,488
------------------------------------------------------ -------- --------- ---------
Attributable to:
Equity shareholders of the
Company 2,924 3,488
Non-controlling interests (32) -
----------------------------------------- ----------- -------- --------- ---------
2,892 3,488
------------------------------------------------------ -------- --------- --------- ----
Basic and diluted earnings per share 33.98p 40.97p
------------------------------------------------------ -------- --------- ---------------
Consolidated statement of recognised income and expense
2011 2010
GBP(000) GBP(000)
------------------------------------------------- --------- ---------
Net income/(expense) recognised directly in
equity:
Actuarial gains/(losses) on the defined benefit
pension scheme (2,423) (2,497)
Exchange differences on translation of foreign
operations (41) 613
Tax on items taken directly to equity 640 528
-------------------------------------------------- --------- ---------
Net income/(expense) recognised directly in
equity in the year (1,824) (1,356)
-------------------------------------------------- --------- ---------
Profit for the financial year 2,892 3,488
-------------------------------------------------- --------- ---------
Total recognised income and expense for the
year 1,068 2,132
-------------------------------------------------- --------- ---------
Attributable to:
Equity shareholders of the Company 1,071 2,132
Non-controlling interests (3) -
-------------------------------------------------- --------- ---------
1,068 2,132
-------------------------------------------------- --------- ---------
Consolidated balance sheet
At 30 September 2011
-----------------------------------------------------
2011 2010
GBP(000) GBP(000)
------------------------------- --------- ---------
Non-current assets
Goodwill 7,357 6,122
Other intangibles 158 184
Property, plant and equipment 9,581 4,609
Deferred tax asset 1,779 1,563
Investments in associates - 639
------------------------------- --------- ---------
18,875 13,117
Current assets
Inventories 4,269 4,009
Trade and other receivables 8,394 6,908
Current tax assets 203 111
Cash and cash equivalents 5,009 9,593
------------------------------- --------- ---------
17,875 20,621
------------------------------- --------- ---------
Total assets 36,750 33,738
------------------------------- --------- ---------
Current liabilities
Trade and other payables 5,222 4,234
Short-term provisions 475 349
------------------------------- --------- ---------
5,697 4,583
Non-current liabilities
Retirement benefit obligation 9,299 8,068
Total liabilities 14,996 12,651
Net assets 21,754 21,087
------------------------------- --------- ---------
Equity
Share capital 851 851
Share premium account 157 157
Capital redemption reserve 286 286
Translation reserve 2,059 2,089
Retained earnings 18,252 17,704
------------------------------- --------- ---------
Total attributable to
equity shareholders of
the Company 21,605 21,087
------------------------------- --------- ---------
Non-controlling interests 149 -
------------------------------- --------- ---------
Total equity 21,754 21,087
------------------------------- --------- ---------
Consolidated cash flow statement
For the year ended 30 September 2011
-------------------------------------------------------------------
2011 2010
GBP(000) GBP(000)
------------------------------------------- ---------- ----------
Cash flows from operating activities
Operating profit 4,424 4,871
Goodwill write down 456 -
Depreciation and amortisation 812 680
Additional (income)/costs to pension
scheme (1,313) (654)
Exchange adjustments (208) 23
(Profit)/loss on disposal of property,
plant and equipment (4) (2)
------------------------------------------- ---------- ----------
4,167 4,918
(Increase)/decrease in inventories 202 (26)
(Increase)/decrease in trade and other
receivables (674) 169
Increase/(decrease) in trade and other
payables 191 (306)
Increase/(decrease) in provisions 126 (9)
------------------------------------------- ---------- ----------
Cash generated from operations 4,012 4,746
Interest paid (16) -
Income tax paid (1,095) (1,262)
------------------------------------------- ---------- ----------
Net cash from operating activities 2,901 3,484
------------------------------------------- ---------- ----------
Cash flows from investing activities
Acquisition of subsidiary undertakings (869) -
Acquisition of business and assets (907) -
Acquisition of associate undertakings - (667)
Proceeds from sale of property, plant
and equipment 7 75
Purchase of property, plant and equipment (5,124) (484)
Development costs capitalised (129) (38)
Interest received 61 103
------------------------------------------- ---------- ----------
Net cash used in investing activities (6,961) (1,011)
------------------------------------------- ---------- ----------
Cash flows from financing activities
Dividends paid (551) (524)
Net cash used in financing activities (551) (524)
------------------------------------------- ---------- ----------
Net increase/(decrease) in cash and
cash equivalents (4,611) 1,949
------------------------------------------- ---------- ----------
Cash and cash equivalents at beginning
of year 9,593 7,476
Exchange adjustments on cash and cash
equivalents 27 168
------------------------------------------- ---------- ----------
Cash and cash equivalents at end of
year 5,009 9,593
------------------------------------------- ---------- ----------
Notes
1. AGM, results and dividends
The trading profit for the year, after taxation, amounted to
GBP2,892k (2010: GBP3,488k).
A final dividend on the Ordinary and 'A' non-voting ordinary
shares of 4.46p per share (2010: 4.24p) for the financial year
ended 30 September 2011 will be proposed at the Annual General
Meeting (AGM) to be held on 26 January 2012. If approved, this
dividend will be paid on 14 February 2012 to members on the
register at 13 January 2012.
An interim dividend of 2.23p per share (2010: 2.12p) was paid on
30 August 2011.
2. Earnings per share and dividend per share
2011 2010
Weighted average number of shares No. No.
------------------------------------------ ---------- ----------
For basic and diluted earnings per share 8,511,398 8,511,398
------------------------------------------ ---------- ----------
The calculation of basic and diluted earnings per share is based
on the profit for the financial year of GBP2,892,223 and on
8,511,398 Ordinary 10p and 'A' non-voting ordinary 10p shares,
being the weighted average number of shares in issue throughout the
financial year.
2011 2010
Paid dividends per 10p ordinary share GBP(000) GBP(000)
------------------------------------------ --------- ---------
2010 final paid of 4.24p (2009: 4.04p) (361) (344)
2011 interim paid of 2.23p (2010: 2.12p) (190) (180)
------------------------------------------ --------- ---------
The final proposed dividend is based on 3,309,200 Ordinary 10p
shares and 5,202,198 'A' non-voting ordinary 10p shares, being the
latest number of shares in issue. The directors are proposing a
final dividend of 4.46p (2010: 4.24p) per share, totalling GBP380k
(2010: GBP361k). This dividend has not been accrued at the balance
sheet date.
3. Basis of preparation
The financial information set out above does not constitute the
company's statutory accounts for the years ended 30 September 2011
or 2010. Statutory accounts for 2010, have been delivered to the
Registrar of Companies. The statutory accounts for 2011 which are
prepared under IFRS as adopted by the EU will be delivered to the
Registrar of Companies following the company's annual general
meeting.
The preliminary statement of results has been reviewed by and
agreed with the Company's auditor, Chantrey Vellacott DFK LLP, who
have indicated that they will be giving an unqualified opinion in
their report on the statutory financial statements for 2011. The
auditor has also reported on the 2010 accounts. Their report was
unqualified, did not include references to any matters to which the
auditor drew attention to by way of emphasis without qualifying the
opinion and did not contain a statement under section 498 of the
Companies Act 2006.
Dewhurst plc has prepared its consolidated and company financial
statements in accordance with International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) from 1
October 2005. The group and company financial statements have been
prepared in accordance with those parts of the Companies Act 2006
that are applicable to companies adopting IFRS. The company is
registered and incorporated in the United Kingdom; and quoted on
AIM.
It is expected that the audited Report and Accounts for the year
ended 30 September 2011 will be sent to shareholders and will also
be available on the Company's website www.dewhurst.co.uk on 22
December 2011.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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