Dewhurst PLC COVID-19 Trading Update (1331I)
March 31 2020 - 2:00AM
UK Regulatory
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RNS Number : 1331I
Dewhurst PLC
31 March 2020
31 March 2020
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Dewhurst PLC
("Dewhurst", the "Group" or the "Company")
COVID-19 Trading Update
In the light of the rapidly evolving situation resulting from
the spread of COVID-19 and its development into a global pandemic,
Dewhurst today provides an update on current trading and
operations. Our priority remains the health, safety and well-being
of our employees and essential support for our customers.
Current Trading and Operations
In the first five months of the current financial year to 29
February 2020 there was no material COVID-19 impact on overall
Group trading, although Hong Kong revenues started to be affected.
During March Dewhurst saw the impact gradually spread to other
locations. Overall first half revenues are now expected to be
approximately GBP28 million (HY19 revenue: GBP28 million, restated
to exclude TVC which was sold on 30 September 2019).
Employees and customers
Our overriding objective is to maintain the safety of our
employees. We have followed national and, where appropriate,
regional government advice and restrictions in the countries where
we operate. However, where it has been deemed safe to do so, the
Company has continued its sales and manufacturing operations in
order to provide support to our customers. This is gradually
getting more difficult. International travel and transport are
severely restricted, which affects our ability to resupply our
overseas operations with components. We are reviewing our
arrangements from day to day as, clearly, the situation is fast
changing. We are operating flexible working arrangements wherever
possible and have increased the provision of equipment to enable
office-based employees to work from home. We have restricted travel
and face-to-face meetings but maintained employee contact through
increased use of Office 365 Teams and other conferencing
facilities. We have enforced health and hygiene practices and are
regularly reinforcing and reminding employees of these
protocols.
Board Actions Taken
Clearly the main concern beyond employee welfare and customer
support is the impact of the COVID-19 pandemic on the long-term
security of the Group. To mitigate the effects of the pandemic the
Board has made several decisions to reduce costs and contain cash
outflow including the following:
-- Over the last week it became increasingly difficult for
Dewhurst UK to maintain normal production as more of its suppliers
and customers closed their doors and staff numbers reduced due to
staff self-isolating at home. Accordingly, Dewhurst has taken the
decision to close operations at Dewhurst UK. In the UK, A&A and
TMP currently remain open albeit with a reduced workforce. It is
anticipated that similar action may become necessary in the Group's
other operations in time, if greater restrictions come into force
in other countries in which the Group operates.
-- We are restricting discretionary spending and non-committed
capital expenditure. For now, the development of Dupar's new
premises discussed in the 2019 financial statements is continuing
as this was contracted and committed to at the start of 2020 but
pause points within the construction contract will be regularly
reviewed.
-- We are considering appropriate cost saving initiatives,
whilst seeking to protect our talented workforce and being careful
not to compromise the long-term prospects of the business.
-- We are also evaluating and, where sensible, implementing
government support measures available in the jurisdictions in which
we operate.
Strong Cash Balance Sheet
Dewhurst has a strong balance sheet, is well financed and
remains debt free and is therefore well positioned to navigate the
COVID-19 pandemic. The Group had c.GBP17m of cash as at 30
September 2019 and cash flow in the first six months of the year
was in line with management's expectations. We currently expect to
have sufficient liquidity from existing resources to meet our needs
through the remainder of this financial year.
Dividends
The Board hopes to maintain Dewhurst's dividend policy for the
year ending 30 September 2020, however this will depend on the
length and severity of business disruption and the outlook for the
remainder of the year. We will make a decision on whether this is
sustainable at the normal time on the announcement of our half year
results.
Outlook
Given the unprecedented levels of uncertainty at this time and
the lack of clarity on the duration of business interruption, all
previous guidance on the Group's future performance is being
withdrawn. An update will be provided once there is greater
certainty on the trading environment and the impact of COVID-19 on
the Group. The Board remains confident in the long-term strong
business fundamentals of the Group.
For further details please contact:
Dewhurst Plc Tel: +44 (0) 208 744 8200
Richard Dewhurst, Chairman
Jared Sinclair, Finance Director
www.dewhurst.plc.uk
Cantor Fitzgerald Europe Tel: +44 (0) 207 894 7000
David Foreman / Will Goode (Corporate Finance)
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END
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