RNS No 5177u
DEWHURST PLC
3rd December 1998
Dewhurst plc ("Dewhurst")
Preliminary Results for the 52 weeks ended 27 September 1998
I am delighted to be able to report record results for the group this year.
The results exceeded our expectations, with a stronger than expected second
half and reflect an excellent performance at all the group's companies.
Chairman's Statement
Results
Group sales were up 7%. Trading profits were up 27%. Overall group profits
before tax were 36% higher after including a profit of on sale of investments
of #124,000. All companies in the group generated sales improvements , but
the main contributors to the profit improvement were the return to
profitability of Thames Valley Controls and the substantially reduced losses
at The Fixture Company. The directors are recommending a final dividend of
2.1p, giving 3.15p for the year, a 9% increase on last year. These are an
excellent set of results and I would like to thank all our employees for their
commitment and effort in achieving this performance.
Strategy
There is no change to our strategy of providing control systems and associated
components to markets around the world. We are working hard to improve our
customer service and flexibility to achieve our aim of being the supplier of
choice in our chosen markets. We are making significant investments in
training to embed the philosophy of continuous improvement throughout our
organisation.
Whilst recognising that the skills of our employees are our most important
asset, we continue to invest to automate processes where possible. This
allows us to improve the control and consistency of our manufacturing
processes and releases our employees to add further value to our products. An
exciting development in this field was the delivery of the group's first robot
towards the year end. This will be used to assemble components for automatic
teller machine keyboards.
The valuation of small company shares has been poor in recent years but has
taken a further knock in the last few months. The main reasons for this have
been widely reported in the press, but in summary they include: lack of
institutional interest, lack of liquidity for the shares and concerns about
the UK economy. Our own shares have followed this trend. As a result, the
company has repurchased 489,350 of its own shares this year. Similar action
will continue to be taken if the company's shares remain, in the directors'
opinion, undervalued and when the cash position allows.
Operating Highlights
After the very significant improvements in 1997, sales and profits were only
slightly up this year at the parent company. Lower demand in Asian markets
and the high value of the pound made trading conditions for the company
difficult during the year. However, the UK lift market remained unusually
buoyant through the second half which helped to offset some of the
difficulties overseas.
The results for Thames Valley Controls again showed very significant progress.
The company returned to profit after two years of losses. The improvement in
the company's competitiveness and customer service, together with the
relatively stronger UK market, helped to generate these excellent results.
Again, Dupar Controls produced an improved operating performance in both sales
and profits. Although this year the improvement generated an increase in
reported results in Sterling, the increase was diminished by the effect of the
weakening Canadian dollar.
The Fixture Company had an excellent year with sales increases of the order of
70%. The company has now established itself and, as a result, is able to gain
orders for larger projects. Whilst the company did not report a profit, the
losses were very significantly reduced and their performance this year shows
what improvements may be attained. We remain committed to the long term
prospects for the US market.
Investment
A number of very substantial investments were made during the year. Several
of these were in our sheet metal production facilities, where we purchased a
new laser cutting machine, a punching machine and bending machines. We also,
as previously mentioned, purchased our first robot which will be used for
adhesive application and assembly. In addition, the group invested in new
ISDN telephone systems at both the parent company and Thames Valley Controls.
These new systems provide improved customer service, through direct dial-in
facilities and improved data communication with customers and suppliers.
Year 2000
The Year 2000 computer problem continues to receive a considerable amount of
publicity. Whilst our project for compliant systems in North America has been
delayed slightly, it is still expected that these new systems will be
implemented during the first quarter of 1999.
All mission critical systems at the parent company and Thames Valley Controls
have already been checked and found compliant.
Outlook
The performance during the past year has been excellent, but I feel I have to
strike a note of caution for the future. Severe price competition,
exacerbated by the strength of the pound has meant that we are facing
significant price reductions to retain sales in international markets. This
applies to direct exports and also products indirectly exported.
In addition, the likely direction of the UK market is uncertain. There are no
immediate signs of downturn, but there seems to be a general lack of
confidence in the medium term future.
The above factors make the outlook for the coming year difficult to forecast.
However, I believe it is unlikely that the group will repeat the level of this
year's record profits in 1999.
R M Dewhurst
Chairman
Review of Operations
Keypad Division
After the dramatic growth in 1997, total keypad sales stabilised as expected
increasing just over 5% in 1998. With price restraints on these products,
margins fell last year despite productivity improvements. The new year is
expected to present an even more challenging target for price reductions and
current margins are likely to be further eroded.
Sales of the MA range of keypads more than doubled during the year in a
difficult and competitive market. Our vandal resistant keypad products
continued to win new customers for financial terminals, security equipment and
fare collection machines. The range is being selected by a number of
customers for own product developments.
A steady gain in keypad sales during the coming year is expected with a higher
growth in export markets. There are opportunities for increased sales of
keypads for payment systems in the Far East and emergency communication
systems in Europe.
The market response to our new access products has been favourable and these
should begin to contribute early sales during the year.
Rail Transportation Division
Sales of our new PA50 and PA51 external bodyside door status indicator
products are increasing following the launch at Railtex last year. The PA50
indicator has been fitted to a number of London Underground fleets and the
larger PA51 has been selected for several classes of the new generation of UK
rail vehicles. The indicators are also gaining interest in export markets.
Sales of our new rail platform train control cabinets are growing in line with
an expanding Railtrack investment programme. This year we will be co-operating
with a major rail distributor to market these and other rail products more
widely in the UK and Europe.
In the coming year, there will be a strong emphasis on conversion projects for
the refurbishment of existing rail vehicles, currently an important sector of
the UK rail market. We will be offering both products and installation on
these contracts. In addition, new products are under development to extend
our range and increase our share of new vehicle builds both in the UK and
Europe.
K F C Bossard
New Business Director
Lift Division
Hounslow
The market in the UK has continued to grow and we again showed a good increase
in our sales. The two product ranges that were launched last year have both
sold in significant quantities and should also achieve good growth in the
coming year.
Our export sales were hit towards the end of last year and margins on this
business were under pressure through the year due to the high value of the
pound.
This year has seen the launch of a new range of our US90 Braille pushbutton,
which has been specially redesigned to meet the specification of one of our
larger overseas markets. We have also taken on the distribution of a new
range of Door Operators for lifts which we will be aiming at the UK
modernisation market. A great deal of our development time and energy has
however been channelled into our new Compact 2 pushbutton which will be
launched in January 1999. This new pushbutton product is designed to help
ensure that we stay ahead of the competition in our key markets.
The coming year is an exciting one for us. Over the second half of the year I
anticipate a downturn in the UK market. However, with the new products that
we have, I would expect us to increase our market share and therefore negate
the effects of any market decline. Overseas, the work that we have been doing
in developing new markets is already beginning to bear fruit and there
continue to be many more opportunities overseas.
Dupar Controls
The Canadian market has continued to grow steadily and Dupar Controls had a
record year for sales and profit.
The installation of all our sheet metal equipment is now complete and we have
focused during the year on winning an increasing amount of 'complete fixtures'
work. Our efforts have been successful and this has generated a great deal of
the growth.
The supply of keypads continues to be a significant part of the business
although growth in this area has slowed.
Overall it has been a good year and we have a strong base from which to
continue the growth in the coming year. Clive Mann and his team have worked
hard and effectively and I would like to take this opportunity to thank them
for their efforts.
The Fixture Company
John Kwiatkowski and his small team have achieved very significant increases
in sales and have established The Fixture Company as a quality supplier of
elevator fixtures in the mid West.
In the coming year we will continue to increase our customer base and aim to
achieve another year of good sales growth.
John and his team have worked hard in a difficult market and we all appreciate
their efforts.
Thames Valley Controls
It has been a year of consolidation, growth and successes at Thames Valley
Controls (TVC). After two years of losses, TVC returned to profit and
congratulations go out to Richard Young and his team for turning the company
around.
We are all aware however that we must continue to work hard, to reduce costs,
ensure quality and develop products for the future, to secure the long-term
prosperity of the Company. TVC is operating in a very competitive market
place and we must continue to invest and innovate if we are to succeed.
The Company is much stronger than it was a year ago and well positioned to
benefit from the current resilience of the UK lift market.
D Dewhurst
Managing Director - Lift Division
Financial Review
Turnover increased by 7.3% from #17.0 million to #18.2 million. Operating
profits increased by #437,000 (38%) from #1,143,000 to #1,580,000. Net
interest increased marginally from #61,000 to #62,000.
Additions to fixed assets increased to #830,000 for this year. A number of
major investments were made during the year. The most significant were items
of computer controlled sheet metal processing equipment: a laser cutting
system, a punching machine and two bending machines. In addition, we
purchased a robotic glueing system and new ISDN telephone systems.
The group ended the year with cash and investments down from #1.9 million to
#1.5 million. This was after spending a net #235,000 on the repurchase of
shares. The fall in cash balances was primarily caused by the year end
falling several days before the month end. We have major customers who make
their payments routinely at the end of the month. This effect can be seen in
the significant increase in debtors on the year end balance sheet. Operating
cash flow was #1.1 million for the year. Dividends paid increased from
#309,000 to #324,000.
The tax charge for the year increased to #506,000 (30.8%) from #393,000
(32.7%) with the higher profit. The proposed total dividend of 3.15p per
share, up 9.4% against last year (2.88p), is covered 3.4 times by earnings.
Shareholders' funds improved from #7.3 million to #7.7 million, with a net
reduction of 457,850 shares during the year.
Group Five Year Review
1994 1995 1996 1997 1998
#(000) #(000) #(000) #(000) #(000)
Turnover 11,408 15,282 15,313 16,981 18,224
Profit before taxation 1,326 1,583 777 1,204 1,642
As a percentage of
shareholders' funds 22.2% 23.5% 11.2% 16.5% 21.3%
Taxation 470 545 262 393 506
Profit after taxation 856 1,038 515 811 1,136
Shareholders' funds 5,965 6,729 6,935 7,302 7,695
Earnings per share 7.82p 9.29p 4.58p 7.27p 10.42p
Dividends per share 2.35p 2.70p 2.73p 2.88p 3.15p
Consolidated Profit & Loss Account
For the 52 weeks ended 27 September 1998
1998 1997
# # # #
Turnover from
Continuing operations 18,224,024 16,981,490
Operating costs from
Continuing operations (16,767,970) (15,838,272)
------------ ------------
Trading profit 1,456,054 1,143,218
Other operating income
Profit on sale of
investments 123,913 -
------------ ------------
Operating profit from
Continuing operations 1,579,967 1,143,218
Net interest 62,439 61,117
------------ ------------
Profit on ordinary
activities before 1,204,335
taxation 1,642,406
Tax on profit on
ordinary activities (506,283) (393,519)
------------ ------------
Profit for the financial
year
1,136,123 810,816
Dividends per 10p
ordinary share
Interim paid 1.05p (106,517)
(1997: 0.96p) (114,594)
Proposed final of 2.10p
(1997: 1.92p) (223,939) (208,939)
--------- ---------
(338,533) (315,456)
Retained profit for the ------------ ------------
financial year 797,590 495,360
------------ ------------
Earnings per share 10.42p 7.27p
The number of shares the 10,906,469 11,146,322
EPS is based on is
Consolidated Balance Sheet
At 27 September 1998
1998 1997
# # # #
Fixed assets
Tangible
- Land and Buildings 1,382,594 1,435,756
- Plant and Machinery 1,565,227 1,167,256
----------- -----------
2,947,821 2,603,012
Current assets
Stocks 3,390,793 3,154,269
Debtors 4,030,906 3,006,581
Investments 21,094 36,579
Cash at bank and in 1,442,642 1,934,673
hand
----------- -----------
8,885,435 8,132,102
Creditors: amounts
falling due within one
year 4,138,108 3,433,196
----------- -----------
Net current assets 4,747,327 4,698,906
----------- -----------
Total assets less
current liabilities 7,695,148 7,301,918
Provisions for
liabilities and charges - -
----------- -----------
Net assets 7,695,148 7,301,918
___________ ___________
Capital and reserves
Called up share capital 1,066,375 1,112,160
Share premium account 126,658 116,248
Revaluation reserve 423,001 423,001
Capital Redemption Reserve 62,435 13,500
Profit and loss account 6,016,679 5,637,009
----------- -----------
Equity shareholders' funds 7,695,148 7,301,918
___________ ___________
Consolidated Cash Flow Statement
For the 52 weeks ended 27 September 1998
1998 1997
# # # #
Net cash inflow from
operating activities 1,092,911 1,058,827
Returns on investments and
servicing of finance
Interest and dividends 61,201
received 63,656
Interest paid (1,217) (84)
--------- ---------
Net cash inflow from
returns on investment and
servicing of finance 62,439 61,117
Taxation:
UK taxation (348,450) (182,112)
Overseas taxation (101,037) (71,836)
--------- ---------
Net cash outflow from
taxation (449,487) (253,948)
Capital expenditure and
financial investment:
Purchase of tangible fixed
assets (830,351) (342,871)
Sale of tangible fixed 75,570
assets 53,601
--------- ---------
Net cash outflow from
capital expenditure &
financial investment (776,750) (267,301)
Equity dividends paid (323,533) (308,667)
Net cash inflow/(outflow)
before use of liquid
resources and financing (394,420) 290,028
Management of liquid
resources
Sale of investments 137,094 48,690
Financing
Issue of share capital 13,560 8,961
Repurchase of shares (248,265) (234,705) (78,300) (69,339)
--------- --------- --------- --------
Increase/(decrease) in cash
in period (492,031) (269,379)
_________ _________
1. Accounting Policies
The abridged financial information included within this announcement has been
prepared in accordance with the accounting policies set out in the most recent
published full accounts of the Company.
2. Statutory accounts
The results for the year ended 27 September 1998 as shown in this report do
not constitute statutory accounts but are an abridged version of the Company's
1998 accounts which will be filed with the Registrar of Companies following
approval at the Company's Annual General Meeting. The auditors have reported
on the statutory accounts for the year ended 27 September 1998. Their report,
under section 235 of the Companies Act 1985, is unqualified and does not
contain any statement under sections 237(2) or (3) of that Act.
END
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