REG - Dewhurst PLC - Interim Results

DewhurstAnnouncement

04/06/2020 07:02

RNS Number : 8526O
  
Dewhurst PLC
  
04 June 2020
  
 

The information contained 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 (the "Group")
 
 Interim Results for the 6 months ended 31 March 2020
 
Directors' Interim Report
 
FIRST HALF
Despite the ongoing difficult circumstances in world markets resulting from the COVID-19 pandemic, we are pleased to report a similar level of sales and profits for the first half of the current financial year compared to the same period last year. Overall, Group revenue on continuing operations increased by 1% to £28.2 million (2019: £27.8 million) and adjusted operating profit (before acquired intangible amortisation) decreased 2% to £3.4 million (2019: £3.5 million). Profit before tax decreased 3% to £2.5 million (2019: £2.6 million) but earnings per share improved slightly to 20.8p (2019: 20.4p).
 
There was good growth in sales in the Lift and Transportation Divisions offset by a significant reduction in keypad demand. A proportion of the fall in keypad demand was predicted as a result of the model changeover at a key customer, however the downturn was more severe than expected. The growth in Lift Division sales was split about 40% UK and 60% overseas, with A&A leading the growth in the UK and ERM and P&R overseas. In transportation, TMP had a strong first half, continuing the progress made in last year's second half. First half currency movements reduced Group revenue by around £0.4 million primarily as a result of the weakening of the Australian Dollar.
 
The Group balance sheet remains strong with cash at the period end of £15.1 million (2019: £6.2 million). Since 31 March 2019, the Group has received £7.5 million on the divestment of TVC but spent £1.0 million towards developing Dupar's new property. 
 
OUTLOOK
The COVID-19 pandemic only had a minor impact on our results in the first half, but the Board expect there to  be a significant impact on the second half. The UK has probably been our most seriously impacted market to date and the only country in which we were temporarily forced to close a factory. This is now operational again, but we have furloughed or laid-off staff in a number of locations and this will continue while demand is lower than normal. Unfortunately, it is difficult to predict the path of the recovery as it is affected by many factors outside our control. Australia has been our most resilient market to date and we expect Australian demand to bounce back reasonably quickly, although there will likely be longer term impacts. Elsewhere the recovery is likely to be more gradual. However, the Group has a strong financial base to absorb the level of short-term difficulty we are currently experiencing and will look to take advantage of any appropriate opportunities that arise.
 
DIVIDENDS
The Directors have declared an interim dividend of 3.75p per ordinary share (2019: 3.75p) which amounts to £315,000 (2019: £315,000). The interim dividend is payable on 18 August 2020 and will be posted on 13 August 2020 to shareholders appearing in the Register on 10 July 2020 (ex-dividend date being 9 July 2020). 
 
The Directors have given due consideration to what might be an appropriate level of dividend in these exceptional circumstances.  Given the current outlook and the relatively modest cash impact of our interim dividend compared to our cash balances we have decided to proceed with that dividend at the same level as last year.  However, as outlined above, the main impact of the COVID-19 pandemic is expected to be felt in the second half and it may not be sustainable to maintain Dewhurst's dividend policy for the year ending 30 September 2020. The Board will make a decision on this at the normal time on the announcement of our full year results.
 
A final 2019 dividend of 9.25p (2018: 9.00p) which amounted to £778,000 (2018: £758,000) was approved at the AGM held on 18 February 2020 and was paid on 26 February 2020 to members on the register at 17 January 2020.
 
By Order of the Board
 
J C SINCLAIR
Finance Director & Secretary
3 June 2020
 
 
Dewhurst plc 
 
The unaudited consolidated statement of comprehensive income, statement of financial position, statement of changes in equity and cash flow statement of Dewhurst plc and its subsidiaries for the half-year ended 31 March 2020, as compared with the corresponding half-year ended 31 March 2019 and the year ended 30 September 2019, shows the following results:
 
Consolidated statement of comprehensive income
 







Half year


Half year


Year








ended


ended


ended








31 March


31 March


30 Sept








2020


2019


2019




Continuing operations


£000's


£000's


£000's






















Revenue


28,172


27,791


56,446




Operating costs


(25,597)


(25,141)


(51,052)




Adjusted operating profit


3,409


3,484


7,700




Pension charge - GMP equalisation


-


-


(639)




Amortisation of acquired intangibles


(834)


(834)


(1,667)




Operating profit


2,575


2,650


5,394




Finance income


34


13


34




Finance costs


(135)


(109)


(184)




Profit before taxation


2,474


2,554


5,244




Taxation


Est. (727)


Est. (841)


(2,149)




Profit for the financial period


1,747


1,713


3,095




Discontinued profits (net of tax)


-


391


7,079




Profit for the financial period


1,747


2,104


10,174






















Other comprehensive income:
















Actuarial gains/(losses) on the defined benefit pension scheme


Est. (619)


Est. (2,831)


(4,559)




Deferred tax effect


118


481


775




Current tax effect


 Est. 87


 Est. 106


314




Total that will not be subsequently reclassified to income statement


(414)


(2,244)


(3,470)






















Exchange differences on translation of foreign operations


(1,483)


(446)


308




Total that may be subsequently reclassified to income statement


(1,483)


(446)


308




Other comprehensive income/(expense) for the period, net of tax


(1,897)


(2,690)


(3,162)




Total comprehensive income for the period


(150)


(586)


7,012






















Profit for the period attributable to:
















Equity shareholders of the company


1,565


1,931


9,780




Non-controlling interests


182


173


394








1,747


2,104


10,174






















Total comprehensive income for the period attributable to:
















Equity shareholders of the company


(214)


(732)


6,620




Non-controlling interests


64


146


392








(150)


(586)


7,012






















Basic and diluted earnings per share - continuing


20.78p


20.35p


32.09p




Dividends per share


3.75p


3.75p


13.00p



 
 
 
Dewhurst plc 
 
Consolidated statement of financial position







Half year


Half year


Year








ended


ended


ended








31 March


31 March


30 Sept








2020


2019


2019








£000's


£000's


£000's




Non-current assets
















Goodwill


9,332


8,505


9,719




Other intangibles


1,995


3,675


2,831




Property, plant and equipment


15,338


13,162


13,225




Deferred tax asset


2,700


2,101


2,198








29,365


27,443


27,973






















Current assets
















Inventories


5,602


6,640


6,010




Trade and other receivables


12,556


13,656


10,993




Cash and cash equivalents


15,097


6,249


16,980








33,255


26,545


33,983




Total assets


62,620


53,988


61,956






















Current liabilities
















Trade and other payables


8,117


7,890


8,180




Lease liabilities


353


-


-




Current tax liabilities


15


304


249




Short-term provisions


300


310


277








8,785


8,504


8,706




Non-current liabilities
















Retirement benefit obligation


10,615


9,902


10,570




Lease liabilities


1,644


-


-




Total liabilities


21,044


18,406


19,276




Net assets


41,576


35,582


42,680






















Equity
















Share capital


841


840


841




Share premium account


157


157


157




Capital redemption reserve


296


297


296




Translation reserve


909


1,545


2,274




Retained earnings


38,167


31,540


37,847




Total attributable to equity shareholders of the company


40,370


34,379


41,415




Non-controlling interests


1,206


1,203


1,265




Total equity


41,576


35,582


42,680



 
 
 
Dewhurst plc 
 
Consolidated statement of changes in equity
 
For the period ended 31 March 2020









































Share


Share


Capital


Translation


Retained


Non


Total








capital


premium


redemption


reserve


earnings


controlling


equity












account


reserve










interest












£(000)


£(000)


£(000)


£(000)


£(000)


£(000)


£(000)






































At 30 September 2019


841


157


296


2,274


37,847


1,265


42,680




IFRS 16 transition impact (see notes)


-


-


-


-


(53)


-


(53)




At 1 October 2019


841


157


296


2,274


37,794


1,265


42,627




Profit for the period


-


-


-


-


1,565


182


1,747




Other comprehensive income and expense
































Exchange differences on 
translation of foreign operations                    


 
-


 
-


 
-


 
(1,365)


 
-


 
(118)


 
(1,483)




Actuarial gains/(losses) on defined benefit pension scheme


 
-


 
-


 
-


 
-


 
(619)


 
-


 
(619)




Tax on items taken directly to equity (Est.)


 
-


 
-


 
-


 
-


 
87


 
-


 
87




Deferred tax effect


-


-


-


-


118


-


118




Total comprehensive income


-


-


-


(1,365)


1,151


64


(150)




Dividends paid


-


-


-


-


(778)


(123)


(901)






































At 31 March 2020


841


157


296


909


38,167


1,206


41,576



















 
 
For the period ended 31 March 2019 









































Share


Share


Capital


Translation


Retained


Non


Total








capital


premium


redemption


reserve


earnings


controlling


equity












account


reserve










interest












£(000)


£(000)


£(000)


£(000)


£(000)


£(000)


£(000)






































At 30 September 2018


842


157


295


1,964


32,693


1,057


37,008




Profit for the period


-


-


-


-


1,931


173


2,104




Other comprehensive income and expense
































Exchange differences on 
translation of foreign operations                    


 
-


 
-


 
-


 
(419)


 
-


 
(27)


 
(446)




Actuarial gains/(losses) on defined benefit pension scheme


 
-


 
-


 
-


 
-


 
(2,831)


 
-


 
(2,831)




Tax on items taken directly to equity (Est.)


 
-


 
-


 
-


 
-


 
106


 
-


 
106




Deferred tax effect


-


-


-


-


481


-


481




Total comprehensive income


-


-


-


(419)


(313)


146


(586)




Shares repurchased


(2)


-


2


-


(82)


-


(82)




Dividends paid


-


-


-


-


(758)


-


(758)






































At 31 March 2019


840


157


297


1,545


31,540


1,203


35,582



















 
 
 
 
For the year ended 30 September 2019









































Share


Share


Capital


Translation


Retained


Non


Total








capital


premium


redemption


reserve


earnings


controlling


equity












account


reserve










interest












£(000)


£(000)


£(000)


£(000)


£(000)


£(000)


£(000)






































At 30 September 2018


842


157


295


1,964


32,693


1,057


37,008




Profit for the year


-


-


-


-


9,780


394


10,174




Other comprehensive income and expense
































Exchange differences on 
translation of foreign operations                    


 
-


 
-


 
-


 
310


 
-


 
(2)


 
308




Actuarial gains/(losses) on defined benefit pension scheme


 
-


 
-


 
-


 
-


 
(4,559)


 
-


 
(4,559)




Tax on items taken directly to equity


 
-


 
-


 
-


 
-


 
314


 
-


 
314




Deferred tax effect


-


-


-


-


775


-


775




Total comprehensive income


-


-


-


310


6,310


392


7,012




Share repurchase


(1)


-


1


-


(82)


-


(82)




Dividends paid


-


-


-


-


(1,074)


(184)


(1,258)






































At 30 September 2019


841


157


296


2,274


37,847


1,265


42,680



















 
 
Dewhurst plc
 
Consolidated cash flow statement







Half year


Half year


Year








ended


ended


ended








31 March


31 March


30 Sept








2020


2019


2019








£000's


£000's


£000's




Cash flows from operating activities
















Operating profit - continuing operations


2,575


2,650


5,394




Operating profit - discontinued operations


-


521


1,077




Operating profit


2,575


3,171


6,471




Depreciation and amortisation


1,550


1,343


2,857




Additional contributions to pension scheme


(552)


(666)


(1,800)




Exchange adjustments


(91)


(162)


111




(Profit)/loss on disposal of property, plant and equipment


(16)


(14)


(13)








3,466


3,672


7,626




(Increase)/decrease in inventories


408


(361)


(838)




(Increase)/decrease in trade and other receivables


(1,563)


264


888




Increase/(decrease) in trade and other payables


(63)


(295)


617




Increase/(decrease) in provisions


23


6


46




Cash generated from operations


2,271


3,286


8,339




Interest paid


(39)


-


(1)




Tax paid


(946)


(1,003)


(1,911)




Net cash from operating activities


1,286


2,283


6,427






















Cash flows from investing activities
















Acquisition of business and assets


(624)


-


-




Proceeds on disposal of a subsidiary (net of cash disposed)


-


-


7,514




Proceeds from sale of property, plant and equipment


16


14


57




Purchase of property, plant and equipment


(1,158)


(4,571)


(5,233)




Development costs capitalised


-


-


(41)




Interest received


34


13


34




Net cash generated from/(used in) investing activities


(1,732)


(4,544)


2,331






















Cash flows from financing activities
















Purchase of own shares


-


(82)


(82)




Repayment of lease liabilities 


(227)


-


-




Dividends paid


(901)


(758)


(1,258)




Net cash used in financing activities


(1,128)


(840)


(1,340)






















Net increase/(decrease) in cash and cash equivalents


(1,574)


(3,101)


7,418




Cash and cash equivalents at beginning of period


16,980


9,440


9,440




Exchange adjustments on cash and cash equivalents


(309)


(90)


122




Cash and cash equivalents at end of period


15,097


6,249


16,980



 
These half-year abbreviated financial statements are unaudited and do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. The results for the year ended 30 September 2019 set out above are abridged.  Full accounts for that year reported under IFRS, on which the auditors of the Company made an unqualified report have been delivered to the Registrar of Companies.
 
The presentation of these Interim Financial Statements is consistent with the 2019 Financial Statements and its accounting policies except for the impact of changes in accounting policy relating to IFRS 16 'Leases' which is disclosed further in the notes below. Where necessary comparative information has been reclassified or expanded from the 2019 Interim Financial Statements to take into account any presentational changes made in the 2019 Financial Statements or in these Interim Financial Statements. 
 
 
Dewhurst plc
 
Notes - New Accounting standards and policies
 
With effect from 1 October 2019 the Group has adopted the following new accounting standard:
 
IFRS 16 'Leases' 
The Group has adopted IFRS 16 from 1 October 2019 for the first time and applied the modified retrospective approach. IFRS 16 provides a single on-balance sheet accounting model for lessees which recognises a right-of-use asset, representing its right to use the underlying asset, and lease liability, representing its obligations to make payment in respect of the use of the underlying asset. The distinction between finance and operating leases for lessees is removed. Comparatives for the prior period have not been restated and the adjustments arising from the new leasing standard are therefore recognised in the opening balance sheet on 1 October 2019 as follows:







1 Oct 2019








£000's




Non-current assets








Property, plant and equipment (right of use assets)


2,146




Total assets


2,146




Current liabilities








Lease liabilities


(448)




Non-current liabilities








Lease liabilities


(1,751)




Total liabilities


(2,199)




Total movement in retained earnings as at 1 October 2019


(53)



 
 
On adoption of IFRS 16, the Group recognised liabilities for leases which had been classified as operating leases under previous accounting standards. The lease liability has been measured at the present value of the remaining lease payments, discounted using the incremental borrowing rate as at 1 October 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 October 2019 was 3.5%.
 
 
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
-  Relied on previous assessments of whether leases are onerous
-  Excluded initial direct costs for the measurement of right-of-use assets at the date of the initial application
-  Applied the transition relief to long-term leases ending within 12 months of the date of initial application of the standard
-  Applied the transition relief exempting short-term leases and low value leases.
-  Used hindsight in determining the lease term where the contract contains options to extend or terminate the lease
 
 







1 Oct 2019








£000's




Operating lease commitments as disclosed at 30 September 2019 


1,747




Reconciling items








- Effect of discounting (at incremental borrowing rate as at 1 October 2019)


(286)




- Long-term leases ending within 12 months recognised on a straight-line basis as expense


(27)




- Low-value leases recognised on a straight-line basis as expense


(113)




- Recognition difference on new leases and extension assumptions


878




Lease liability recognised as at 1 October 2019


2,199



 
Impact on the income statement
The impact on the income statement for the six months ended 31 March 2020 is to increase operating profit by approximately £37k and increase finance costs by £39k resulting in a decrease in profit before tax of £2k. The impact on the income statement for the year ended 30 September 2020 is expected to increase operating profit by approximately £74k and increase finance costs by £78k resulting in a decrease in profit before tax of £4k.
 
Impact on the cash flow statement
There has been a change to the classification of cash flows in the cash flow statement with operating lease payments previously categorised as net cash used in operations now being split between the principal element, included as repayment of lease liabilities within financing activities and the interest element, included as interest paid. In the six months to 31 March 2020 there are £266k of lease payments within financing activities comprising £227k of repayment of lease liabilities and £39k of interest paid.
 
Accounting policy
The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, comprising the initial amount of the lease liability plus any initial direct costs incurred and an estimate of costs to restore the underlying asset, less any lease incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the asset or the end of the lease term.
 
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the incremental borrowing rate. The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or a rate or a change in the Group's assessment of whether it will exercise an extension or termination option. When the lease liability is remeasured, a corresponding adjustment is made to the right-of-use asset.
 
Payments associated with long-term leases with less than 12 months from the date of application, short-term leases or low-value assets are recognised on a straight-line basis as an expense in the income statement. Short-term leases are leases with a lease term of 12 months or less. Low-value assets mostly comprise of IT equipment and small items of office furniture.
 
 
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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