Dewhurst Regulatory News (DWHT)

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

Dewhurst plc 

Consolidated statement of financial position

Dewhurst plc 

Consolidated statement of changes in equity

For the period ended 31 March 2020

For the period ended 31 March 2019

For the year ended 30 September 2019

Dewhurst plc

Consolidated cash flow statement

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:

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

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)