Dewhurst Regulatory News (DWHT)

Dewhurst PLC

("Dewhurst" or the "Group")

Preliminary Results for the year ended 30 September 2015

Chairman's Statement

Results

I am pleased to report improved profits for the year albeit on slightly lower sales which fell 1.4% to £45.9 million (2014: £46.6 million) mainly due to currency movements. Operating profit before amortisation of acquired intangibles and gains on property disposal was £5.6 million (2014: £5.5 million), very close to the previous record figures; profit before tax was £5.3 million (2014: £4.8 million) up 11% and by a small margin our best ever.

The year followed the pattern set in the first half. After last year's strong performance in the UK, sales dropped back this year, whereas all but one of the overseas companies achieved better revenues. As last year, the continued strengthening of the pound reduced the reported impact in sterling of the local improvements. The adverse effect of the change in currency translation rates was £1.1 million on sales and £0.2 million on profits. Sales were down at the Transportation Division, marginally down overall at the Lift Division and broadly flat for Keypads.

Many of our operations have faced challenges this year to meet customers' ever more demanding expectations. Our employees are focussed on our efforts to improve and I would like to thank them for their contribution to our progress this year.

We are planning to continue our progressive improvement in the dividend in line with our stated target, with another 1p increase in the basic dividend proposed for the year. We sold our remaining building on the Inverness Road site during the year and this provided a welcome gain on disposal of £0.4 million. As a result we are proposing a special additional dividend of 3p to distribute a significant proportion of the cash raised from that transaction.

Operations and People

Our General Manager at Australian Lift Components (ALC) left us during the year. Brad Newell has taken on that position. Brad is new to the lift industry, but has made good progress in addressing a number of ALC's key issues. We welcome him to the Group and wish him continued success in his role.

We have increased our investment in equipment this year with one new high speed laser machine purchased for Canada and another similar one ordered for Feltham. We have also replaced some of our older moulding machines.

We have continued the drive to improve our quality and the reliability of our processes, with investment in additional staffing and equipment.

Products

We have launched several products in the last 3 months that we have put considerable effort and investment into during the year. Our latest control system, Ethos 2, has been released after a lengthy development programme. This offers an intuitive touchscreen based control and integrated speed profiling, simplifying set up for our customers. At recent industry exhibitions in North America and Europe we also launched a touchscreen lift car operating panel, which provides end users with flexibility in appearance and floor designations.

In our transportation division we introduced a more robust and simpler version of our retroreflective reboundable traffic bollard earlier in the year and more recently a new highways passively safe chevron sign system.

Outlook

We had a strong first quarter for 2015, but that does not look as though it will be replicated in the coming year. Instead the pattern from the second quarter of last year onwards is continuing, with demand in the UK rather weak, but most of our overseas markets stable or gently growing. There are signs of potential future improvement in the UK with project activity quite high, but timing of orders uncertain. At some point these projects will feed through to sales, but our business does tend to lag behind the general performance of the economy.

Richard Dewhurst

Chairman

Strategic Report

Business Review

The Group's principal activity in the year continued to be the manufacture of electrical components and control equipment for industrial and commercial capital goods. The Group maintained its position as a specialist supplier of equipment to lift, transport and keypad sectors. A business review of the Group's operations is dealt with below in operating highlights and in the Chairman's Statement.

Principal Risks and Uncertainties

The board is informed at every meeting of the principal risks and uncertainties across the Group which could have a material impact on the Group's long and short term performance and action plans to mitigate these risks. The Group's risk assessment process is designed to identify, manage and mitigate business risks. Business and operational risks are referred to in the business review. Financial risks, being currency and credit risk are covered within the financial review.

Key Performance Indicators

The directors believe that the key financial performance indicators relevant to the Group are earnings per share, adjusted operating profit, profit before tax and return on equity which are stated in the five year review. The key non-financial performance indicators relevant to the Group are quality measures and on-time deliveries to our customers.

Operating Highlights

It has been a difficult year in our European markets, including the United Kingdom. Sales in Group companies in this area have either been flat or have fallen. Encouragingly though, outside this region we have seen quite a different picture, with sales in the vast majority of Group companies increasing.

In line with the Chairman I would like to thank all our employees in our Group companies, who have worked hard all year and ensured that we have been able to deliver these results.

UNITED KINGDOM

Dewhurst UK Manufacturing

Sales at Dewhurst UK Manufacturing fell by 3% on the previous year, primarily as a result of reduced infrastructure spending in the UK. Last year, the General Election caused a number of private and public authority projects to be stalled which added to the challenge of effectively growing our sales. We have however put a great deal of energy into strengthening our overseas markets and this has led to an increase of 10% in our export sales. The two primary areas of growth were Canada, where we have been able to broaden the range of products we sell to our sister company, Dupar Controls. The Middle East was the second area of growth. We have focused our effort here for the last two years and these efforts are now starting to pay off with some reasonable signalisation orders from a range of customers.

Our new UniBlade products and other products that we have developed for Destination Despatch Lift Systems have sold well. We have won significant projects in the UK, Canada and Dubai for both new builds and modernisation.

Research and Development through the year focused primarily on smaller projects aimed at broadening and improving our current range of products. We added a number of variants to our UniBlade family of products and we have also improved the illuminators on our core Compact 3 and Jumbo pushbuttons.

We have maintained the focus on Continuous Improvement of our processes and our most significant event for this year was the launch of our new online ordering system. The system allows customers to order our fastest moving pushbutton products as well as key switches and other lift auxiliaries online. In addition to providing 24 hour access, we feel it also presents the products in a clearer and much more appealing way. Initial feedback from customers has been positive and we would expect good take up of the system over the coming year.

In the three years following our move from Hounslow to Feltham, our main priority has been to bed down the production facility and ensure that everything is working as we would like it to. Capital investment has remained relatively low. It is therefore pleasing to report that this year we have made some significant investments in new plant, with the purchase of two new Arburg moulding machines, to replace existing machines that were over 20 years old. Towards the end of the year we also ordered a new Amada fibre laser cutter that we have now commissioned. Fibre laser machines are able to cut our stainless steel faceplates significantly faster than conventional CO2 machines. As well as cutting faster, they have much lower running costs in terms of laser gases, electricity and maintenance costs.

Thames Valley Controls (TVC)

After a really excellent year last year, we knew that TVC would struggle to live up to that performance again this year and indeed they did experience a 16% fall in sales. TVC's orders are made up of a steady flow of base orders and then a smaller number of one off projects. Last year we had an unusually high number of projects and this year those project orders returned to more normal levels. Despite the fall in sales, TVC contributed strongly to Group profits.

Even though we have seen a reduction in the number of projects compared with last year, we have continued to be successful with our Navigator Destination Despatch Control System. We have won a number of new projects in the commercial sector including at Manchester's Arndale Centre and for a landmark building on Euston Road in London.

We have continued to build on the success of our lift monitoring products by adding in new features and facilities, specifically an integrated CCTV function. This provides lift operators with an enhanced safety offering, particularly in unmanned environments, as well as providing safeguards against anti-social behaviour.

Traffic Management Products (TMP)

In line with our other UK companies TMP encountered difficult trading conditions and sales fell 18% on the previous year. However costs were well controlled and TMP's profits were not significantly impacted.

The team at TMP has continued to make good progress this year. We have invested in new products with the launch of Evo N our new reflective, reboundable bollard, which complies with all current standards. Evo-N has achieved a passive safety level of 100NE4, which means that even if hit by a vehicle at 100 km/h it will rebound intact. This illustrates the robustness of its design. We have also developed and launched a new range of Chevrons called Evo-Chev. These products pinpoint hazardous bends and roundabouts, helping to reduce accidents in the locations. Evo-Chev incorporates the TMP patented self-righting base (used on our bollard products) and allows the Chevron to return to an upright position following impact.

Investment has been made at TMP in our marketing material with the launch of a new website including the facility for on line ordering.

EUROPE

Dewhurst Hungary

Sales at Dewhurst Hungary were more or less identical to last year, although price reductions over the previous year meant that there was some growth in terms of the number of units shipped.

Improved processes both at the factory in Hungary but also in terms of our supply chain, have allowed us to reduce our costs and achieve some growth in profits.

We have built up a strong and knowledgeable quality team in Hungary, with the support of a key customer. The systems we now have in place are far more sophisticated and effective than those we have across our other companies in the Group. As a result, this year we have broadened the remit of our Dewhurst Hungary Quality Manager and promoted her to the new role of Group Quality Manager. We have established a set of new quality measures which we expect all Group companies to report within the next twelve months. Once companies have established these measures, we will be able to pinpoint areas of opportunity and work to achieve continuous improvement in our quality level.

NORTH AMERICA

Dupar Controls

While the UK and Europe experienced challenging market conditions our other markets experienced reasonable growth. Dupar was typical in this respect and following a number of years of growth reported a 15% increase in sales over the previous year. This was an excellent achievement and created quite a challenge for production.

We did see a squeeze on margins with the Canadian dollar weakening against both the British pound and the US dollar, but despite this Dupar generated good profit growth.

There has been significant investment this year in new computer software to improve our processes. This investment is on-going but we aim to see the rewards during the next twelve months.

Dupar have also been involved in a major new product development and towards the end of the year we launched the US1 Touch Car Operating Panel. This product is a state of the art alternative to traditional pushbuttons. It allows you to create your own style of pushbutton on the touch screen, with a background that complements the design of your building or lift car. It is however quite a niche product, designed for high end installations and we currently see it complementing our range of traditional pushbuttons rather than replacing them.

The increased sales have meant it has been critical for us to continue to invest in new plant and machinery. As with Dewhurst UK we needed to replace Dupar's laser machine and we have purchased the same Amada fibre laser cutting machine for Dupar. This was installed and commissioned halfway through the year and we have benefitted greatly from its increased capacity and reliability.

Elevator Research & Manufacturing (ERM)

Sales have been flat at ERM over the last twelve months however increases in costs pushed ERM into a small loss for the year. It has been a difficult year operationally and we have operated with an Interim General Manager at the company whilst we work to find a new General Manager.

ERM is a good company, with a wonderful opportunity to improve service levels and grow sales outside the Los Angeles area. We believe that in the right hands ERM can prosper greatly and we are not going to rush to fill the post of General Manager. We need to be absolutely confident that we have the correct person for the job.

AUSTRALIA & ASIA

Australian Lift Components (ALC)

ALC saw strong demand this year and grew sales by nearly 20% over the previous year. As a result profits recovered considerably from last year's disappointing level.

There was a change of personnel at ALC and we welcome Brad Newell our new General Manager.

We have reenergised our Continuous Improvement initiatives in the plant and focused hard on streamlining our assembly processes, as well as implementation of rigid 5S activity.

ALC are now working to increase their market share with the major lift companies to ensure that the growth in sales continues through the coming year.

Lift Material

It was very much a year of consolidation at Lift Material. Sales continued to grow steadily, increasing 10% on the previous year.

We continue to win business for the EHC escalator handrails all around Australia and in other countries in the Pacific region. Most projects include installation of the handrails in addition to supplying the material. This requires a great deal of organisation. The logistics of ensuring the people, installation tools and product are in the right place at the right time, in a country as vast as Australia is quite demanding.

Dual Engraving

Dual had an excellent year with 20% sales growth on last year.

They have been involved in some major modernisation projects in Perth, the most notable of which was Central Park. This is a landmark building located in Perth's Central Business District with 51 floors and a total of 23 lifts. Dual supplied and installed bespoke new car interiors and entrances for the lifts.

Dewhurst Hong Kong

Dewhurst Hong Kong grew sales by just over 10% to achieve a record year for both sales and profit.

We have been able to broaden our market and are now achieving notable levels of sales in other South East Asian countries, primarily Singapore and Malaysia.

Approved and signed on behalf of the board.

David Dewhurst

Group Managing Director

7 December 2015

Financial Review

Trading results

Dewhurst sales continued a similar trend to that reported in the half year with full year revenue marginally down on last year. UK revenue continued to weaken across all domestic companies but again overseas companies performed strongly. The regions of biggest revenue growth were in Canada and Australia which saw double digit percentage increases in local terms, with nearly all those subsidiaries reporting record sales in local currency. Unfortunately, upon retranslation into Pounds Sterling for group reporting, the strengthened pound reduced like for like sales by £1.1 million or 2.4% and accounts for more than the reported Group decrease. Overall revenue decreased by 1.4% from £46.6 million to £45.9 million.

The same foreign retranslation also impacted operating profits by £0.2 million or 2.9%, but despite this the Group's overseas operations still reported improvements on last year. Operating profit before gain on disposal of property and acquired intangible amortisation increased by 2.1% from £5.5 million to £5.6 million and in percentage terms increased from 11.7% to 12.2% of revenue.

Strong cash position

Cash flow was once again very good with £3.6 million of cash being generated from operations (2014: £3.9 million). Despite pension contributions of £1.4 million, increased dividends, as well as investing £0.9 million in key plant and equipment, the Group ended the year with cash and short-term deposits at £15.0 million, up £2.1 million from £12.9 million in 2014.

We started and finished the year with no borrowing or bank overdraft facility.

Pension scheme deficit

I am pleased to report that this year, Dewhurst plc saw no material increase in the scheme deficit of £12.2 million. The net effect of three key actuarial assumptions changes: the liability discount rate changing from 3.8% to 3.7%, the RPI rate changing from 2.9% to 3.0% and the mortality table changing to reflect more accurately the recent past and current mortality rates, resulted in an overall £5k adjustment.

The scheme was closed to future accrual in 2010 but the Group continue to pay a fixed sum of £1.4 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.

Contingent liability settlement

Following dismissal of the lawsuit in the Arizona Court, without admission or finding of liability, Dewhurst (Hungary) Kft and AIG agreed and paid in the current financial year a confidential full and final settlement of all claims arising from this dispute.

Gain on disposal of property

The old factory site in Hounslow (Inverness Road) was sold in 2012 generating the cash to acquire and develop the current site in Feltham. At that time, the property developers were not interested in acquiring the caretaker's bungalow which was also owned by Dewhurst plc and was adjacent to the old site. The directors therefore chose to retain this bungalow in the short term whilst the Hounslow site was redeveloped into residential properties in the expectation that the redevelopment would enhance the bungalow's future value. The directors sold this property in May 2015 giving rise to a £0.4 million gain on disposal.

Amortisation of acquired intangibles

The amortisation relates to Dual Engraving's acquired customer list and key relationships which are being written off over 3 years. These will be fully written off in February 2016.

Subsidiary Share Repurchase

As a result of amortising the acquired intangibles within Dual Engraving, this subsidiary will have little or no retained earnings for dividend redistribution until distributable profits surpass the A$1.6 million amortisation being written off but the subsidiary does have surplus cash above its day to day working capital requirements. Therefore to redistribute this surplus cash back to its shareholders, Dual Engraving exercised a share repurchase of A$500k in Dec 2014. Since Dual Engraving is only 70% owned by Dewhurst plc, this transaction is reported both within the consolidated and Company cash flow statement as well as within related party transactions.

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 over 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.

Dividends

Dividends are accounted for when paid or approved by shareholders, and not when proposed, therefore the proposed final dividend for 2015 has not been accrued at the balance sheet date. The total dividend for 2015 of 13.00p per share is 44% up on 2014 and is covered 4.1 times by earnings. Total equity improved from £22.4 million to £24.3 million.

There was no change in the number of allotted shares during the year.

Jared Sinclair

Finance Director

7 December 2015

For further details please contact:

Consolidated statement of comprehensive income

Other comprehensive income:

* Operating profit before goodwill write down, gain on disposal of property and amortisation of acquired intangibles

Consolidated balance sheet

The financial statements were approved by the board of directors and authorised for issue on 7 December 2015 and were

signed on its behalf by:

Richard Dewhurst Chairman

Jared Sinclair Finance Director

Company Registration Number: 160314Consolidated statement of changes in equity

For the year ended 30 September 2015

Consolidated cash flow statement

Notes

1. AGM, results and dividends

The trading profit for the year, after taxation, amounted to £4.5 million (2014: £3.9 million).

A 3p special dividend in addition to the normal final dividend on the Ordinary and 'A' non-voting ordinary shares of 7.00p per share (2014: 6.20p) for the financial year ended 30 September 2015 will be proposed at the Annual General Meeting (AGM) to be held on 2 February 2016. If approved, the shares will turn ex-div on 21 January 2016 with the dividend being paid on 17 February 2016 to members on the register at 22 January 2016.

An interim dividend of 3.00p per share (2014: 2.80p) was paid on 25 August 2015.

2. Earnings per share and dividend per share

The calculation of basic and diluted earnings per share is based on the profit for the financial year of £4,406,018 and on 8,474,898 Ordinary 10p and 'A' non-voting ordinary 10p shares, being the weighted average number of shares in issue throughout the financial year.

The final proposed dividend is based on 3,309,200 Ordinary 10p shares and 5,165,698 'A' non-voting ordinary 10p shares, being the latest number of shares in issue. The directors are proposing a 3p special dividend in addition to the normal final dividend of 7.00p (2014: 6.20p) per share, totalling £847k (2014: £525k). This dividend has not been accrued at the balance sheet date.

3. Accounting policies

The accounting policies applied to the 2015 accounts have been consistent with 2014 in all manners.

4. Basis of preparation

The financial information set out above does not constitute the company's statutory accounts for the years ended 30 September 2015 or 2014. Statutory accounts for 2014 have been delivered to the Registrar of Companies. The statutory accounts for 2015 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, Moore Stephens LLP, who have indicated that they will be giving an unqualified opinion in their report on the statutory financial statements for 2015. The auditor has also reported on the 2014 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 2015 will be sent to shareholders and will also be available on the Company's website www.dewhurst.co.uk on 23 December 2015.