Dewhurst has now released its interim results for the year ending 2015.
When compared to the first half of last year, revenue fell by £249K to £22.8M. Operating costs also fell during the year, though to give an operating profit some £85K ahead of last time. We then see a tax bill that is slightly higher to give a profit for the half year of £1.6M, an increase of just £62K year on year.
When compared to the end point of last year, total assets increased by £485K driven by an £888K increase in receivables and a £117K growth in cash partially offset by a £207K fall in property, plant & equipment, a £156K decline in other intangible assets and a £113K decrease in goodwill. Liabilities fell during the period as a £172K growth in current tax liabilities was more than offset by the £324K reduction in the pension obligation. The end result is a net tangible asset level some £851K higher at £19.7M.
Before movements in working capital, cash profits fell by £102K compared to the first half of last year to £2.6M. This was then eroded by a further increase in receivables and a £663K payment to the pension scheme to give an operational cash flow some £62K below that of last time at just under a million pounds. After tax more than halved, however, the net cash from operations stood at £863K, an increase of £127K year on year. This was more than enough to pay for the £161K of capital expenditure and free cash flow for the half year stood at £750K which paid for the dividends and left a cash flow for the period of £147K.
Overall weakness in the UK market resulted in lower revenue domestically but the overseas businesses performed strongly. After a positive start to the year, UK sales fell back in Q2, possibly affected by the general election. They were weaker across both lift and transport divisions but the impact was greatest in the lift business after a very strong first half for those products last year. The fall in UK sales was almost entirely offset by stronger North American, Asian and Australian performances but the weaker Australian and Canadian dollars reduced reported revenue by £200K during the period.
Going forward, the UK government has indicated that constraints on public spending will increase further and this is likely to impact the group’s public sector sales. In their overseas markets, the short term outlook is reasonably positive suggesting the current trends are likely to continue. Therefore the board expects their markets in the UK to remain weak whilst the overseas markets should remain buoyant, at least for the second half of the year. A further fall in the Australian and Canadian currencies, however, will have some negative impact on the profitability of operations in those countries. The interim dividend has increased from 2.8p to 3p to give a yield for the year of 2.3% and there are still no broker forecast that I can find.
This is all the detail that was included in the interim report and I have to say that the performance in the UK is rather disappointing and given the issues facing Australia over the commodity price falls, I am not sure that sales in that country will hold up in the medium term. Still, the shares still look cheap on current metrics so I am tempted to dip my toe in here.
On the 22nd June it was announced that a court in Arizona had dismissed the lawsuit against the Hungarian subsidiary without the finding of liability. The group have subsequently agreed a confidential full and final settlement of all claims from AIG arising from the dispute and there is no material impact on current market expectations for the results of the group either this year or future years. This is indeed good news.