Annual report and accounts 2012 Dewhurst worldwide Financial highlights Group companies Agents 2012 2011 £(000) £(000) Group revenue £51,555 £41,487 Operating profit* £5,605 £4,880 Earnings per share 44.48p 34.35p Dividends per share 12.02p 6.69p * Operating profit before goodwill write down and gain on property disposal Revenue +24% Revenue £ million Operating profit* £ million 2008 2009 2010 2011 2012 36.3 35.8 37.0 41.5 51.6 2008 2009 2010 2011 2012 Operating profit* +15% 4.4 4.5 4.9 4.9 5.6 Financial highlights 1 Consolidated financial statements 16 Company financial statements 38 Earnings per share pence Dividend per share pence Chairman’s statement 2 Consolidated income statement 16 Alan Dewhurst 1923–2012 3 Review of operations 4 Financial review 10 Group five year review 11 Board of directors 12 Report of the directors 13 Consolidated statement of recognised income and expense 16 Company statement of recognised income and expense 38 Company balance sheet 39 Consolidated balance sheet 17 Company cash flow statement 40 Consolidated cash flow statement 18 Report of the independent auditor 41 Notes to the accounts 19 Notice of meeting 42 Group companies 43 Advisers and company information 44 Earnings per share +29% 2008 2009 2010 2011 2012 38.92 38.43 40.97 34.35 44.48 2008 5.76 2009 6.06 2010 2011 2012 6.36 6.69 7.02 12.02† † Includes special dividend of 5p per share Dividend per share +80% 1 Chairman’s statement It has been an eventful year, but one in which we have made good progress Richard Dewhurst Chairman Alan Dewhurst 28 April 1923 – 5 October 2012 I am delighted to be able to report record sales and profits for the Group this year. Sales were up 24% to £51.6 million (2011: £41.5 million), operating profit before goodwill and an exceptional gain from the sale of the property was £5.6 million (2011: £4.9 million) and profit before tax was £5.4 million (2011: £4.3 million) up 26%. This would have been a good performance in any year but in the current market conditions I believe it is excellent. Business Secretary Vince Cable cuts the ribbon to open Dewhurst’s new head office and factory. The improvement was broadly based, with growth in all three product divisions. Geographically, sales improved in the UK, Europe and the Far East. The only area not really showing improvement was North America which was broadly flat. The lift and keypad markets held up in the second half, but the transport sector was more difficult. For the year as a whole keypad sales and Thames Valley Controls (TVC) were the strongest contributors to growth. TVC sales were bolstered by the new Hall Call Destination Product and good performance on remote monitoring products. The Group’s employees have performed really well to achieve these results and I would like to thank them for their continued effort and dedication. 2 Property As reported at the half year we moved our headquarters and main Hounslow factory in December 2011. The team responsible for this did an excellent job as we moved in on time according to plan. Inevitably there was some disruption during January and February as we got to grips with our new facilities, but we did our best to keep this to a minimum. I would like to thank our customers for their forbearance during this time. The premises were formally opened by the Secretary of State for Business, Innovation and Skills in June and we were happy to welcome a number of customers and suppliers to this event. We completed the sale of our Inverness Road premises in early March after some lengthy negotiation. This provided a significant cash boost to the Group and as a result the directors are proposing a special one off additional dividend of 5 pence per share. Acquisitions During the year we completed our acquisition of ERM on the basis of our agreement with the shareholders in July 2010. The US market has remained tough, but we have now recruited a new general manager to drive the business forward. Outlook Keypad sales were unusually high this year. It is anticipated that these sales will revert to more normal levels in the coming year. Our concerns expressed at the half year have proved well founded as the new year has started slowly. Customer confidence in the UK has deteriorated and uncertainty has crept back in. Transport demand remains weak due to Local Authority and Central Government cutbacks. However we have some potential in new products coming on stream during the year and an acquisition opportunity we are currently pursuing that may help to offset performance elsewhere. It is with great sadness that we have to report the death of Alan Dewhurst, who worked for the company for 46½ years, 29 years as Chairman. He joined the company in 1951 starting in the Controller Test Department. He progressed to Head of that department, then on to Head of Product Design and subsequently added responsibility for Production. He became Chairman in 1962 on the death of his father Melbourne Dewhurst who had founded the company back in 1919. It is true to say that father was Dewhurst through and through having been born in a cottage on Inverness Road that ultimately was demolished and became the Main Offices – so he worked within a few feet of where he had been born. Design was his true love and he developed many of the products that became classics and key elements of the company’s success. He was rightly proud of the Design Award won in 1976 for the US81 vandal resistant pushbutton, presented to him by the Duke of Edinburgh. He was able to visualise products in his mind and thought them through before committing pen to paper. As a result once he had started something he was able to produce the design very quickly. He worked hard to simplify things, long before lean manufacturing was talked about and he invested heavily in new technologies to reduce the costs of production. He introduced injection moulding and laser cutting to the company, both of which are key technologies for us now. Father carried us through some very difficult times for UK manufacturing – the 1970s were particularly tough and many traditional control gear companies disappeared during that time. In fact Dewhurst plc is the only such company to survive as an independent entity today. Not only did he carry us through, but he laid the foundations for our current success focussed particularly on pushbuttons and keypads. The values he espoused for the business are the core values we hold true to today. Although in many ways he was conservative, he was also forward looking. I am very pleased that he was with us to see our move from Inverness Road. Despite his links with that site he was delighted with our new building and was pleased to be able to celebrate its opening in June. He was a demanding boss, expecting high standards of those who worked for him, but he was also a kind and caring employer. He will be sorely missed. 3 e n i z a g a M n o i t a v e E y b d e l i l p p u s h p a r g o t o h P Review of operations We have achieved broadly based growth across our operations this year David Dewhurst Group Managing Director We have enjoyed a good year in the majority of our geographical markets. Over the last three or four years we have found that end customers have generally held back from spending unless it is absolutely necessary. This has flowed through to reduced spending on modernisation of lifts. However, we have found that this year many customers have been unable to put off overdue investment in their lifts any longer and there has been a definite increase in modernisation work. We have certainly benefitted in many of our businesses from the renewed activity that this has created. In what has been a busy year we have had tremendous input from all our employees and we are very grateful for their hard work and significant contribution to this year’s success. United Kingdom DEWHURST UK MANUFACTURING This was an eventful and fruitful year at Dewhurst UK, with some significant changes taking place. As we indicated in last year’s report, we decided to restructure our UK businesses. We have moved the fixture and component supply for the UK back into Dewhurst UK and this has been an almost seamless change. Dewhurst UK now has a Sales Team of three people who have worked hard to interact with the customer base and build sales of all lift products but we have especially focussed on fixtures. We have achieved a reasonable amount of success in terms of sales growth in this area. In other areas, we have benefitted from the improved lift market and demand for many of our components such as displays, pushbuttons, locks and key switches has increased. The move from our Inverness Road site to our new facility in Feltham seems a distant memory but it was a significant milestone in the year and also in the Company’s history! The move took place over the last two weeks of December 2011 and the first two weeks of January 2012. It went very smoothly and essentially to plan. There was not a single day during the move when production or invoicing was totally compromised and significantly in January we achieved above 4 budget invoicing in the month when we had carried out the largest element of our move. Although things went as well as expected, obviously there was some impact on production and our on time deliveries dipped in January and February of 2012. We recovered after that but achieved only 90%, so we will be working hard during the coming year to restore on time deliveries to above 95%. The business has undergone a period of about 18 months during which the move has been all consuming and we have not been able to instigate new lean programmes across our manufacturing. We are now in a position to once again focus on our processes and look to improve them across all areas. Our design teams have also been busy and have developed a number of new products. The main focus has been on our hall lantern products where we are developing new designs for ‘Blade’ hall lanterns that we will be able to sell not only in the UK but also through our subsidiary companies around the world. The Jumbo pushbutton has also been redesigned to make it both easier to manufacture and to install. THAMES VALLEY CONTROLS (TVC) This has been the first year of operation for the newly reformed Thames Valley Controls. As previously reported, with Dewhurst UK Manufacturing taking over the supply of the lift fixtures and components, TVC have focussed their activities Increased efficiency in our new factory New premises We now have a much cleaner, brighter and more energy efficient factory for our employees, which gives them a better working environment. We have optimised the factory layout for our current demand, but have designed in as much flexibility as possible so that we can adapt to potential future changes. 5 Developing customer focused products Destination Control System Our system has been integrated with a turnstile security system and installed as part of the major refurbishment of a large office building in Canary Wharf. Staff swipe their card to gain access and are directed immediately to the correct lift to take them to their floor. 6 Review of operations on the manufacture and supply of Lift Control Products and Lift Monitoring Systems. TVC have had an excellent first year with strong sales and a good contribution to Group profits. The significant development work that we carried out for our flagship product Navigator: the Ethos Hall Call Destination System, bore fruit. We delivered a number of these systems throughout the year. Some of these installations are now fully commissioned and the feedback from customers and users alike has been very positive. Further development of the Navigator product has also taken place in the year, driven by customer requirements. For example, one project that we won in Canary Wharf required us to integrate a turnstile security system into Navigator. When staff swipe their card to gain access to the lift lobby, a call is automatically registered with the lifts and the staff are directed immediately to the lift that will take them to their floor. This speeds up traffic flow and improves security. The upturn in the modernisation market also benefitted TVC and the excellent reputation of our Ethos controller in the market led to strong sales of the product through the year. The market remains very price-competitive and we have worked hard throughout the year to drive down the cost of manufacture to enable us to stay competitive in the long term. Demand for our monitoring products has also remained strong and we have continued to invest in our reporting system, CMS Anywhere, to ensure that it is compatible with the wide range of software platforms our customers now use. TRAFFIC MANAGEMENT PRODUCTS (TMP) Despite reduced Government spending and increased competition TMP delivered good sales growth on the previous year. Margins however remain under significant pressure as Local Authorities continue to implement spending cuts with price becoming the key determinant in product selection. In response to such threats TMP have commenced a lean and continuous improvement programme and are working closely with their supply chain to ensure goals are aligned and the required efficiency and cost improvement are achieved. TMP’s commitment to new product development has continued with the Apollo sign lights, due for launch in January 2013, which will be followed by further product launches before the end of next year. CORTEST Cortest achieved a record year with significant sales growth achieved through the delivery of two large PFI schemes. The client base has continued to expand as we increase both the number of blue chip engineering companies and Local Authorities with whom we do business. However, as seen Our new self-fronting bollard base was launched this year; it is simpler and performs better than our previous base. with TMP, Local Authority budget cuts have impacted margins and restricted our larger opportunities to PFI schemes. We have made changes to the operational structure during the year to improve the effectiveness of the business to cope with fluctuating demand and we will continue to assess how best to meet these requirements going forward. Europe DEWHURST HUNGARY Hungary had a strong year for sales. Just over half this growth was generated due to a change in the content of a product that we supply to a key customer. A relatively expensive component in the product that was originally free issued, had to be purchased by Dewhurst Hungary. Unfortunately, it was then sold on with a relatively low handling charge. Having said that, demand for all Hungary’s product was strong throughout the year and even without this change Hungary would have shown good sales growth. Throughout the year, the team at Dewhurst Hungary have carried out a large number of relatively small Kaizen projects to continuously improve our assembly processes. These have been quite successful, leading to small but important reductions in cycle times and also helping to improve our quality levels. Despite being under constant price pressure, we are also under pressure to continuously improve quality standards and we have been able to drive our number of rejected parts down quite considerably over the last twelve months. We have invested in a state of the art Coordinate Measuring Machine, which allows us to measure the critical dimensions of components. This ensures that we have good control of the quality of piece parts, whether they be moulded, die cast or machined. North America DUPAR CONTROLS Dupar had another solid year and performed in a broadly similar way to last year. The market in North America 7 Review of operations continues to be difficult, so to hold their own in this environment was a creditable achievement. There has been significant focus throughout the year on trying to make sure that our products are as quick and simple to install as possible. We now have a large number of jobs where customers free issue us their pushbutton control printed circuit boards. We then fully wire everything up, so that when our car stations arrive on site all the lift company needs to do is to connect up to the connectors on these boards and the installation of the car station is complete. The Cube Lift Identifier provides all round visibility for Destination Control Systems with large lift lobbies. This can save many hours of installation time and is a huge cost benefit to our customers. Dupar continue to work hard to continuously improve their processes. Good progress has been made in ensuring the minimum of programming is required to interface the drawings they produce for each job, with their laser cutter and engraving machines. With jobs moving seamlessly through these two sections we have been able to improve our efficiency and throughput at Dupar. ELEVATOR RESEARCH AND MANUFACTURING (ERM) It has been another difficult year at ERM but we are confident that the changes we have made during the year will put us in a much stronger position for the coming year. We carried out a major audit of the business early in the year and this has led to a fairly significant reorganisation of ERM in terms of the layout of our manufacturing space and also our product offering. In terms of manufacturing, we have been able to reduce the space in which we operate and this has allowed us to vacate two of the buildings that we leased. We have moved our fixture operation into a newer, more convenient building (one we were already leasing). Moving this part of the operation enabled us to have a clean sheet with regard to layout of our processes, so we now have a much better flow of work around the manufacturing space. At the same time we have rationalised our product range and dropped two product lines which were no longer profitable. 8 These changes leave us with a leaner and more efficient business, which is more able to compete in the current environment. Clive Mann who had been running ERM for the past decade retired during the year and we welcome Barnet Rogers, who has taken up the role as the new General Manager of ERM. He has already implemented a number of positive changes and we wish him every success in the future. Australasia and Asia AUSTRALIAN LIFT COMPONENTS (ALC) ALC reported a good increase in sales on the back of a healthy Australian market that benefitted all Group Companies in the region. Demand for fixture products was very strong with a number of large modernisation projects being completed through the year. ALC aims to be the supplier of choice for high quality installations in Australia, so it was pleasing that this year we have provided fixtures for such iconic venues as the Sydney Opera House and the Melbourne Cricket Ground. LIFT MATERIAL Lift Material had a reasonable year, again benefitting from strong demand for lift components. In the middle of the year we signed an agreement with Escalator Handrail Company (EHC) of Canada to distribute and install their handrails. EHC are a world leader in the escalator handrail market and have some excellent new products. We will be focussing on the supply and installation of their range of thermoplastic handrails. These have the advantage of superior resistance to delamination, drive, slippage, dust and vandalism compared with conventional handrails. These new handrails also have an extended life, so the frequency of change – out is reduced. After extensive training, Lift Material are now accredited to carry out the onsite installation (splicing) of the EHC handrails and in the last quarter of the year they carried out their first installations. We are confident that this will be a strong product line for us over the medium term. JAS ENGINEERING In their first full year within the Dewhurst Group JAS had good sales and although margins improved there is still more work to be done on improving efficiency. We have carried out initial lean training and implementation of a number of ideas generated will lead to some reorganisation of the operation. DEWHURST HONG KONG Dewhurst Hong Kong have built on their strong performance last year with another excellent year of sales and profit growth. After some slower years, the Hong Kong market has stabilised and there is a steady flow of major infrastructure projects which lead to good demand for our products. Broadening the scope of our services Escalator handrails Traditionally handrails were manufactured from rubber, but EHC’s latest product is made from thermoplastic. Handrails have to be formed into a continuous loop by splicing the two ends together. It is much cleaner and less costly to splice thermoplastic and Lift Material are now providing this service across Australia. 9 Financial review The sale of the premises has restored our cash balances to enhance our financial stability Jared Sinclair Finance Director Special extra dividend 5p/share Dewhurst returned a record year on revenue and profits with double digit sales growth across all three business sectors. Strong global sales in keypad products was aided by £3.1 million of additional pass through revenue but even without these additional sales, the keypad growth was still double digit. The lift sector’s growth came from good fixture and component sales in Asia and Australasia along with solid sales in the UK and despite the UK transport sector facing a tough and challenging year, sales of bollards and non-destructive testing grew. Overall revenue increased 24.3% from £41.5 million to £51.6 million whilst operating profit before goodwill write down and the gain on the property disposal grew by 14.9% from £4.9 million to £5.6 million. Goodwill write down Despite strong Group results, Dewhurst plc needed to take a prudent view on three subsidiaries and write down their respective goodwill amounts. ERM, our US corporation, faced with a struggling US economy continued to make losses and so was fully written down. A new general manager has been recruited and steps have been taken to address the losses. TMP improved performance, but was still short of its original purchase valuation and so required a goodwill write down. And finally, Dewhurst UK Manufacturing Ltd, having absorbed the Switching Components pushbutton range into its operations back in 2007, has seen a conversion of customers across to the Dewhurst pushbutton range over the years. This now requires its goodwill to be written down. More information can be found in note 10 to the accounts. Gain on disposal of Inverness Road The sale of the Inverness Road property is detailed in the report of the directors but as the gain was material at £3.9 million it has been separately disclosed on the face of the consolidated income statement. After taking professional advice it is the company’s belief that capital gains tax roll-over relief will be available and the transaction has been accounted for on that basis. 10 Strengthened cash position Cash flow was once again very good with £4.9 million of cash being generated from operations despite pension contributions of £1.4 million. The Group spent £0.8 million, as planned, completing the re-development of the Hampton Business Park property prior to moving in as well as spending £0.6 million acquiring the final stake in ERM. The £4.5 million net proceeds from the sale of Inverness Road ensured the Group ended the year with cash and short-term deposits at a very respectable £11.1 million. This is aligned with the Group’s philosophy of maintaining a strong cash position together with minimal borrowing. We started and finished the year with no borrowing and last year’s precautionary £2.0 million secured bank overdraft facility was cancelled. Pension scheme deficit A more detailed analysis of the retirement benefit fund assets and liabilities movements is reported in note 22 under IAS 19, but this year has seen the scheme deficit increase by £2.6 million from £9.3 million to £11.9 million. Although the scheme was closed to future accrual from 1 October 2010 and the company has paid £1.4 million annually since then into the scheme this and any asset return has been more than offset by this year’s change in assumptions, specifically the liability discount used. The liability discount is used to calculate the net present value of future liabilities and is traditionally based upon the 15 year AA bond yields. The yield in the past year has dropped from 5% to 4% and this one assumption change has had approximately a £6.0 million negative impact on the scheme position. The Group will 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. Treasury policy The Group seeks to reduce or eliminate financial risk to ensure sufficient liquidity is available to meet foreseeable Group five year review 2008 2009 2010 2011 2012 £(000) £(000) £(000) £(000) £(000) Revenue 36,326 35,835 36,975 41,487 51,555 Operating profit before goodwill write down and gain on property disposal 4,352 4,511 4,871 4,880 5,605 Operating profit 4,352 4,511 4,871 4,424 5,660 Profit before taxation 4,679 4,428 4,827 4,320 5,442 As a percentage of total equity 26.2% 22.7% 22.9% 19.9% 25.2% Taxation 1,238 1,157 1,339 1,428 1,688 Profit after taxation 3,441 3,271 3,488 2,892 3,754 Total equity 17,883 19,480 21,087 21,754 21,564 Earnings per share, basic and diluted 38.92p 38.43p 40.97p 34.35p 44.48p Dividends per share 5.76p 6.06p 6.36p 6.69p 12.02p 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 just 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, as reported in note 25. dividend in addition to the normal dividend of 7.02p. The total dividend for 2012 of 12.02p per share, up 79.7% against last year’s 6.69p, is covered 3.7 times by earnings. Total equity declined from £21.8 million to £21.6 million. Dividends are accounted for when paid or approved by shareholders, and not when proposed, therefore the proposed final dividend for 2012 has not been accrued at the balance sheet date. There was no change in the number of allotted shares during the year. Dividends Although the pension deficit remains a concern and a liability to be funded, the directors consider that some of the cash generated by the sale of Inverness Road should be returned to shareholders. They are therefore recommending a 5p special 11 Board of directors Report of the directors Richard Dewhurst BA (Eng Sc), ACMA Chairman, 56, joined in 1985. Previously with Ford Motor Co, Ernst & Whinney Senior Management Consultant. David Dewhurst BSc (Elec Eng) Group Managing Director, 51, joined in 1987. Previously with Holmes & Marchant plc. Jared Sinclair BSc, ACA Finance Director, 42, joined in 1997. Previously with Moores Rowland, Chartered Accountants, Audit Senior. Richard Young MBA, BSc, CEng, MIET Managing Director – Thames Valley Controls, 56, joined in 1996. Previously with MBM Technology Ltd, Director and General Manager. John Bailey Managing Director – TMP & Cortest, 42, joined in 2008. Previously with Brett Landscaping & Building Products, Commercial Director. Peter Tett MA, MSc Non-executive Director, 73, joined in 2000. Previously with Halma plc, Director. The directors present their annual report on the affairs of the Group together with the financial statements and auditor’s report for the year ended 30 September 2012. Results and dividends The trading profit for the year, after taxation, amounted to £3.8 million (2011: £2.9 million). A 5p special dividend in addition to the normal final dividend on the Ordinary and ‘A’ non-voting ordinary shares of 4.68p per share (2011: 4.46p) for the financial year ended 30 September 2012 will be proposed at the Annual General Meeting (AGM) to be held on 5 February 2013. If approved, this dividend will be paid on 21 February 2013 to members on the register at 18 January 2013. An interim dividend of 2.34p per share (2011: 2.23p) was paid on 28 August 2012. A final dividend of 4.46p which amounted to £380k for the financial year ended 30 September 2011 was approved at the AGM held on 26 January 2012 and was paid on 14 February 2012 to members on the register at 13 January 2012, compared with 4.24p the previous year (£361k). Principal activities and review of the business The company and Group principal activity, in the course of 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 on pages 4–9, a commentary on treasury policy is dealt with in the financial review and financial instruments are disclosed within note 25 to the financial statements. The directors believe that the key financial performance indicators relevant to the Group are earnings per share, operating profit, profit before tax and return on equity which are stated in the five year review on page 11. The key non-financial performance indicators relevant to the Group are lead times and on-time deliveries to our customers. 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. Change of registered office On 21 December 2011, having successfully moved into the new premises, Dewhurst plc changed its registered address to Unit 9 Hampton Business Park, Hampton Road West, Feltham, TW13 6DB. Sale of freehold property On 4 March 2012, Willowcharm Ltd paid £6.0 million (£5.0 million plus £1.0 million VAT) to Dewhurst plc for the freehold property known as Melbourne Works, Inverness Road, Hounslow, Middlesex, TW3 3LT. Prior to the sale of Melbourne Works, Dewhurst plc had successfully obtained residential planning permission for the site to enable it to realise the maximum possible value to offset against the cost of the new premises. Melbourne Works was reported in the books of the company with a net book value of £0.6 million, giving rise to a profit on disposal of £3.9 million (after deduction of associated costs of disposal of £0.5 million). The net cash proceeds from the sale enabled Dewhurst plc to fully pay down any short-term indebtedness to its bank, enabling a return to its core strategy of maintaining a strong cash position together with minimal or no borrowing. Acquisitions On 31 July 2012, Dewhurst plc acquired the remaining shares in Elevator Research & Manufacturing Corp. (ERM) from Clive Mann (shares held in the name of Mann Family Trust). The Group acquired the additional 20% stake in ERM for a total cash consideration of US$0.9 million (£0.6 million) and at this date the Group had a 100% stake in ERM. Post balance sheet event On 11 November 2012, the board signed a conditional agreement to acquire 70% of the business and assets of the partnership trading as Dual Engraving from D.E. Corporate Pty Ltd and Datree Pty Ltd (the ‘Business’ or ‘Dual’). The agreement is subject to satisfactory due diligence on the Business. Dual, based in Perth, Western Australia (WA), is a lift car interior and fixture manufacturer which works with all the major lift companies in the local WA market. In addition the Business supplies lift components to that market, including products from Dewhurst, Designcom, TL Jones and Memco. Subject to successful completion, the acquisition of a 70% stake in Dual demonstrates the company’s commitment to continue to expand its international operations. Part of the company’s strategy over recent years has been to seek to add additional fixture businesses around the world that can act as an outlet for sales of the company’s components and add value with local supplies and support for customers. Dual Engraving is already a customer of the Dewhurst Group, so this acquisition will not generate additional component sales, but it will secure those sales. Share repurchases The company did not repurchase any shares during the year. 12 13 Report of the directors Directors The members of the board during the year were: Mr R M Dewhurst (chairman) Mr D Dewhurst (group managing director) Mr J C Sinclair Mr R Young Mr J Bailey Mr P Tett (non-executive) The directors retiring by rotation at this year’s Annual General Meeting are Mr P Tett and Mr J Bailey who, being eligible, offer themselves for re-election. The unexpired period of Mr P Tett and Mr J Bailey’s service agreement is less than one year. During the year and at the date of approval of the accounts, the Group maintained liability insurance for all directors. Directors’ share interests The table below sets out the names of the persons who were directors of the company during the financial year ended 30 September 2012 together with details of their own and their families’ beneficial interests in the shares of the company at that date and corresponding details at 30 September 2011. 30 September 2012 Ordinary ‘A’ ordinary shares shares 30 September 2011 ‘A’ ordinary shares Ordinary shares Mr R M Dewhurst Mr D Dewhurst Mr J C Sinclair Mr R Young Mr J Bailey Mr P Tett 494,333 123,666 494,333 123,666 69,932 69,932 419,595 419,595 – 1,000 1,000 – 1,000 1,000 – 1,000 1,000 – 1,000 1,000 – – – – At 30 September 2012 and 30 September 2011 there were no share options allocated to the directors. During the financial year no director was materially interested in any contract which was significant to the Group’s business. No transactions have taken place between the end of the financial year and 3 December 2012. Directors’ emoluments The remuneration of the directors is shown below: Salary and fees £(000) Bonus Benefits Pension in kind £(000) £(000) £(000) 2012 Total 2011 Total £(000) £(000) Executive directors: 122 Mr R M Dewhurst 108 Mr D Dewhurst 89 Mr J C Sinclair 84 Mr R Young Mr J Bailey 87 Non-executive director: 17 Mr P Tett 137 112 41 73 44 – 3 3 – – 2 – 14 Substantial shareholdings At 20 November 2012, the company had been advised of the following beneficial interests in excess of 3% of the ordinary voting share capital (other than the holdings shown under directors’ share interests). Executors of Mr A Dewhurst Mrs V E Dewhurst Ms B Meredith Ms E Dewhurst Fidelity Management & Research Fund (Boston) Mr J H Ridley 366,000 285,000 190,208 175,333 170,500 126,000 At the same date the register shows interests in excess of 3% of the ‘A’ non-voting ordinary share capital (other than directors’ holdings) of: W B Nominees Ltd Discretionary Unit Fund Mrs V E Dewhurst Schweco Nominees Ltd – 16495 Acct Vidacos Nominees Ltd TD Waterhouse Nominees Ltd Executors of Mr A Dewhurst Schweco Nominees Ltd – 9000 Acct Ms E Dewhurst Roy Nominees Ltd 387,000 350,000 337,000 317,500 296,500 191,500 181,000 175,500 167,416 160,000 Employee involvement Meetings, chaired by the group managing director, are held with employee representatives. The financial position and prospects of the company are discussed together with details of investment and changes in facilities which are planned by management. Opportunity is given at the meetings to question senior executives about matters which concern the employees. Health and safety Regular attention is given to health and safety with all reasonable precautions taken to provide and maintain safe working conditions for both employees and visitors alike, which comply with statutory requirements and appropriate codes of practice. In order to minimise the instances of occupational accidents and illnesses detailed policies and risk improvement programmes are regularly updated. Employment policies The Group is committed to ensuring that: – – 10 9 – 262 223 140 166 133 189 164 116 124 116 All employees are treated fairly and equally irrespective of gender, ethnic origin, religion, nationality, marital status, sexuality or disability. The working environment is conducive to achievement and free from sexual harassment and intimidation. – 17 17 Full and fair consideration is given to the employment of disabled persons, having regard to their particular aptitudes and abilities. Wherever possible, continuing employment is provided for employees who become disabled with appropriate arrangements for re-training being made where necessary. The Group has a development policy committing it to the training and continuous development of its employees to develop their full potential and to achieve a more flexible and skilled workforce. Dewhurst plc, the company, achieved IiP (Investors in People) status which was awarded in January 2002 and has since been successfully re-appraised. Supplier payments policy The company’s policy concerning the payment of its trade creditors is to arrange the best possible terms with its suppliers and then pay as appropriate to those terms, subject to satisfactory performance by the supplier. Any contractual or legal obligations would be honoured with creditors being paid by the agreed dates to satisfy such contracts and commitments. Payment procedures are reviewed as required to maintain a good working relationship, with the supplier. The average number of days purchases outstanding was twenty-nine (2011: twenty-eight). Research and development The Group continues to invest in research and development programmes for new products as well as new processes and technologies to improve overall operational effectiveness. Political and charitable contributions The Group has made no political contributions this year (2011: £Nil). Charitable donations made by the Group to local schools, community projects and worthy causes amounted to £7k (2011: £3k), of which £4k was donated to the UK Lift Industry Charity. Going concern Positive steps to develop sales and control costs have been taken by management to ensure the company has adequate resources to continue in operational existence for the foreseeable future, therefore the directors continue to adopt a going concern basis in preparing the financial statements. Auditor The current directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group’s auditor for the purposes of the audit and to establish that the auditor is aware of that information. The directors are not aware of any relevant audit information of which the auditor is unaware. A resolution will be proposed at the Annual General Meeting to re-appoint Chantrey Vellacott DFK LLP as auditor and to authorise the directors to determine their remuneration. Statement of directors’ responsibilities The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at any time the financial position of the company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and the Group and for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for preparing the annual report, the directors’ report and the financial statements in accordance with the Companies Act 2006. The directors have prepared the financial statements for the Group and the company in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. International Accounting Standard 1 requires that financial statements present fairly for each financial year the Group’s financial position, financial performance and cash flows. This requires the faithful representation of the effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for assets, liabilities, income and expenses set out in the International Accounting Standards Board’s ‘Framework for the preparation and presentation of financial statements’. In virtually all circumstances, a fair presentation will be achieved by compliance with all applicable IFRS. A fair presentation also requires the directors to: consistently select and apply appropriate accounting policies; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business; and present information, including accounting policies, in a manner that provides relevant, reliable comparable and understandable information; and provide additional disclosures when compliance with the specific requirements in IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance. Financial statements are published on the Group’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Group’s website is the responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. By order of the board Jared Sinclair Secretary 3 December 2012 15 Consolidated financial statements Consolidated income statement 2012 2011 For the year ended 30 September 2012 Notes £(000) £(000) Continuing operations Revenue 2 51,555 41,487 Operating costs 3 (45,895) (37,063) Operating profit before goodwill write down and gain on property disposal 5,605 4,880 Goodwill write down 10 (3,889) (456) Gain on disposal of property 3,944 – Operating profit 5,660 4,424 Share of loss from associate – (29) Finance income 5 124 62 Finance costs 6 (342) (137) Profit before taxation 5,442 4,320 Tax on profit 7 (1,688) (1,428) Profit for the financial year 8 3,754 2,892 Attributable to: Equity shareholders of the company 3,786 2,924 Non-controlling interests 26 (32) (32) 3,754 2,892 Basic and diluted earnings per share 9 44.48p 34.35p Consolidated statement of recognised income and expense 2012 2011 Notes £(000) £(000) Net income/(expense) recognised directly in equity: Actuarial gains/(losses) on the defined benefit pension scheme 22 (3,619) (2,423) Exchange differences on translation of foreign operations 49 (41) Tax on items taken directly to equity 821 640 Net income/(expense) recognised directly in equity in the year (2,749) (1,824) Consolidated balance sheet 2012 2011 At 30 September 2012 Notes £(000) £(000) Non-current assets Goodwill 10 3,555 7,357 Other intangibles 11 125 158 Property, plant and equipment 12 9,669 9,581 Deferred tax asset 19 2,037 1,779 15,386 18,875 Current assets Inventories 14 4,852 4,269 Trade and other receivables 15 8,421 8,394 Current tax assets – 203 Cash and cash equivalents 16 11,101 5,009 24,374 17,875 Total assets 39,760 36,750 Current liabilities Trade and other payables 17 5,583 5,222 Current tax liabilities 35 – Short-term provisions 18 722 475 6,340 5,697 Non-current liabilities Retirement benefit obligation 22 11,856 9,299 Total liabilities 18,196 14,996 Net assets 21,564 21,754 Equity Share capital 20 851 851 Share premium account 21 157 157 Capital redemption reserve 21 286 286 Translation reserve 21 2,097 2,059 Retained earnings 21 18,173 18,252 Profit for the financial year 3,754 2,892 Total attributable to equity shareholders of the company 21,564 21,605 Total recognised income and expense for the year 1,005 1,068 Non-controlling interests 26 – 149 Attributable to: Equity shareholders of the company 1,004 1,071 Non-controlling interests 1 (3) 1,005 1,068 Total equity 21,564 21,754 The financial statements were approved by the board of directors and authorised for issue on 3 December 2012 and were signed on its behalf by: Richard Dewhurst Chairman Jared Sinclair Finance Director Company Registration Number: 160314 The notes on pages 19 to 37 form part of these financial statements The notes on pages 19 to 37 form part of these financial statements 16 17 Consolidated financial statements Notes to the accounts Consolidated cash flow statement 2012 2011 For the year ended 30 September 2012 Notes £(000) £(000) Cash flows from operating activities Operating profit 5,660 4,424 Goodwill write down 3,889 456 Depreciation and amortisation 875 812 Additional (income)/costs to pension scheme (1,399) (1,313) Exchange adjustments (155) (208) (Profit)/loss on disposal of property, plant and equipment (3,964) (4) 4,906 4,167 (Increase)/decrease in inventories (583) 202 (Increase)/decrease in trade and other receivables (27) (674) Increase/(decrease) in trade and other payables 361 191 Increase/(decrease) in provisions 247 126 Cash generated from operations 4,904 4,012 Interest paid (5) (16) Income tax paid (889) (1,095) Net cash from operating activities 4,010 2,901 Cash flows from investing activities Acquisition of subsidiary undertakings 26 (585) (869) Acquisition of business and assets – (907) Net proceeds from sale of property, plant and equipment 4,588 7 Purchase of property, plant and equipment (1,374) (5,124) Development costs capitalised (104) (129) Interest received 124 61 Net cash generated from/(used in) investing activities 2,649 (6,961) Cash flows from financing activities Dividends paid (579) (551) Net cash used in financing activities (579) (551) Net increase/(decrease) in cash and cash equivalents 6,080 (4,611) Cash and cash equivalents at beginning of year 16 5,009 9,593 Exchange adjustments on cash and cash equivalents 12 27 Cash and cash equivalents at end of year 16 11,101 5,009 The notes on pages 19 to 37 form part of these financial statements 18 Note 1 Accounting policies Basis of preparation Dewhurst plc prepares its consolidated and company financial statements on a going concern basis and in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union (EU). 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. The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to the years presented, unless otherwise stated. The results have been prepared on the basis of all IFRS issued by the International Accounting Standards Board currently effective. The directors consider the effects of standards issued but not yet effective to be immaterial. The preparation of financial statements in conformity with IFRS requires the use of judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis and revisions are recognised in the period in which the estimate or assumption is revised. The key areas where estimates have been used and assumptions applied are in impairment testing of goodwill, provisioning, taxation and in assessing the defined benefit pension scheme liabilities (see notes 10, 18, 19 and 22 respectively). The financial statements have been prepared under the historical cost convention and are presented in sterling to the nearest thousand (£’000). Consolidation The consolidated financial statements incorporate the results of Dewhurst plc and all of its subsidiary undertakings made up to 30 September 2012, adjusted to eliminate intra-group balances, transactions, income and expenses. The Group has used the acquisition method of accounting to consolidate the results of subsidiary undertakings, which are included from the date of acquisition. Revenue Revenue is measured at the fair value of sales of goods and services less returns and sales taxes. Revenue is recognised on delivery to customers. Customer loyalty rebates The cost of customer loyalty rebates is recognised as a cost of sale, with an accrual equal to the estimated fair value of the loyalty rebate recognised when the original transaction occurs. On redemption, the cost of redemption is offset against the accrual. Property, plant and equipment Property, plant and equipment is stated at cost or deemed cost less accumulated depreciation and any recognised impairment loss. Depreciation is charged so as to write off the cost over the assets expected useful life. The depreciation rates used are: Buildings (Basic Structure) 1½% – on a declining balance basis Buildings (Fittings) 5% to 20% – on a straight-line basis Plant and equipment 10% to 331/3% – on a straight-line basis Investments in subsidiaries In the accounts of the company, investments held as non-current assets are stated at cost less provision for impairment. Goodwill Goodwill arising on the acquisition of a subsidiary undertaking is the difference between the fair value of the consideration paid and the fair value of the assets and liabilities acquired, and is recognised as an asset and reviewed for impairment at least annually. Any impairment is recognised immediately in the income statement and is not subsequently reversed. On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous UK GAAP amount subject to being tested for impairment at that date. Inventories Inventories are stated at the lower of weighted average cost and net realisable value. Cost represents direct materials, labour and appropriate production overheads. The Group provides for all inventories where there is more than one year’s usage and where there is no annual usage therefore the directors consider the carrying amounts are stated at their fair value after deduction of appropriate allowances for estimated irrecoverable amounts. Taxation The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on taxable profit for the year. Taxable profit differs from the net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all material taxable temporary differences and deferred tax assets are only recognised to the extent that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is 19 Notes to the accounts realised, based upon tax rates and laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Foreign currencies Foreign currency transactions of individual companies are translated at the rates ruling when they occurred. Foreign currency monetary assets and liabilities are retranslated at the rates ruling at the balance sheet date. Any differences are taken to the income statement. The results of overseas operations are translated at the average rates of exchange during the year and their balance sheets translated into sterling at the rates of exchange ruling at the balance sheet date. Exchange differences which arise from translation of the opening net assets and results of foreign subsidiary undertakings and from translating the income statement at an average rate are taken to reserves. All other differences are taken to the income statement. The treatment of tax charges or credits resulting from the exchange differences reported above match the accounting treatment and are either taken to reserves or to the income statement as appropriate. Research and development Development expenditure that satisfies the criteria of IAS 38 for recognition as an intangible asset is capitalised and then amortised on a straight-line basis over its expected useful life of up to three years. Expenditure on development activities that does not meet these criteria along with research activities are recognised as an expense in the period in which they are incurred. Operating leases Rentals under operating leases are charged to the income statement in equal annual amounts over the lease term. Benefits received as incentives to enter into the agreements are also spread on a straight-line basis over the lease term. Employee benefits The Group operates both a defined contribution and a defined benefit type pension scheme. Contributions in respect of the defined contribution schemes are charged to the income statement in the year they fall due. The defined benefit scheme has been set up under a trust deed with its financial assets held separately from those of the Group and is controlled by the Trustees. The pension cost is assessed in accordance with the advice of an independent qualified actuary to recognise the expected cost of providing pensions on a systematic and rational basis over the expected remaining service lives of employees. The liability recognised in the balance sheet in respect of the defined benefit pension scheme is the present value of the defined benefit obligation at the balance sheet date less the fair value of scheme assets, together with adjustments for unrecognised actuarial gains and losses and past service costs. The defined benefit obligation is determined by discounting the estimated future cash outflows using interest rates of high- quality corporate bonds approximating to the terms of the related pension liability. 20 Actuarial gains and losses are recognised in full in the statement of recognised income and expense. Current and past service costs are charged to the income statement under pension costs in operating expenses. Interest on the pension scheme’s liabilities and the expected return on the scheme’s assets are recognised within finance costs in the income statement. Dividends Dividend distribution to the company’s shareholders is recognised as a liability in the Group’s financial statements in the year in which dividends are approved by shareholders or paid, which ever is earlier. Financial instruments The Group does not hold or issue derivative financial instruments for speculative purposes. Trade receivables and payables Trade receivables do not carry any interest and trade payables are not interest bearing. Receipts and payments occur over a short period and are subject to an insignificant risk of changes in value. The Group provides for all trade receivables that are more than ninety days overdue therefore the directors consider the carrying amounts are stated at their fair value after deduction of appropriate allowances for estimated irrecoverable amounts. Financial liabilities Financial liabilities incurred by the Group are classified according to the substance of the contractual arrangements entered into and measured at their amortised cost. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and short- term deposits that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Provisions Provisions are recognised for liabilities of uncertain timing or amount when there is a present legal or constructive obligation that has arisen as a result of past events, for which it is probable that an outflow of economic benefit will be required to settle the obligation, and where the amount of the obligation can be reliably estimated (see notes 15 and 18). Note 2 Segment reporting For management purposes, the Group reports its primary segmental information by geographical destination. The geographical analysis by significant regions is as follows: Revenue Operating profit 2012 2011 2012 2011 £(000) £(000) £(000) £(000) United Kingdom 16,481 14,461 1,470 558 Europe 9,984 5,737 1,377 1,055 The Americas 12,307 11,613 338 665 Asia & Australia 15,884 13,320 2,470 2,147 Other 59 50 5 (1) 54,715 45,181 5,660 4,424 Inter-company sales (3,160) (3,694) Share of (loss)/profit from associates – (29) Finance income/(costs) (218) (75) Consolidated revenue/profit before tax for the year 51,555 41,487 5,442 4,320 Assets Liabilities 2012 2011 2012 2011 £(000) £(000) £(000) £(000) United Kingdom 15,675 12,736 8,844 5,304 Europe 5,828 5,410 2,815 2,769 The Americas 6,867 7,953 3,176 3,620 Asia & Australia 11,255 10,524 3,254 3,188 Other 135 127 107 115 Consolidated assets/liabilities for the year 39,760 36,750 18,196 14,996 Capital additions Depreciation and amortisation 2012 2011 2012 2011 £(000) £(000) £(000) £(000) United Kingdom 1,076 5,093 343 246 Europe 113 40 51 66 The Americas 82 1,747 200 212 Asia & Australia 205 920 280 286 Other 2 – 1 2 Total Group 1,478 7,800 875 812 21 Notes to the accounts Note 2 Segment reporting continued Note 4 Staff costs and information regarding employees The secondary segmental reporting is by the following business sectors: Revenue 2012 2011 Sector £(000) £(000) Lift 34,391 31,462 Transport 4,878 3,923 Keypad 15,446 9,796 54,715 45,181 Inter-company sales (3,160) (3,694) 51,555 41,487 Assets Capital additions 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Lift 30,567 25,627 1,256 7,613 Transport 2,965 5,385 89 142 Keypad 6,228 5,738 133 45 Total Group 39,760 36,750 1,478 7,800 Note 3 Operating costs 2012 2011 £(000) £(000) Movement in inventory provision obsolescence 25 (55) Cost of inventories recognised as an expense 25,959 19,525 Staff costs (see note 4) 14,105 12,235 Depreciation 738 657 Amortisation 137 155 Write down of goodwill 3,889 456 Gain on disposal of property (3,944) – Foreign exchange differences 155 (56) Other operating charges 4,831 4,146 Operating costs 45,895 37,063 Other operating charges include lease rentals on premises £366k (2011: £313k) and lease rentals on motor vehicles £78k (2011: £72k), profit on sale of property, plant and equipment £20k (2011: profit of £4k) and auditor’s remuneration detailed below. Expenditure on research and development was £766k (2011: £728k). Auditor’s remuneration: The Group The Company 2012 2011 2012 2011 Amounts paid to Chantrey Vellacott DFK LLP and DFK associates £(000) £(000) £(000) £(000) Statutory audit services 73 69 14 14 Pension audit services 5 5 2 2 Taxation compliance services 11 11 1 1 Other taxation advisory services 64 6 62 4 153 91 79 21 Costs during the year were as follows: The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Wages and salaries 12,477 10,866 676 516 Social security costs 939 807 87 64 Pension costs (see note 22) 689 562 128 24 14,105 12,235 891 604 The average number of employees during the year was: The Group The Company 2012 2011 2012 2011 No. No. No. No. Office and management 163 169 8 8 Manufacturing 194 190 – – 357 359 8 8 The executive directors comprise the key management personnel of the Group and company in both the current and previous years. The total amount of the directors’ remuneration was as follows: 2012 2011 £(000) £(000) Emoluments – Executive directors 905 692 Emoluments – Non-executive directors 17 17 922 709 Four directors became deferred members in the company’s defined benefit pension scheme after the scheme closed to future accrual on 30 September 2010. The emoluments of the directors is reported on page 14 of the directors report and the remuneration of the highest paid director during the year was £262k (2011: £189k). The highest paid director, under the defined benefit scheme has accrued pension of £113k (2011: £108k) and an accrued lump sum of £2,127k (2011: £1,820k). Note 5 Finance income 2012 2011 £(000) £(000) Bank deposit interest 121 61 Other interest receivable 3 1 124 62 22 23 Notes to the accounts Note 6 Finance costs 2012 2011 £(000) £(000) Interest payable on bank overdraft and loans (5) (16) Net costs on defined benefit pension scheme (337) (121) (342) (137) Note 7 Tax 2012 2011 Current tax £(000) £(000) UK corporation tax at 25% (2011: 27%) – – Adjustment on prior years tax (135) (32) Overseas taxation 1,260 1,035 1,125 1,003 Deferred tax Movement in deferred taxation provision 563 425 Tax expense in the income statement 1,688 1,428 The tax assessed for the year is different from the standard rate of corporation tax in the UK. The differences are explained below: 2012 2011 £(000) £(000) Profit before tax 5,442 4,320 Standard rate of corporation tax in the UK 25.0% 27.0% Effects of: Adjustments in respect of prior years (2.5%) (0.7%) Overseas withholding tax 0.8% 1.5% Deferred tax 10.4% 9.8% Additional reduction for R&D expenditure (2.0%) – Expenses not deductible for tax purposes (0.7%) (4.5%) Effective tax rate for the year 31.0% 33.1% Note 8 Profit for the financial year The Group profit for the year includes £769k (2011: £2,628k) of profit after tax, which has been dealt with in the financial statements of the holding company. The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own income statement in these financial statements. Note 9 Earnings per share and dividend per share 2012 2011 Weighted average number of shares No. No. For basic and diluted earnings per share 8,511,398 8,511,398 The calculation of basic and diluted earnings per share is based on the profit for the financial year of £3,786,101 and on 8,511,398 Ordinary 10p and ‘A’ non-voting ordinary 10p shares, being the weighted average number of shares in issue throughout the financial year. 2012 2011 Paid dividends per 10p ordinary share £(000) £(000) 2011 final paid of 4.46p (2010: 4.24p) (380) (361) 2012 interim paid of 2.34p (2011: 2.23p) (199) (190) The final proposed dividend is based on 3,309,200 Ordinary 10p shares and 5,202,198 ‘A’ non-voting ordinary 10p shares, being the latest number of shares in issue. The directors are proposing a 5p special dividend in addition to the normal final dividend of 4.68p (2011: 4.46p) per share, totalling £824k (2011: £380k). This dividend has not been accrued at the balance sheet date. 24 25 Notes to the accounts Note 10 Goodwill The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Cost or valuation: At 1 October 8,938 7,228 – – Exchange adjustment 94 63 – – Additions on acquisition of subsidiaries – 1,647 – – Note 11 Other intangibles The Group The Company 2012 2011 2012 2011 Development costs £(000) £(000) £(000) £(000) Cost or valuation: At 1 October 738 609 65 65 Additions 104 129 – – Disposal (65) – (65) – At 30 September 9,032 8,938 – – At 30 September 777 738 – 65 Amortisation: At 1 October 580 425 65 60 Charge for the year 137 155 – 5 Disposal (65) – (65) – At 30 September 652 580 – 65 Net book value: At 30 September 125 158 – – At 30 September – prior year 158 184 – 5 All amortisation has been charged to the income statement through operating costs and no intangible items are held as security. Amortisation and Impairment: At 1 October 1,581 1,106 – – Exchange adjustment 7 19 – – Write down 3,889 456 – – At 30 September 5,477 1,581 – – Net book value: At 30 September 3,555 7,357 – – Goodwill is allocated at acquisition to the business units that are expected to benefit from that acquisition. The carrying amounts of goodwill have been allocated as follows: The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) United Kingdom 667 3,957 – – America – 603 – – Asia & Australia 2,888 2,797 – – 3,555 7,357 – – The goodwill relates to two Cash Generating Units (CGU) in the UK, Traffic Management Products business acquired in January 2006 and the Switching Components business acquired in October 2007, two CGUs in America, Elevator Research Manufacturing Corp. and Winter & Bain acquired in December 2010 and three CGUs in Australia, Australian Lift Components Pty Ltd acquired in February 2000, Lift Material Australia Pty Ltd acquired in July 2005 and JAS Engineering Pty Ltd acquired in December 2010. Goodwill values have been tested for impairment by comparing them against the value in use of the relevant CGUs. The value in use calculations are based on current or projected pre-tax profits, derived from current results or 12 month forecasts approved by the board, discounted at 5% per annum to calculate their net present value. The key assumptions used for the ‘value in use’ calculation for these CGUs are the sales and margin projections, the private company price index (PCPI) multiple applied to forecast profits and the discount rate. Sales growth is not based upon past experience but on future expectations because of recent product development. Margins are in line with past experience, and both the PCPI multiple and discount rate are derived from external sources of information and felt to be most appropriate. Based upon these key assumptions the goodwill impairment charge that arose during the current year is in relation to Switching Components, Traffic Management Products and Elevator Research Manufacturing Corp with goodwill written down by £160k, £3,130k & £599k (2011: £456k write down on Winter & Bain) respectively in the financial year. 26 27 Notes to the accounts Note 12 Property, plant and equipment The Group The Company Property Plant and Total Property Plant and Total equipment equipment £(000) £(000) £(000) £(000) £(000) £(000) Cost or valuation: At 1 October 2010 3,653 6,779 10,432 1,325 344 1,669 Exchange adjustment 33 (10) 23 – – – Acquired with subsidiary 44 856 900 – – – Asset under construction 4,924 – 4,924 4,924 – 4,924 Additions 11 189 200 – 2 2 Disposals – (102) (102) – – – At 1 October 2011 8,665 7,712 16,377 6,249 346 6,595 Exchange adjustment 53 37 90 – – – Additions 785 589 1,374 765 170 935 Disposals (819) (2,084) (2,903) (816) (344) (1,160) At 30 September 2012 8,684 6,254 14,938 6,198 172 6,370 The Group The Company Property Plant and Total Property Plant and Total equipment equipment £(000) £(000) £(000) £(000) £(000) £(000) Depreciation: At 1 October 2010 716 5,107 5,823 311 306 617 Exchange adjustment 3 5 8 – – – Acquired with subsidiary 33 374 407 – – – Charge for the year 82 575 657 10 39 49 Disposals – (99) (99) – – – At 1 October 2011 834 5,962 6,796 321 345 666 Exchange adjustment 7 7 14 – – – Charge for the year 164 574 738 93 11 104 Disposals (226) (2,053) (2,279) (224) (344) (568) At 30 September 2012 779 4,490 5,269 190 12 202 Net book value: At 30 September 2012 7,905 1,764 9,669 6,008 160 6,168 At 30 September 2011 7,831 1,750 9,581 5,928 1 5,929 Capital commitments contracted by the Group at 30 September 2012 amounted to £73k (2011: £820k) and by the company £73k (2011: £800k). Capital commitments authorised but not contracted by the Group at 30 September 2012 amounted to £78k (2011: £21k) and by the company £Nil (2011: £21k). Note 13 Investments – shares in subsidiary undertakings The Company 2012 2011 Investments (ordinary shares) in subsidiary undertakings are: £(000) £(000) Cost: Dewhurst UK Manufacturing Ltd 175 175 Thames Valley Controls Ltd 300 300 Traffic Management Products Ltd 4,516 4,516 Cortest Ltd 50 50 Dewhurst (Hungary) Kft 72 72 Dupar Controls Inc. 35 35 The Fixture Company 32 32 Elevator Research Manufacturing Corp. 2,390 1,805 Australian Lift Components Pty Ltd 1,798 1,798 Lift Material Australia Pty Ltd 84 84 JAS Engineering Pty Ltd 123 123 Dewhurst Australian Property Pty Ltd 97 97 Dewhurst (Hong Kong) Ltd 1 1 9,673 9,088 Provision for impairment (6,137) (822) 3,536 8,266 The company has thirteen wholly-owned subsidiaries, Dewhurst UK Manufacturing Ltd, Thames Valley Controls Ltd, Traffic Management Products Ltd (TMP) and Cortest Ltd, registered and principally operating in England, Dewhurst (Hungary) Kft, registered and principally operating in Hungary, Dupar Controls Inc., registered and principally operating in Canada, The Fixture Company and Elevator Research Manufacturing Corp. (ERM) registered and principally operating in the United States of America, Australian Lift Components Pty Ltd, Lift Material Australia Pty Ltd, JAS Engineering Pty Ltd and Dewhurst Australian Property Pty Ltd, all registered and principally operating in Australia and Dewhurst (Hong Kong) Ltd registered and principally operating in Hong Kong. All companies have similar principal activities to Dewhurst plc, except TMP and Cortest, which operate solely in the transport sector and Dewhurst Australian Property Pty Ltd, which operates solely to hold Australian Lift Components Pty Ltd’s property. £3,605k of the investment in TMP along with the remaining £1,711k investment in ERM (2011: £679k in ERM) has been provided for at the end of this financial year. Note 14 Inventories The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Raw materials and components 3,075 2,774 – – Work-in-progress 328 239 – – Finished goods and goods for re-sale 1,449 1,256 – – 4,852 4,269 – – There is no material difference between the replacement cost of inventories and the amounts stated above. 28 29 Notes to the accounts Note 15 Trade and other receivables The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Trade receivables 8,312 8,200 – – Amounts due from subsidiary undertakings – – 3,910 2,953 Other taxes and social security costs – – – 134 Other receivables 24 88 – – Prepayments and accrued income 85 106 – – 8,421 8,394 3,910 3,087 Trade receivables are shown net of provision for impairment. The movements in the provision for impairment of receivables were as follows: The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) At 1 October 242 236 – – Charge for the year (48) 10 – – Costs incurred (45) (4) – – At 30 September 149 242 – – At the balance sheet date the ageing analysis of trade receivables that were past due (normal terms is 30 days net monthly) but not provided for are as follows: Within Up to 1 month Up to 2 months Over 2 months Total terms overdue overdue overdue £(000) £(000) £(000) £(000) £(000) As at 30 September 2012 8,312 6,556 1,266 313 177 As at 30 September 2011 8,200 5,585 1,826 493 296 Note 16 Cash and cash equivalents The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Cash 8,101 5,009 677 301 Short-term deposits 3,000 – 3,000 – 11,101 5,009 3,677 301 Note 17 Trade and other payables The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Trade payables 2,351 2,837 3 306 Other taxes and social security costs 497 338 17 – Other payables 103 125 41 19 Accruals and deferred income 2,632 1,922 491 255 5,583 5,222 552 580 The directors consider that the carrying amount of trade payables approximates to their fair value. Note 18 Short-term provisions The Group The Company 2012 2011 2012 2011 £(000) £(000) £(000) £(000) Warranty provisions 722 475 – – Warranties are provided in the normal course of business based on current issues and are costed on an assessment of future claims with reference to past claims. The provision is in relation to replacement and change-out costs and although it is not possible to estimate the timing of crystallisation of the potential liability it is expected that it will be utilised during the coming year. Amounts charged to the Group income statement during the year were £424k (2011: £303k). Amounts utilised by the Group in the year were £177k (2011: £177k). There were no amounts charged or utilised this year or last year by the company. Note 19 Deferred taxation The Group The Company 2012 2011 2012 2011 Deferred tax asset: £(000) £(000) £(000) £(000) At 1 October 1,779 1,563 2,426 2,254 Transfer directly (to)/from equity 821 641 832 630 Transfer (to)/from income statement (563) (425) (574) (458) At 30 September 2,037 1,779 2,684 2,426 Deferred tax at 30 September relates to the following: The Group The Company 2012 2011 2012 2011 Deferred taxation £(000) £(000) £(000) £(000) Defined benefit pension scheme 2,726 2,418 2,726 2,418 Provisions 133 172 (42) 8 Exchange differences on translation of foreign operations (822) (811) – – Deferred tax asset 2,037 1,779 2,684 2,426 30 31 Notes to the accounts Note 20 Share capital 2012 2011 Authorised: £(000) £(000) Shares of 10p each – 4,500,000 Ordinary 450 450 – 9,000,000 ‘A’ non-voting ordinary 900 900 1,350 1,350 2012 2011 Allotted and fully paid: £(000) £(000) Shares of 10p each – 3,309,200 (2011: 3,309,200) Ordinary 331 331 – 5,202,198 (2011: 5,202,198) ‘A’ non-voting ordinary 520 520 851 851 The Ordinary shares and the ‘A’ non-voting ordinary shares rank in all respects pari passu except that the ‘A’ non-voting ordinary shares do not carry the right to receive notices, attend or vote at meetings of the company. Note 21 Changes in equity The Company The Group Share Share Capital Translation Retained Share Share Capital Retained capital premium redemption reserve earnings capital premium redemption earnings account reserve account reserve £(000) £(000) £(000) £(000) £(000) £(000) £(000) £(000) £(000) At 1 October 2010 851 157 286 2,089 17,704 851 157 286 8,597 Exchange differences on translation of foreign operations – – – (41) – – – – 8 Actuarial gains/(losses) on defined benefit pension scheme – – – – (2,423) – – – (2,423) Tax on items taken directly to equity – – – 11 630 – – – 630 Dividends paid – – – – (551) – – – (551) Profit for the year – – – – 2,892 – – – 2,628 At 1 October 2011 851 157 286 2,059 18,252 851 157 286 8,889 Exchange differences on translation of foreign operations – – – 49 – – – – – Actuarial gains/(losses) on defined benefit pension scheme – – – – (3,619) – – – (3,619) Net costs of acquiring the final stake in ERM (note 26) – – – – (467) – – – – Tax on items taken directly to equity – – – (11) 832 – – – 832 Dividends paid – – – – (579) – – – (579) Profit for the year – – – – 3,754 – – – 769 At 30 September 2012 851 157 286 2,097 18,173 851 157 286 6,292 Included in retained earnings is (£10,118k) (2011: (£6,499k)) being the cumulative actuarial gains or (losses) on defined benefit pension scheme. Note 22 Retirement benefit obligation The Group operates pension schemes in the UK, Canada, Australia and the USA, and also complies with Hungarian state legislation. During the year the UK operated both defined contribution schemes, the assets of which are held in independently administered funds, and a defined benefit scheme, the assets of which are held in trustee administered funds. The total pension cost for the Group was £689k (2011: £562k), of which £587k (2011: £562k) relates to defined contribution schemes and £102k (2011: £Nil) relates to the defined benefit scheme. The Hungarian, Canadian, USA and Australian schemes are of the defined contribution type and the cost to the Group amounted to £310k (2011: £302k). There was £22k of outstanding charges at the balance sheet date in respect of the defined benefit scheme (2011: £Nil). On 30 September 2010 the company closed the defined benefit scheme to future accrual and offered all existing members future pension benefits in a new Group defined contribution scheme. There were still company contributions during the year of £1,404k per annum into the defined benefit scheme (2011: the company contributed a fixed sum of £1,404k per annum). This method of calculating the rate and amount has been agreed with the actuary. The percentage contribution covered the current service accruals and the fixed sum is paid to reduce the fund deficit. As required under the Welfare Reform and Pensions Act 1999 and Stakeholder Pension Schemes Regulations 2000 the Group has offered access to a stakeholder pension scheme to employees in its UK-based companies. The pension cost relating to the UK defined benefit scheme is assessed in accordance with the advice of qualified actuaries using the new scheme specific funding regime which came into force in September 2005. The latest actuarial valuation of the scheme was on 1 June 2009. Generally, it has been assumed that future investment yields would be at 6.5% per annum (pre-retirement) and 5.0% (post-retirement) and that increases in earnings would average 4.2% per annum. At the date of the latest actuarial valuation of the UK scheme, the market value of the assets of the scheme exceeded £15.9 million and the funding level on the on-going valuation basis was 64%. The 2009 actuarial valuation takes account of secured pensioners when assessing the assets and liabilities of the fund. All the recommendations made by the scheme’s actuary to eliminate the scheme deficit have been fully implemented. IAS 19 Employee Benefits Under IAS 19 a snapshot is taken of the retirement benefit fund assets and liabilities to coincide with the company’s financial year-end. Thus movements in equity and bond markets and in discount rates may create some volatility in the calculation of the scheme assets and liabilities. The FTSE-100 index stood at 5,742 at 30 September 2012 (2011: 5,128). Assumptions The following actuarial assumptions, updated to 30 September 2012 by the scheme actuary, have been used in preparing the disclosures required under IAS 19: 2012 2011 Retail price index expected to rise by 2.4% 3.0% Pensionable salaries will increase by n/a n/a Deferred pensions and pensions in payment will increase by 2.4% 3.0% Liabilities discounted at a rate of 4.0% 5.0% Expected lifetime for a member retiring at the accounting date – for males 23.1 yrs 23.0 yrs – for females 24.3 yrs 24.3 yrs Future expected lifetime for a member retiring in 20 years’ time – for males 25.9 yrs 25.8 yrs – for females 26.3 yrs 26.3 yrs 32 33 Notes to the accounts Note 22 Retirement benefit obligation continued The assets in the scheme and the expected rates of return: IAS 19 requires the value of annuities purchased in respect of pensioners and widow(er)s to be taken into current year calculations. Long-term Long-term rate of return Fair value at rate of return Fair value at Fair value at expected at 30 Sept 2012 expected at 30 Sept 2011 30 Sept 2010 30 Sept 2012 £(000) 30 Sept 2011 £(000) £(000) Equities 6.2% 14,282 5.9% 15,074 15,215 Bonds 4.0% 4,402 5.1% 1,293 1,270 Other 3.0% 3,505 3.4% 3,169 3,390 Total fair value of scheme assets 22,189 19,536 19,875 Present value of scheme liabilities (34,045) (28,835) (27,943) Scheme deficit (11,856) (9,299) (8,068) Related deferred tax asset 2,726 2,418 2,259 Net pension liability (9,130) (6,881) (5,809) Amounts charged to operating profit: 2012 2011 2010 £(000) £(000) £(000) Current service cost – – 299 Curtailment – – 91 Total operating charge – – 390 Amounts charged to other finance costs: 2012 2011 2010 £(000) £(000) £(000) Expected return on pension scheme assets 1,087 1,256 1,194 Interest on pension scheme liabilities (1,424) (1,377) (1,347) Net benefit/(cost) (337) (121) (153) Amounts recognised in the statement of recognised income and expenses (SoRIE): 2012 2011 2010 £(000) £(000) £(000) Actual return less expected return on pension scheme assets 788 (2,217) (59) Experience gains and losses arising on the scheme liabilities (159) – 1,119 Changes in assumptions underlying the present value of the scheme liabilities (4,248) (206) (3,557) Actuarial gains/(losses) recognised in SoRIE (3,619) (2,423) (2,497) The movement in the scheme assets, liabilities and the net deficit are as follows: 2012 2011 2010 £(000) £(000) £(000) Deficit in scheme at 1 October (9,299) (8,068) (6,072) Movement in the year Current service cost – – (299) Curtailment – – (91) Contributions 1,404 1,404 1,111 Administration charge (5) (91) (67) Other finance costs (337) (121) (153) Actuarial gains/(losses) (3,619) (2,423) (2,497) Deficit in scheme at 30 September (11,856) (9,299) (8,068) History of experience gains and losses: 2012 2011 2010 £(000) £(000) £(000) Difference between the expected and actual return on scheme assets 788 (2,217) (59) Percentage of scheme assets 3.6% (11.3%) (0.3%) Experience gains and losses on scheme liabilities (159) – 1,119 Percentage of the present value of scheme liabilities 0.5% – (4.0%) Total amount recognised in SoRIE (3,619) (2,423) (2,497) Percentage of the present value of scheme liabilities 10.6% 8.4% 8.9% Note 23 Lease commitments Total future minimum lease payments under non-cancellable operating leases for each of the following periods: The Group The Company 2012 2012 2011 2011 2012 2011 Land and Other Land and Other Other Other buildings buildings £(000) £(000) £(000) £(000) £(000) £(000) Within one year 203 67 236 74 – – Within two to five years 149 40 310 70 – – 352 107 546 144 – – Note 24 Related parties The controlling party of the Group is Dewhurst plc. Transactions between the company and its subsidiaries, which are related parties to the company, have been eliminated on consolidation. However during the year, in the company’s financial statements, there have been the following transactions: purchase and sale of goods at arm’s length, group management charges, interest on loans at floating rates on a commercial basis and dividend income received. All transactions are settled by cash. Any loans given are secured on the assets of the relevant company. 2012 2011 £(000) £(000) Management charges to subsidiaries 848 852 Rent charges to subsidiaries 250 265 Interest income received 138 14 Interest income paid – 11 Dividend income received 4,076 3,561 Dividends paid to directors 76 72 Loans and trade receivables due 4,709 4,315 Loans and trade payables due – 1,361 34 35 Notes to the accounts Note 25 Financial instruments Note 26 Investments – shares in subsidiary undertakings On 31 July 2012, Dewhurst plc acquired the remaining shares in Elevator Research & Manufacturing Corp. (ERM). The Group acquired the additional 20% stake for a total cash consideration of US$0.9 million (£0.6 million). At this date the Group had a 100% stake in ERM. Book value Fair value Details of the transaction: Notes £(000) £(000) Non controlling interest: As at 1 October 2011 149 149 Loss to July 2012 (32) (32) Exchange rate 1 1 As at 31 July 2012 118 118 Consideration 585 585 Net costs taken directly to equity 21 467 467 There are no recognised gains and losses other than the results for the periods. Cash flows The net outflow of cash arising from acquisitions was as follows: £(000) Cash consideration, as above 585 Net outflow of cash in respect of ERM 585 The Group’s policies towards using financial instruments to manage interest rate, liquidity and currency exposure risks are explained in the financial review on pages 10–11. Credit risk The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings, taking into account local business practices, are then factored into any contracts. Interest risk The Group is exposed to interest risk but purely on bank deposits. It is Group policy to maximise the return on interest earned whilst taking adequate steps to monitor the viability of the bank and safe guarding the assets of the Group. Foreign exchange contracts During the year the Group used derivatives to manage credit risk. At the year end Dewhurst plc entered into a A$3,350,000 Australian Dollar foreign exchange contract, in the amount of £2,146,570 sterling, the purpose of which is to hedge against Australian Dollar currency fluctuations. The contract was stated at its fair value and the Group does not hedge account. This contract matured on 31 October 2012. Currency and interest rate exposure of financial assets and liabilities The cash and cash equivalent amount of £11,101k (2011: £5,009k) is made up of cash of £8,101k (2011: £5,009k) and short-term deposits of £3,000k (2011: £Nil). The cash was invested at overnight rates based on the relevant national LIBOR. Short-term deposits were fixed for 12 months at an average rate of 2.70% (2011: Nil). Of the cash, £6,670k (2011: £2,533k) is denominated in sterling with the balance of £4,431k (2011: £2,476k) held in foreign currencies. Other financial assets and liabilities do not attract interest. The Group The Company Floating Fixed Interest Interest Floating Fixed Interest Interest rate rate free free rate rate free free assets assets assets liabilities assets assets assets liabilities Currency and interest profile £(000) £(000) £(000) £(000) £(000) £(000) £(000) £(000) Sterling 2,534 – 3,707 1,446 298 – – 306 AUS Dollars 1,173 – 1,536 420 1 – – – US Dollars 559 – 1,749 796 2 – – – CAN Dollars 466 – 1,050 78 – – – – Other 277 – 158 97 – – – – At 30 September 2011 5,009 – 8,200 2,837 301 – – 306 Sterling 3,670 3,000 4,053 1,005 383 3,000 – 3 AUS Dollars 1,878 – 1,448 446 161 – – – US Dollars 1,288 – 1,689 681 133 – – – CAN Dollars 688 – 999 125 – – – – Other 577 – 123 94 – – – – At 30 September 2012 8,101 3,000 8,312 2,351 677 3,000 – 3 The only operation that holds material monetary assets and liabilities in currencies other than their functional currency is the Hungarian subsidiary Dewhurst (Hungary) Kft, which holds cash denominated in Sterling with a balance of £448k (2011: £350k) and US Dollars with a balance of £988k (2011: £321k), trade receivables denominated in Sterling with a balance of £1,236k (2011: £1,118k) and US Dollars with a balance of £1,035k (2011: £682k) and trade payables denominated in Sterling with a balance of £135k (2011: £263k) and US Dollars with a balance of £406k (2011: £311k). Fair value of financial instruments Fair value is defined as the amount at which a financial instrument could be exchanged in an arm’s length transaction between informed and willing parties, excluding accrued interest, and is calculated by reference to market rates discounted to current value. Accordingly, the directors believe that there is no material difference between the carrying amount and the fair value of its financial instruments. Bank facilities The Group has no undrawn committed bank overdraft facility (2011: a £2.0 million facility secured upon the new premises being Unit 9 Hampton Business Park). 36 37 Company financial statements Company statement of recognised income and expense 2012 2011 £(000) £(000) Net income/(expense) recognised directly in equity: Actuarial gains/(losses) on the defined benefit pension scheme (3,619) (2,423) Exchange differences on translation of foreign operations – 8 Tax on items taken directly to equity 832 630 Net income/(expense) recognised directly in equity in the year (2,787) (1,785) Profit for the financial year 769 2,628 Total recognised income and expense for the year (2,018) 843 Company balance sheet 2012 2011 At 30 September 2012 Notes £(000) £(000) Non-current assets Other intangibles 11 – – Property, plant and equipment 12 6,168 5,929 Deferred tax asset 19 2,684 2,426 Investments in subsidiaries 13 3,536 8,266 12,388 16,621 Current assets Trade and other receivables 15 3,910 3,087 Current tax assets 19 53 Cash and cash equivalents 16 3,677 301 7,606 3,441 Total assets 19,994 20,062 Current liabilities Trade and other payables 17 552 580 552 580 Non-current liabilities Retirement benefit obligation 22 11,856 9,299 Total liabilities 12,408 9,879 Net assets 7,586 10,183 Equity Share capital 20 851 851 Share premium account 21 157 157 Capital redemption reserve 21 286 286 Retained earnings 21 6,292 8,889 Total equity 7,586 10,183 The financial statements were approved by the board of directors and authorised for issue on 3 December 2012 and were signed on its behalf by: Richard Dewhurst Chairman Jared Sinclair Finance Director Company Registration Number: 160314 The notes on pages 19 to 37 form part of these financial statements The notes on pages 19 to 37 form part of these financial statements 38 39 Company financial statements Report of the independent auditor Company cash flow statement Notes 2012 2011 For the year ended 30 September 2012 £(000) £(000) Cash flows from operating activities Operating profit /(loss) (2,543) (296) Depreciation and amortisation 104 54 Additional (income)/costs to pension scheme (1,399) (1,313) (Profit)/loss on disposal of property, plant and equipment (3,944) – Write-down of investments 5,315 679 (2,467) (876) (Increase)/decrease in trade and other receivables (823) 477 Increase/(decrease) in trade and other payables (28) 186 Cash generated from operations (3,318) (213) Interest paid (2) (13) Income tax paid (8) (90) Net cash from/(used in) operating activities (3,328) (316) Cash flows from investing activities Acquisition of subsidiaries undertakings 26 (585) (1,286) Net proceeds from sale of property, plant and equipment 4,536 – Purchase of property, plant and equipment (935) (4,926) Interest received 191 25 Dividends received 4,076 3,561 Net cash generated from/(used in) investing activities 7,283 (2,626) Cash flows from financing activities Dividends paid (579) (551) Net cash used in financing activities (579) (551) Net increase/(decrease) in cash and cash equivalents 3,376 (3,493) Cash and cash equivalents at beginning of year 16 301 3,794 Cash and cash equivalents at end of year 16 3,677 301 The notes on pages 19 to 37 form part of these financial statements 40 Independent auditor’s report to the shareholders of Dewhurst plc. material misstatements or inconsistencies we consider the implications for our report. We have audited the Group and parent company financial statements (‘the financial statements’) of Dewhurst plc for the year ended 30 September 2012 which comprise the consolidated income statement, the consolidated and company balance sheets, the consolidated and parent company cash flow statements, the consolidated and parent company statements of recognised income and expense and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRS) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the Companies Act 2006. This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Respective responsibilities of directors and auditor As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Group’s and the parent company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the directors; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements. If we become aware of any apparent Opinion on financial statements In our opinion: the financial statements give a true and fair view of the state of the Group’s and of the parent company’s affairs as at 30 September 2012 and of the Group’s profit for the year then ended; the group financial statements have been properly prepared in accordance with IFRS as adopted by the European Union; the parent company financial statements have been properly prepared in accordance with IFRS as adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006; the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Opinion on other matters prescribed by the Companies Act 2006 In our opinion the information given in the report of the directors for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following where under the Companies Act 2006 we are required to report to you if, in our opinion: adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or the parent company financial statements to be audited are not in agreement with the accounting records and returns; or certain disclosures of directors’ remuneration specified by law are not made; or we have not received all the information and explanations we require for our audit. Paul Fenner Senior Statutory Auditor for and on behalf of Chantrey Vellacott DFK LLP Chartered Accountants and Statutory Auditor London, 5 December 2012 41 Notice of meeting Group companies Notice is hereby given that the ninety third Annual General Meeting of Dewhurst plc will be held at its registered office, Unit 9 Hampton Business Park, Hampton Road West, Feltham, TW13 6DB on 5 February 2013 at 11:00 am. The meeting will be held in order to consider and, if thought fit, pass resolutions 1 to 6 as ordinary resolutions. Ordinary resolutions 1 To receive and adopt the statement of accounts for the year ended 30 September 2012 and the reports of the directors and auditor thereon. 2 To declare and approve a 5p special dividend and the final dividend on the Ordinary and ‘A’ non-voting ordinary shares to shareholders on the register of members on 18 January 2013. 3 To re-elect as a director Mr P Tett, who retires by rotation under the Articles of Association. 4 To re-elect as a director Mr J Bailey, who retires by rotation under the Articles of Association. 5 To re-appoint Chantrey Vellacott DFK LLP as auditor at a fee to be agreed by the directors. 6 As special business to consider and, if thought fit, pass the following ordinary resolution: that the company be and is hereby generally and unconditionally authorised to make market purchases (within the meaning of section 693(4) of the Companies Act 2006) of up to an aggregate of 496,380 Ordinary shares and 780,330 ‘A’ non-voting ordinary shares of 10p each (representing 15% of the issued share capital) in the company at a price per share (exclusive of expenses) of not less than 10p and not more than 105% of the average of the middle market quotations for such Ordinary and ‘A’ non- voting ordinary shares, as derived from the Stock Exchange Daily Official List, for the ten dealing days immediately preceding the day of the purchase; such authority to expire at the conclusion of the Annual General Meeting to be held in 2014 save that the company may purchase shares at any later date where such purchase is pursuant to any contract made by the company before the expiry of this authority. 7 To transact any other ordinary business of the company. By order of the board Jared Sinclair Secretary 31 December 2012 Notes 1 All Shareholders who wish to attend and vote at the meeting must be entered on the company’s register of members no later than 11:00 am on 3 February 2013 (being 48 hours prior to the time fixed for the meeting) or, in the case of an adjournment, as at 48 hours prior to the time of the adjourned meeting. Changes to entries on the register after that time will be disregarded in determining the rights of any person to attend or vote at the meeting. ‘A’ non-voting ordinary shares do not carry the right to attend or vote at meetings of the company. 2 Shareholders entitled to attend and vote at the meeting may appoint a proxy or proxies to attend, vote and speak on their behalf. A proxy need not be a member of the company. Investors who hold their shares through a nominee may wish to attend the meeting as a proxy, or to arrange for someone else to do so for them, in which case they should discuss this with their nominee or stockbroker. Shareholders are invited to complete and return the enclosed Proxy Form. Completion of the Proxy Form will not prevent a Shareholder from attending and voting at the meeting if subsequently he/she finds that he/she is able to do so. To be valid, completed Proxy Forms must be received by the Company Secretary at the registered office of the company, Dewhurst plc, Unit 9 Hampton Business Park, Hampton Road West, Feltham, TW13 6DB, by fax at +44 (0)20 8744 8206, with the scanned Proxy Form by email at cosec@dewhurst.co.uk by no later than 48 hours before the time appointed for the holding of the meeting, or, in the case of an adjournment, as at 48 hours prior to the time of the adjourned meeting. 3 Representatives of Shareholders which are corporations attending the meeting should produce evidence of their appointment by an instrument executed in accordance with Section 44 of the Companies Act 2006 or signed on behalf of the corporation by a duly authorised officer or agent and in accordance with article 71 of the company’s Articles of Association. 4 The company, pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, specifies that only those holders of Ordinary Shares registered in the register of members of the company at 11:00 am on 3 February 2013 (being 48 hours prior to the time fixed for the meeting) shall be entitled to attend and vote at the Annual General Meeting in respect of such number of shares registered in their name at that time. Changes to entries in the register of members after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting. 5 A copy of the company’s current Articles of Association will be available for inspection during usual business hours on any weekday (Saturdays, Sundays and Public Holidays excluded) at the registered office of the company until the date of the Annual General Meeting and at the place of the meeting for 15 minutes prior to and until the termination of the meeting. 42 Head office DEWHURST PLC Unit 9 Hampton Business Park Hampton Road West Feltham TW13 6DB Tel: 020 8744 8200 Fax: 020 8744 8261 cosec@dewhurst.co.uk www.dewhurst.co.uk UK subsidiaries DEWHURST UK MANUFACTURING LTD Unit 9 Hampton Business Park Hampton Road West Feltham TW13 6DB Tel: 020 8744 8200 Fax: 020 8744 8261 cosec@dewhurst.co.uk www.dewhurst.co.uk David Dewhurst Managing Director THAMES VALLEY CONTROLS LTD Unit 15 Manor Farm Industrial Estate Flint, Flintshire Wales CH6 5UY Tel: 01352 793222 Fax: 01352 793255 info@tvcl.co.uk www.tvcl.co.uk Richard Young Managing Director TRAFFIC MANAGEMENT PRODUCTS LTD Unit 7 Gatwick Distribution Point Church Road, Lowfield Heath Crawley West Sussex RH11 0PJ Tel: 08456 808066 Fax: 08456 808077 info@traffic-products.co.uk www.traffic-products.co.uk John Bailey Managing Director CORTEST LTD Unit 7 Gatwick Distribution Point Church Road, Lowfield Heath Crawley West Sussex RH11 0PJ Tel: 08456 808044 Fax: 08456 808055 info@corrosion-testing.co.uk www.corrosion-testing.co.uk John Bailey Managing Director Overseas subsidiaries DEWHURST (HUNGARY) KFT H–2038, Soskut Hrsz. 3518/8 Hungary Tel: 00 362 356 0550 Fax: 00 362 356 0559 Laszlo Denk Managing Director DUPAR CONTROLS INC. 1751 Bishop Street Cambridge, Ontario Canada N1T 1N5 Tel: 001 519 624 2510 Fax: 001 519 624 2524 info@dupar.com www.dupar.com George Foleanu General Manager ELEVATOR RESEARCH MANUFACTURING CORP. 1417 Elwood Street Los Angeles CA 90021 USA Tel: 001 213 746 1914 Fax: 001 213 749 1355 sales@elevatorresearch.com www.elevatorresearch.com Barnet Rogers General Manager AUSTRALIAN LIFT COMPONENTS PTY LTD 5 Saggartfield Road Minto NSW 2566 Australia Tel: 00 612 9603 0200 Fax: 00 612 9603 2700 info@alc.au.com www.alc.au.com Chris Carroll Managing Director LIFT MATERIAL AUSTRALIA PTY LTD PO Box 7164 Alexandria, Sydney NSW 2015 Australia Tel: 00 612 9310 4288 Fax: 00 612 9698 4990 info@liftmaterial.com www.liftmaterial.com Tony Pegg Managing Director JAS ENGINEERING (NSW) PTY LTD 26 Kiama Street, Miranda NSW 2228 Australia Tel: 00 612 9522 4842 Fax: 00 612 9522 3240 sales@jaseng.com.au www.jaseng.com.au Chris Carroll Managing Director DEWHURST (HONG KONG) LTD Unit 19, 7/F, Block A Hoi Luen Industrial Centre 55 Hoi Yuen Road Hong Kong Tel: 00 852 3523 1563 Fax: 00 852 3909 1434 efung@dewhurst.co.uk www.dewhurst.co.uk Eric Fung General Manager Other overseas representation The group maintains overseas representation in major countries throughout the world 43 Advisers and company information Secretary and registered office Jared Sinclair Dewhurst plc Unit 9 Hampton Business Park Hampton Road West Feltham TW13 6DB Registered No.160314 Advisers AUDITOR Chantrey Vellacott DFK LLP Chartered Accountants and Statutory Auditor Russell Square House 10–12 Russell Square London WC1B 5LF BANKERS National Westminster Bank plc 275–277 High Street Hounslow Middlesex TW3 1EG REGISTRARS Capita IRG plc Northern House Woodsome Park Fenay Bridge Huddersfield West Yorkshire HD8 0LA NOMINATED ADVISER AND BROKER Seymour Pierce Ltd 20 Old Bailey London EC4M 7EN SOLICITORS Keystone Law 53 Davies Street London W1K 5JH 44 Design: www.gilldavies.co.uk www.dewhurst.co.uk
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