Dewhurst’s earnings and dividends – and a stab at valuation

PUBLISHED: Dec 20 2019 @ 06:07 | Comments (0) |

Dewhurst (LSE:DWHA) has been a very good share for me, rising from 311p to 750p–850p in five years. Throughout that rise I’ve bought more at increasing prices because the company’s economic franchises are strong, forming a firm foundation for future growth of profits. But the shares have risen a lot in the last year. So, should I stop buying more until the price falls back to a level that affords a decent margin of safety? Today’s newsletter will contribute to that decision by setting out the earnings history.

Sales, earnings and dividends (including TVC business which was sold 30^th Sept 2019 (yearend) – both operating profits and capital gain made on TVC’s sale are included)

	Sales, £m	Earnings per share (p)	Dividend per share (p)
2010	37	40.97	6.36
2011	42	34.35	6.69
2012	52	44.48	7.02 + 5 special
2013	44	15.7	8.0
2014	47	43.87	9.0
2015	46	50.21	10 + 3 special
2016	47	40.75	11.0
2017	53	52.65	12.0
2018	55	47.93	12.50
2019	66	116.23p	13.0

In the table above the 2019 earnings number is raised due to the inclusion of a capital gain on selling the TVC subsidiary – we can now remove that element as well remove the profit contribution made by operating the TVC business in the financial year.

Underlying earnings of continuing businesses only (in 2019 that means excluding capital gain on sale of TVC and the £1.1m profit after tax TVC made):

	2019 £ooo’s	2018 £000’s
Profit from continuing operations after tax	3095	4,260
Add back exceptional: pension female/male equalisation charge	639	0
Add back exceptional: amortisation of acquired intangibles	1667	555
Less tax on exceptionals	-461	-111
Underlying profit after tax before minority interests	4940	4,704
Less non-controlling interests	-394	-221
Earnings attributable to equity SH of the company	4,546	4,483
Underlying earnings per share	54p	53p

Of course, the disposed business (TVC) contributed another £1.1m after tax profits (13p per share) in 2019, so the company did not really stand still.

It’s just that it has accepted £8.6m in cash for this business because the directors think that the capital expenditure required to stay in that game would not generate good shareholder returns, “the cost and complexity of developing new products is becoming increasingly onerous. Vantage Elevator Solutions, the new owner of TVC,

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