Dewhurst – return on net tangible assets

Share On Facebook

In newsletters last week and yesterday I showed that Dewhurst (LSE:DWHA) has a stable profits history as well as a strong balance sheet. It has very experienced managers in the niche businesses where it operates, with some good pricing power due to the economic franchises it created over decades combined with shrewd acquisitions.

I bought “A” shares (non-voting) a few days ago at an average of £5.64. They have now risen to £7.00 – £7.50. When writing the following analysis I judged there to be a good margin of safety at £5.64.  I invite readers to make their own judgement on whether there is a good margin of safety at £7.50 – and comment, it’ll be good to get a discussion going.

Today’s newsletter looks makes a stab at a valuation of a Dewhurst “A” share through a consideration of its return on net tangible assets.

Profits, assets and liabilities

£’000s  Year end September 2018   2017   2016   2015
INCOME STATEMENT
Profit after tax 4,260 4,621 3,508 4,316
Amortisation charge this year for accounting goodwill following acquisitions 555 0 0 0
Exceptional items distorting profits (positive or negative) 0 0 0 0
Profit for shareholders 4,815 4,621 3,508 4,316
CURRENT ASSETS AND LIABILITIES
Inventories 6,279 5,566 4,863 4,751
Receivables 13,920 10,011 10,301 8,056
Cash needed for operations (assumed) 1,000 1,000 1,000 1,000
Other current assets 0 0 0 0
Payables -8,185 -5,567 -5,365 -4,502
Short-term debt 0 0 0 0
Other current liabilities -836 -368 -164 -348
Working capital for operations 12,178 10,642 10,635 8,957
Surplus cash (assumed) 8,440 17,012 15,373 13,958
NON-CURRENT ASSETS AND LIABILITIES
Property, Plant and Equipment 9,271 9,267 9,240 8,581
Goodwill in BS 8,598 4,575 3,444 2,695
Previously written-off acquired goodwill – add back 6,803  6,803 6,860 6,328
Other acquired intangible assets in BS 4,445 0 0 83
Previously written-off other acquired intangibles – add back 1,433  934 945 657
Long-term debt 0 0 0 0
Other non-current liabilities 0 0 0 0
Net non-current assets for operations 30,550 21,579 20,489 18,344
OTHER ITEMS TO CONSIDER
Defined benefit pension deficit 7,628 11,751 16,373 12,197
Internally generated intangible assets capitalised to BS 65 98 91 88
Investments (in shares, bonds, etc.) 0 0 0 0
Operating lease non-cancellable commitments 2,382 1,152 879 480
Preference share capital 0 0 0 0
Minority interests in profit 221 176 55 61
Minority interests in net assets 1,057 1,001

………………To read more subscribe to my premium newsletter Deep Value Shares – click here http://newsletters.advfn.com/deepvalueshares/subscribe-1

 

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.

Leave A Reply

 
Do you want to write for our Newspaper? Get in touch: newspaper@advfn.com

By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions

P: V: D:20190619 11:53:00