Interim Results

Dialight PLC 18 September 2006 Date: Embargoed until 07:00 am Monday 18 September 2006 Contacts: Roy Burton - Group Chief Executive Cathy Buckley - Finance Director Dialight PLC Tel: 01480 447490 Alistair Mackinnon-Musson Nicola Savage Hudson Sandler Tel: 020 7796 4133 Email: dialight@hspr.com DIALIGHT PLC Interim results for the six months ended 30 June 2006 Dialight plc, the UK based leader in applied LED technology, announces its Interim Results for the six months ended 30 June 2006. Dialight consists of two business segments: • Components comprising indication products and electromagnetic components • Signals / Illumination which includes Traffic and Rail Signals, Obstruction Lights and the new Solid State Lighting products of the Group Highlights • Continuing operations • Turnover up 16% to £30m • Order intake up 24% year on year • Operating profit up 53% to £2.3m • Earnings per share up 63% to 5.2p • Interim dividend of 1.75 pence per share • Successful acquisition and integration of Lumidrives Roy Burton, Group Chief Executive, said 'I am pleased to report both our Components and Signals/Illumination segments increased sales, order intake and profit contribution.' 'The relocation of our European traffic light production to the UK and the developing relationship we have with key European traffic systems OEMs will enable us to build further our presence in the European solid state traffic signal market, as adoption rates accelerate.' 'The Lumidrives acquisition and the recently announced license agreement provide an excellent platform for expansion in the growing Solid State Lighting market.' 'With continuing healthy demand, the Board considers the Group to be well positioned to make progress in the second half.' Overview This is the first period of reporting Dialight as a stand alone business focused on Applied LED technology and the emerging solid state lighting market. We are pleased to report improved performance for the first half of the year in both business segments, Components and Signals/Illumination, with increased sales, order intake and profit contribution in each. As previously announced, Lumidrives, a leading supplier of solid state lighting fixtures and components, was acquired in January 2006 and we can confirm the successful integration of this company into the Group. In addition, we have completed the transfer of the Group's traffic light manufacturing facility from Wang, Germany to Newmarket, UK. The operation is now well organised to service the expansion of the European traffic business. Our US subsidiary signed a license agreement with Color Kinetics, an important strategic step for our solid state lighting business in architectural, entertainment and general lighting applications in North America. Financial Results Revenue for the six months to 30 June 2006 increased by 16% to £30 million (2005: £25.8 million) and operating profit increased by 53% to £2.3 million (2005: £1.5 million). Basic earnings per share rose by 63% to 5.2 pence per share (2005: 3.2 pence). During the first half of the year the Group had a net cash outflow of £4.3 million after the payment of £2.5 million for the acquisition of Lumidrives, payment of the 2005 final dividend of £0.9 million and £0.3 million to fund the purchase of 156,000 shares for the Employee Share Plan. Working capital absorbed £2.4 million with inventory increasing by £4.2 million from the start of the year. Unallocated overheads represent all costs other than direct material, direct labour and sales commission. The increase in unallocated costs over last year is due principally to the addition of Lumidrives to the Group and additional employment costs partly offset by a reduction to corporate costs of £0.5 million. Business Review Components Orders in the Components segment showed a 30% increase for the half versus the prior year, including two sizeable one-off orders for electromagnetic disconnect products, most of which have been delivered in the first half. As commented on in March, the general electronics market is seeing a healthy increase in activity which has increased demand for our indicator products. Overall, sales in the period showed a 27% increase versus the first half of 2005. Our business maintained the same strong sales channel position both through the major electronic distributors and direct to the major OEMs and there has been no significant change to contribution margins. The Restriction of use of Hazardous Substances regulations have now become mandatory in Europe and all required shipments are fully compliant. Signals/ Illumination The Signals/Illumination segment showed an 18% increase in orders and an underlying growth in sales of 13%, before the impact of a contract cancellation in the US traffic market (6% increase after the cancellation). Contribution increased by 12% over the comparative period. This segment is driven by the adoption rate of high brightness LEDs in applications such as traffic lights, rail signals and aircraft obstruction lights, where coloured LEDs provide major energy savings; and by industrial white lighting where the long life and reliability of LEDs provide safety and maintenance cost benefits. Our traffic light business in the relatively mature North American market does not vary significantly from period to period. However, in this half there has been the introduction of a new ITE (Institute of Traffic Engineers) standard for traffic lights in the US. Dialight introduced a preliminary version of this light early in 2005 and followed this with an upgraded more efficient signal in June. Whilst adoption of this new standard is not mandatory, it is expected that adoption will accelerate in the second half of 2006. Significantly, we are the first supplier to conform fully to the new standards which gives Dialight the opportunity to build advantage over its competitors. To conform to the new standard posed a significant challenge to our optical and thermal engineers which we are pleased to say they have overcome, with the design of an efficient and cost effective signal. Inventory rose in the period, particularly of traffic related material. This was largely due to the transition between standards and the requirement, for the foreseeable future, to continue to supply product to our customers under both the old and new standards. We expect inventory to reduce to normal levels during the remainder of the year as the balance of customer demand for product under the old and new standards stabilises. We will, however, be shipping to both old and new standards for some time. The European traffic business started the year slowly due to adverse weather conditions but showed a healthy upturn during the second quarter. The assembly of traffic lights was transferred successfully from Germany to Newmarket in the UK and output performance targets reached, making us confident of delivering product against the expected growth in demand. The costs of this transfer, incurred in the first half, are expected to be recovered in the second half of the year. We remain optimistic for the prospects of the European traffic business in particular, through our relationship with Siemens and other major traffic OEMS. We believe we are taking market share as well as seeing an enhanced adoption due to the introduction of the new German OCIT standard. To date adoption of LED based traffic lights across all European territories has been relatively low, nevertheless, our customer base is expanding as we gain further customer specific approvals and we are currently working on custom products for the UK market. In Asia we have identified a number of 'regulated' markets for LED traffic lights where products of the quality and specification of Dialight's can be appropriately specified and where the value proposition is recognised. We are targeting these markets for product approval. There exists a market in certain Asian countries for 'unregulated' and therefore low price, low specification LED products, but this is not a market which we plan to pursue. Our rail business remains steady. In Europe initial shipments were made to Danish Rail although further deliveries are held pending a final review by the safety authorities. Discussions continue with a number of rail authorities in both Europe and Asia but we expect the adoption of LED rail signals to be slower than for our other markets due to the inherent conservatism of the rail industry. Aircraft obstruction lights have been a successful application for red LEDs for the past four years. Dialight was the first manufacturer to qualify a light for this application and has been a pioneer in the market. We sell our product across global markets to operators of broadcast and telecommunications towers, wind towers and latterly oil refineries. At the end of 2005, we introduced a Red Beacon which is qualified for hazardous locations such as oil refineries and offshore platforms. Sales of obstruction lights were flat on last year; however 2005 did benefit from significant demand from Poland where the adoption of LED obstruction lights was high. This year the geographical spread of our customer base and sales has increased significantly. During the half, we qualified our new low power beacon to the Federal Aviation Authority specification and have shipped the first volumes of Hazardous Location Beacons to a number of refineries in the USA. Acquisition and Licensing In January of this year, in line with our solid state lighting strategy, we completed the acquisition of Lumidrives Limited, a UK based supplier of solid state lighting fixtures and modules. Lumidrives gives Dialight a position in the European Solid State Lighting market for Architectural and Entertainment applications. Sales in 2005 were over £3 million, almost entirely in Europe and primarily through other lighting OEMs. The business has performed well since acquisition, in line with our expectations and has expanded sales of its own products in Europe. We are now seeing some benefit from taking complementary ' Dialight' products through these channels. As previously mentioned, Lumidrives sales have been primarily in Europe. An exciting opportunity for solid state lighting exists in the North American market and Dialight has developed products and technologies to address this opportunity. In June of this year at the request of our customers, we concluded a license agreement with Color Kinetics. There had been uncertainty in the United States lighting industry regarding ownership of intellectual property in relation to colour mixing and the application of LED technology. As a result of this agreement, Dialight is able to provide its US customers with the licensed intellectual property of Color Kinetics enhanced by Dialight's own products, technology and intellectual property including those of Lumidrives. We have opened up new sales channels in North America and are driving our full product range into that market. As with the European market, our strategy is to sell through the major lighting OEMs and to that end discussions are proceeding. In addition to OEM sales, there has been increasing interest in solid state lighting from the major electronics distributors. Future Electronics has been addressing this market for some time as the exclusive distributor for Phillips Lumileds. Arrow Electronics has launched a lighting initiative as has Premier Farnell. Dialight has long standing relationships with these distributors through its components business and the first orders from these distributors have been received for the Lumidrives range of lighting related modules. Dividend Following the disposal of the Solartron businesses last year the Board announced the future dividend policy would be designed to reflect the new profile and growth potential of the continuing Group. The final dividend for 2005 was 3 pence per share, which based on our historic pattern, would have followed an interim dividend for 2005 of 1.5 pence for the continuing Group. In light of the performance of the Group your Board recommends an interim dividend of 1.75 pence per share to be paid on 26 October 2006 to all shareholders registered on 29 September 2006. Outlook Demand for the Group's Components products continues to be in line with the encouraging levels achieved in the first half, although it is recognised this business segment remains sensitive to overall world market levels of demand. The Lumidrives acquisition and the recently announced license agreement position us well in the growing solid state lighting market. The prospects for the European traffic market are good, especially with our focus on developing our relationships with key traffic systems OEMs. Our other markets remain promising, driven by the adoption of LED technology based on strong value propositions. The weakness of the US Dollar, in which two-thirds of our sales are denominated, will if maintained at current levels, have a modest adverse impact on our expected growth in sterling terms. With continuing healthy demand the Board considers the Group to be well positioned to make progress in the second half. CONSOLIDATED INCOME STATEMENT For the period ended 30 June 2006 (unaudited) 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 Note £'000 £'000 £'000 Continuing operations Revenue 3 29,997 25,820 56,129 Cost of sales (22,240) (19,099) (41,432) Gross Profit 7,757 6,721 14,697 Distribution costs (2,221) (2,198) (4,485) Administrative expenses (3,224) (3,007) (6,266) Operating profit 3 2,312 1,516 3,946 Financial income 1,104 723 2,201 Financial expense (835) (835) (1,691) Net financing income 4 269 (112) 510 Profit before tax 2,581 1,404 4,456 Income tax expense 5 (961) (442) (1,403) Profit after tax from continuing operations 1,620 962 3,053 Profit from discontinued operations, net of 11 - 2,416 24,945 tax Profit for the year attributable to equity holders of the parent - Continuing operations 1,620 962 3,053 - Discontinued operations - 2,416 24,945 1,620 3,378 27,998 Earnings per share Basic 7 5.2p 11.2p 92.2p Diluted 7 5.2p 11.1p 92.2p Continuing operations Basic 7 5.2p 3.2p 10.1p Diluted 7 5.2p 3.2p 10.1p The accompanying Notes form an integral part of these Interim Financial Statements CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE For the period ended 30 June 2006 (unaudited) 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Exchange difference on translation of foreign (947) 833 1,100 operations Exchange realised on disposal of businesses - - (13) Actuarial losses on defined benefit pension - (612) (1,266) schemes Tax on items taken directly in equity - 269 424 Net expense recognised directly in equity (947) 490 245 Profit for the period 1,620 3,378 27,998 Total recognised income and expense for the 673 3,868 28,243 period attributable to equity holders of the parent Effect of change in accounting policy Impact of adoption of IAS32 and 39 (net of tax) to: - retained earnings: Cash flow hedges 190 190 - share capital: Reclassification of preference shares (2,280) (2,280) Attributable to members (2,090) (2,090) The accompanying Notes form an integral part of these Interim Financial Statements CONSOLIDATED BALANCE SHEET As at 30 June 2005 (unaudited) 30 June 2006 30 June 2005 31 December 2005 Note £'000 £'000 £'000 Assets Property, plant & equipment 5,752 5,922 5,983 Intangible assets 8 7,274 4,096 4,321 Deferred tax asset 1,873 2,618 2,405 Total non-current assets 14,899 12,636 12,709 Inventories 10,805 8,392 6,742 Trade and other receivables 13,493 12,642 16,685 Cash and cash equivalents 5,517 1,711 9,829 Assets classified as held for resale - 49,054 - Total current assets 29,815 71,799 33,256 Total assets 44,714 84,435 45,965 Liabilities Loans and borrowings (2,196) (2,232) (2,213) Trade and other payables (9,335) (7,472) (7,477) Tax liabilities (942) (767) (3,364) Liabilities classified as held for resale - (13,467) - Total current liabilities (12,473) (23,938) (13,054) Employee benefits (2,408) (9,681) (3,104) Provisions (871) (800) (890) Deferred tax liability (52) (39) (53) Total non-current liabilities (3,331) (10,520) (4,047) Total liabilities (15,804) (34,458) (17,101) Net assets 28,910 49,977 28,864 Equity Issued share capital 9 591 569 587 Share premium 9 546 6,049 - Other reserves 9 (901) 40,175 29 Retained earnings 9 28,674 3,184 28,248 Total equity 28,910 49,977 28,864 CONSOLIDATED CASH FLOW STATEMENT For the period ended 30 June 2006 (unaudited) 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Operating activities Profit for the year 1,620 3,378 27,998 Adjustments for: Financial income (1,104) (921) (2,399) Financial expense 835 1,134 1,993 Income tax expense 961 1,972 2,742 Share based payments 68 - - Gain on disposal of discontinued operations - - (22,022) Depreciation of property, plant and equipment 636 628 1,423 Amortisation of intangible assets 317 218 567 Operating cash flow before movements in working 3,333 6,409 10,302 capital (Increase)/decrease in inventories (4,197) (116) 1,017 Decrease/(increase) in trade and other receivables 136 (2,923) (3,115) Increase/(decrease) in trade and other payables 1,562 828 (168) Decrease in pension liabilities (452) - (418) Cash generated from operations 382 4,198 7,618 Income taxes paid on profit on ordinary activities (511) (1,263) (2,777) Income tax paid on gain on disposals (2,397) - (5,237) Interest paid (832) (1,177) (1,986) Net cash from operating activities (3,358) 1,758 (2,382) Investing activities Interest received 1,104 921 2,399 Acquisition of business net of cash acquired (2,449) - - Disposal of discontinued operations - - 65,689 Capital expenditure (602) (1,429) (2,228) Expenditure on development (507) (1,020) (1,505) Sale of tangible fixed assets - - 44 Net cash (utilised)/generated from investing (2,454) (1,528) 64,399 activities Financing activities Dividends paid (937) (2,288) (3,341) Proceeds from the issue of shares - - 2,089 Transfer from/(to) 'Restricted Cash' 2,813 - (4,000) Special contributions to pension funds - - (7,374) Preference shares redeemed (17) (48) (67) Own shares acquired (308) - - Return to shareholders following disposal of - - (46,524) businesses Net cash generated by/(used in) financing 1,551 (2,336) (59,217) activities Net (decrease)/increase in cash and cash (4,261) (2,106) 2,800 equivalents Cash and cash equivalents at 1 January 9,829 6,768 6,768 Effect of exchange rates on cash held (51) 514 261 Cash held as asset held for sale - (3,465) - Cash and cash equivalents at end of period 5,517 1,711 9,829 Significant Accounting Policies For the period ended 30 June 2006 (unaudited) 1) Basis of preparation The consolidated interim financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments. The financial information for the six months ended 30 June 2006 and the comparative figures for the six months ended 30 June 2005 are unaudited and have been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated financial statements for the year ended 31 December 2005 except for the following changes: As required by the Listing Rules of the Financial Services Authority, as a result of the endorsement by the EU of new or changed IFRSs that are applicable or available for early adoption in the preparation of the company's next consolidated financial statements for the year ending 31 December 2006, the directors have changed their accounting policies in respect of the amendment to IAS39. Where Dialight plc, the company enters into financial guarantee contracts to guarantee the indebtedness of other companies within its group, the company considers these to be insurance arrangements, and accounts for them as such. In this respect, the company treats the guarantee contract as a contingent liability until such time as it becomes probable that the company will be required to make a payment under the guarantee. The company does not expect the amendment to have any impact on the financial statements for the period commencing 1 January 2006. In respect of the Defined Benefit plans no actuarial gains or losses were recognised in the period. There will be a full review performed at the year end and any actuarial gains and losses arising will be recognised through the statement of recognised income and expense at that date. The comparative figures for the year ended 31 December 2005 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year have been delivered to the Registrar of Companies and include an audit report which was unqualified and did not contain a statement under either Section 237(2) or 237(3) of the Companies Act 1985. Basis of consolidation Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date control commences until the date that control ceases. 2) Accounting estimates and judgements The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from the estimates. Except as described below, in preparing these interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 31 December 2005. - Recoverable amount of intangible assets related to the acquisition of Lumidrives (see note 10). 3) Segmental reporting The Group's primary reporting format is business segments and its secondary format is geographical segments. A business segment is a component of the Group that is engaged in providing a group of related products and is subject to risks and returns that are different from those other business segments. A geographical segment is a component of the Group that operates within a particular economic environment and this is subject to risks and returns that are different from those of components operating in other economic environments. Business segments The Group comprises the following business segments: - • Components comprising the indication businesses and the electromagnetic components. • Signals/Illumination which includes Traffic and Rail Signals, Obstruction Lights and Solid State Lighting products. All revenue relates to the sale of goods. The contribution shown below represents sales less direct costs incurred by each business segment. Business segments Six months ended 30 June 2006 Components Signals/ Illumination Total £'000 £'000 £'000 Revenue 15,790 14,207 29,997 Contribution 7,564 5,162 12,726 Unallocated expenses (10,414) Operating profit 2,312 Net financing income 269 Profit before tax 2,581 Six months ended 30 June 2005 Components Signals/ Illumination Total £'000 £'000 £'000 Revenue 12,423 13,397 25,820 Contribution 6,365 4,611 10,976 Unallocated expenses (9,460) Operating profit 1,516 Net financing income (112) Profit before tax 1,404 Year ended 31 December 2005 Components Signals/ Illumination Total £'000 £'000 £'000 Revenue 26,564 29,565 56,129 Contribution 13,313 9,902 23,215 Unallocated expenses (19,269) Operating profit 3,946 Net financing income 510 Profit before tax 4,456 The tables above exclude the segmental results of the Solartron businesses which were sold in 2005. 4. Net financing income 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Interest income 193 24 717 Expected return on assets in the pension schemes 911 699 1,484 1,104 723 2,201 Interest expense (43) (9) (42) Interest charge on pension scheme liabilities (792) (826) (1,649) (835) (835) (1,691) Net financing income 269 (112) 510 5. Income tax expense The tax charge of £961,000 for the half year to 30 June 2006 reflects the anticipated effective tax rate for the year ending 31 December 2006. 6. Dividends During the period the following dividends were paid: 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 Final - 3.0p (2005:7.6p) per ordinary share 937 2,288 2,288 Interim - 3.4p per ordinary share - - 1,053 937 2,288 3,341 The following dividends were declared/proposed at the balance sheet date: 6 months ended 6 months ended 12 months ended 30 June 2006 30 June 2005 31 December 2005 £'000 £'000 £'000 3.0p final dividend proposed - - 937 1.75p (2005:3.4p) interim dividend declared 547 1,053 - 547 1,053 937 7. Earnings per share The calculation of basic earnings per share is based on the profit for the period of £1,620,000 (2005:£3,378,000) and a weighted average number of ordinary shares outstanding during the six months ended 30 June 2006 of 31,219,000 (2005: 30,102,000). 6 months 6 months 12 months ended ended ended 30 June 30 June 31 December 2006 2005 2005 £'000 £'000 £'000 Profit on ordinary activities after taxation-Continuing 1,620 962 3,053 -Total 1,620 3,378 27,998 Number Number Number Weighted average number of shares 31,219,000 30,102,000 30,369,000 Diluted effect of share options - 354,000 2,000 Diluted weighted average number of shares 31,219,000 30,456,000 30,371,000 The weighted average number of shares used in the basic earnings per share calculation excludes 156,000 shares held by the Dialight Employees' Share Ownership Plan Trust. 8. Intangible assets Concessions, Goodwill Development Total patents, licences costs and trademarks £'000 £'000 £'000 £'000 Costs Balance at 1 January 2006 573 3,291 1,470 5,334 Acquisition through business combinations 664 2,112 - 2,776 Other acquisitions - internally developed - - 507 507 Effects of foreign exchange movement - 19 (43) (24) Balance at 30 June 2006 1,237 5,422 1,934 8,593 Amortisation and impairment losses Balance at 1 January 2006 (573) - (440) (1,013) Amortisation for the period (83) - (234) (317) Effects of foreign exchange movement - - 11 11 Balance at 30 June 2006 (656) - (663) (1,319) Carrying amounts At 30 June 2006 581 5,422 1,271 7,274 At 31 December 2005 - 3,291 1,030 4,321 9. Reconciliation of movement in Other Reserves Retained Earnings capital and reserves Share Share Trans- Capital Reserve for Profit Total capital premium lation redemption own shares and loss account reserve reserve account £'000 £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 January 2006 587 - 10 19 - 28,248 28,864 Profit for the period - - - - - 1,620 1,620 Net expense recognised directly in equity (See Statement of Recognised Income and Expense) - - (947) - - - (947) Share based payments 68 68 Dividends to shareholders (937) (937) B Shares redeemed - - 17 - (17) - New shares issued 4 546 - - - 550 Own shares purchased - - - (308) - (308) Balance at 30 June 2006 591 546 (937) 36 (308) 28,982 28,910 Balance at 1 January 2005 2,849 6,049 (1,077) 40,372 - 2,294 50,487 Impact of adoption of IAS32 and 39 (2,280) - - - 190 (2,090) At 1 January 2005 as restated 569 6,049 (1,077) 40,372 - 2,484 48,397 Profit for the period - - - - - 3,378 3,378 Net expense recognised directly in equity (See Statement of Recognised Income and Expense) - - 833 - - (343) 490 Dividends to shareholders - - - - - (2,288) (2,288) B Shares redeemed - - - 47 - (47) - Balance at 30 June 2005 569 6,049 (244) 40,419 - 3,184 49,977 The reserve for own shares comprises the cost of the Company's shares held by the Group. At 30 June 2006 the number of shares held by the group through the Share Ownership Trust was 156,000 (2005: nil). The market value of these shares at 30 June 2006 is £321,000. In 2005 the Company underwent a Capital reorganisation following which a total of £27 million was returned to shareholders. 10. Acquisition of subsidiary On 11 January 2006 the Group acquired the entire issued share capital of Lumidrives Limited for a total consideration of £3million. The consideration was satisfied in part by cash of £2.5million and the balance of £0.5million satisfied by the issue of 223,578 Dialight plc shares. The ordinary shares were issued at a price of £2.46 being the market price of the 1.89p ordinary shares at the close of business immediately preceding completion. The subsidiary contributed £0.2million to the group profit since acquisition. The acquisition had the following effect on the Group's assets and liabilities (the fair value adjustments are considered provisional): Acquisition amounts £'000 Property, plant and equipment 39 Intangible assets (see note 8) 664 Inventories 383 Trade and other receivables 426 Cash and cash equivalents 77 Deferred tax liabilities 3 Trade and other payables (628) Net identifiable assets and liabilities 964 Goodwill on acquisition (see note 8) 2,112 Consideration 3,076 Consideration satisfied by the issue of shares 550 Consideration satisfied by cash 2,526 Cash acquired (77) Net cash outflow 2,449 The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the acquired businesses management and workforce. 11. Discontinued operations In 2005 the Group sold its entire Solartron business segment. The Solartron business was classified as 'discontinued operations' in both the 2005 interim and full year accounts. The comparative income statement has been restated to show the profit from discontinued operations separately on one line. Profit attributable to the discontinued operations for the six months ended 30 June 2005 and year ended 31 December 2005 was as follows: 6 months ended 12 months ended 30 June 2005 31 December 2005 £'000 £'000 Revenue 32,501 39,023 Cost of sales (20,408) (24,639) Gross Profit 12,093 14,384 Distribution costs (5,314) (6,381) Administrative expenses (2,732) (3,637) Operating profit 4,047 4,366 Net finance costs (101) (104) Profit before tax 3,946 4,262 Income tax expense (1,530) (1,339) Profit after tax but before gain on sale (net of tax) 2,416 2,923 Gain on sale of discontinued operations, net of tax - 22,022 Profit for the period 2,416 24,945 This information is provided by RNS The company news service from the London Stock Exchange

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