Unaudited Preliminary Results

RNS Number : 9800H

Dialight PLC

03 March 2010

 



3 March 2010

Dialight plc

Unaudited Preliminary Results for the Year ended 31 December 2009

Dialight plc (the 'Company'), the UK based leader in Applied LED Technology, announces its unaudited preliminary results for the year ended 31 December 2009.

Highlights

·     Satisfactory operating profit of £5.5m (2008: £5.3m)

·     Full year Revenues maintained at £77.3m (2008: £77.9m)

·     Outstanding H2 performance with Operating Profit £4.9m (H2 08: £3.3m).

·     Signals/Illumination segment revenues increased to £46.4m (2008:£43.4m) with continued margin improvement.

·     Strong operating cash flow leading to net cash of £9.1m  (2008 :£4.1m)

·     Second interim dividend of 4.3 pence (2008 Final:3.9 pence)

Roy Burton, Group Chief Executive, said:

"Markets were very difficult in the first half of the year but an exceptional second half performance demonstrates the growth in our core markets. The quality of our earnings improved materially, particularly in the second half and this gives us confidence for the current year"

For further information:   

Roy Burton, Group Chief Executive and George Ralph, Interim Group Finance Director, Dialight PLC, Tel: [phone] 

Simon Bridges, Canaccord Adams Limited, Tel: [phone]

Robert Speed, Kreab Gavin Anderson, Tel: [phone], [e-mail]

Financial results

Given the difficult markets in the first half of the year we are pleased to have delivered overall revenues of £77.3 million (2008: £77.9 million).  An increase in Group operating profit to £5.5m (2008: £5.3 million) was achieved following a very strong second half performance. These results provide a solid base for the coming year.

The Signals/Illumination segment, which is central to the Group's growth strategy, increased segment profit by £1.6m to £3.3m on a revenue increase of £3.0m.

Tight control of working capital helped deliver a significant increase in operating cash flow leading to a year end net cash balance of £9.1m, an increase of £5.0m over 2008.

Dividend

The Board has declared a second interim dividend of 4.3 pence per share (2008 Final: 3.9 pence).  This dividend will be paid on 1 April 2010 to shareholders on the register at close of business on 12 March 2010. The total dividend in respect of 2009 is 6.6 pence per share and the dividend cover is 2.7 times.

Board changes

At the AGM in May 2009, Bill Whiteley retired as a director of the company and since then we have appointed two non-executive directors. Bill Ronald comes with extensive international marketing expertise while Richard Stuckes brings experience of the lighting industry. Both are making a very valuable contribution to the development of Dialight. At the end of 2009 Cathy Buckley, who was our Finance Director, left the company and George Ralph joined the board as interim Finance Director.  We are actively seeking a new Finance Director and an announcement will be made in due course.

Business Review

Despite difficult global economic conditions, our Signals and Illumination business saw full year revenues increase by 7% on the prior year, driven by a record second half performance, with second half revenues up by over 18% on the first half. We believe that the Signals and Illumination business is at the early stages of worldwide growth and the performance in 2009 provides a very solid foundation for the coming year. Our component activities were affected to a greater extent by the global economic downturn with revenues down on the previous year.

Over 60% of Dialight's business was derived from the high growth Signals and Illumination sector in 2009 and we anticipate this ratio will increase as markets continue to grow strongly, driven by both the need to reduce energy consumption and strong financial returns from investment in this new technology.

Dialight is well positioned as a green company in an area of technology that is starting to show strong growth and is disrupting the traditional lighting market.

Signals/Illumination Segment

	2009	2008
Sales	£46.4m	£43.4m
Segment profit	£3.3m	£1.7m

After a slow start to the year the Signals/Illumination Segment returned revenue growth of 7% for the year with significant improvement being seen in the second half as the Group's strategy for growth took effect in spite of continuing economic pressures.  While the revenue increase was pleasing it is the improvement in margins that made the big difference to segment profits with 2009 showing almost a 100% gain on 2008 as a consequence of higher value add products and cost down initiatives in the engineering processes.

Traffic Signals

Sales into the European Traffic market grew almost 18% in the second half of the year after a slow first half to finish flat year on year. Throughout Europe, sales of LED traffic Lights are channeled through systems suppliers such as Siemens AG, who supply turnkey installations to local authorities ensuring a correct interface between our LED module and their unique controller systems.

 Dialight currently supplies the majority of lights to the two largest systems OEMs in the UK.  The level of adoption of LED Traffic Lights in the UK is increasing significantly and Dialight is well positioned to benefit from this development. In late 2009 Transport for London issued a tender for LED Traffic Lights which we would expect to be the first step in a programme to fit all existing traffic lights across the capital with LED Signals. A number of other cities are also showing strong interest in retrofits and it is hoped that 2010 could see that interest turn into further business for the Group. In order to share the benefits of using LED technology with cities in the UK, Dialight has become the major sponsor of the CABE Sustainable Cities Programme during the year.

In the remainder of Western Europe, sales were relatively flat compared to 2008. Performance in Eastern Europe was very weak for the year in contrast to its strong contribution in the previous year. At the end of 2009 a major order was secured to supply 20,000 of our state-of-the-art LED traffic signals to the Turkish market. This provides both a strong start to 2010 and some indication of an upturn in business in Eastern Europe. The overall European market is expected to show strong growth over the coming years as LED adoption increases from its current low levels.

The market for LED traffic signals in the US has become mature as almost 70 % of all traffic lights have been converted to LEDs. We do not expect to see sustained growth in this market going forward and sales were down against 2008 due primarily to fewer major projects occurring in 2009 compared with the prior year. The underlying business, however, remains sound, supported by Dialight's strong dealer network. We are starting to see some replacement of the original LED traffic lights sold by Dialight in the late 1990's and early 2000's which we believe will sustain a steady business for the years to come. Dialight remains the major supplier to this market.

Obstruction Lighting

Dialight was the first producer of LED based lights for the Aircraft Obstruction market in 2002.  For the first five years, all products were based on red LEDs and were sold for use on Radio and Television Broadcast Towers and on tall buildings in and around airports.  With the growth in use of wind turbines in North America, we saw some growth due to the use of these lights to indicate to pilots the presence of wind farms.  In the United States the requirement for such lights is highly regulated by the Federal Aviation Authority and the marking of tall structures is mandatory.

A major use of Aircraft Obstruction Lighting has been for towers used in the cellular telephone market and US regulations call for lighting all those towers over 199 feet. These structures are typically lit by a white xenon strobe light during the day and an adaptation of that light that is coloured red for night operations.  At present, it is extremely costly to change the light. Additionally, Xenon strobes have proved to be somewhat unreliable and need to be changed at least every eighteen months. The availability of a long life light source for this application is highly beneficial to the tower operators although  the brightness required has been very difficult to achieve other than with this xenon strobe. In late 2007 however, Dialight introduced an LED equivalent of this white strobe light which, whilst it had the same light output as the xenon product, had a lifetime that was several times longer thus avoiding the need for expensive and dangerous replacement of lights. The first version of this light was heavier and more expensive than the conventional strobe but served to whet the appetite of the market for a product with a guarantee of long life. As is typical for our Company, this initial product has been improved to the point where the latest version weighs only 25 pounds (original 90 pounds) with a price only slightly above the conventional light. As with all our products, this is guaranteed for five years against operating failure and we fully expect a useful life of ten or more years with no maintenance.

This is a conservative market and the first improved versions sold only 300 units in 2008.  In 2009, the value proposition for our customers had become compelling and we had sales of over 1000 units.  In addition we secured two major contracts with operators of cell phone towers which alone offer the possibility of doubling the units sold in 2010.  The installed base of conventional lights in North America is believed to be over 80,000 units giving a market potential of over $250 million.  We believe we have reached the "tipping point" for product adoption and at the current time there are no other qualified products in the marketplace.

Sales in Obstruction Lighting grew by over 50% in 2009 to £7.1m (2008: £4.6m) in a year of economic downturn and tight capital budgets.

Solid State Lighting

Sales of lighting for architectural and entertainment use were adversely affected due to the worldwide recession and recovered only slowly throughout the year.  Spending for these applications tends to be largely discretionary and as such is likely to be the first item to be cut from any budget.  Whilst Dialight has a range of products that serve these markets they are sold through a network of lighting partners who see our products as complementary to their existing range of conventional lights.

Our primary focus in Solid State Lighting is in the area of Industrial Lighting and in particular for lighting used in hazardous or rugged applications.  In 2008, we launched Safesite, an LED Area Downlight which was the first such light qualified to Underwriter's Laboratory Standards for use in environments where explosive gases or vapours may be present.  In addition to its rigorous qualification, this light uses 60% less energy than its conventional equivalent and is guaranteed by Dialight to perform for at least five years of continuous operation.  This guarantee was unprecedented in the world of conventional lighting when we launched our first product.  Sales in the first year were modest but with several trials at "blue chip" customers, sales almost doubled in 2009 with accelerated adoption in the second half.  As with all new technology product introductions, take up is slower than we would wish but the recent increase in adoption gives us confidence that 2010 will show strong growth. The majority of sales to date have been in North America but in the second half of 2009, Safesite was granted ATEX approval allowing it now to be sold in international markets

Towards the end of 2009 we introduced new extensions to the Safesite range and in particular a High Bay circular flood light which in its higher output versions comes close to replacing a 400 watt metal halide light whilst using only 140 watts.  This has been very enthusiastically received and whilst we enjoyed only two months of sales in 2009, the number of these new fixtures sold has already hit a strong run rate.  This light, whilst having been designed for the same harsh environments as our initial product, has been adopted for use in cold stores and warehouses and is being tried in a number of installations on both sides of the Atlantic. Its long life, energy efficiency and ability to be turned on and off instantly with no degradation to lifetime or reliability has allowed Dialight to compete in even broader market areas.

2010 will also see the introduction of further LED fixtures to extend the applications addressed by our products although remaining largely within the same rugged, regulated industrial markets.  In addition we will be following our usual path of continuous improvement of these products to enhance the value proposition to our customers and to drive adoption of LED technology into our chosen markets.  The improvement in cost and performance of white LEDs helps us enable more applications and from introduction of the High Bay light in late 2009 we are now shipping versions with a 50% improvement in light output with little increase in power consumption and only modest increase in cost. Dialight's ability to quickly introduce new products to the market and to drive continuous performance improvement is a major strength and a real point of difference versus a typical lighting supplier.

There has been much interest in the USA in using "stimulus" funds for LED street lights and there are trials ongoing in several cities to evaluate various product offerings. Dialight is participating in a number of these trials.  In many cases these lights are bought by the same people who buy our Traffic Lights and recognise Dialight as a leader in the application of LEDs and can attest to the reliability and performance of our products. In the UK we have recently installed a small trial in the City of Edinburgh and once again hope to use the Sustainable Cities Initiative as a forum to bring information to this market.

Component Segments

	2009		2008
Segment Sales
LED Indication Components	£17.6m		£19.4m
Electromagnetic Disconnects	£13.3m		£15.1m
Total segments sales	£30.9m		£34.5m
Segment profits
LED Indication Components	£3.2m		£4.9m
Electromagnetic Disconnects	£0.7m		£0.5m
Total segments profit	£3.9m		£5.4m

Dialight's Components Businesses comprises two product sets; Indication Components which are LED based indicators for professional electronics OEMs; and Electromagnetic Disconnects which are high current switches for the utility market enabling utilities to remotely connect and disconnect a domestic electricity supply.

The LED Indication business consists of the supply of small LED assemblies for status indication for use by such OEMs as IBM, Lucent/Alcatel and Cisco amongst others. This is a niche market which over a long period of  time has  provided good returns with strong cash generation. In the short term the revenues from this business reflect the general electronics market as it fluctuates and  late in 2008, this market experienced a severe drop in orders. This downturn continued through most of the first half of 2009 with some small recovery taking place towards the end of the period.  The second half saw continued improvement in results but at the close of the year activity was still below prior year levels.  Margins returned to traditional high levels in the second half as the effects of first half restructuring showed through.  There has been no fundamental change to the business and relationships with both distributors and OEMs remain strong.  We anticipate this product line will continue to show modest growth over time but it will also continue to follow the fluctuations of the general electronics market.

Our Electromagnetic Disconnect component  business in which the products apply wound inductive technology consists of some mature and declining product lines, but also a range of unique devices for application in "smart metering" which is becoming increasingly universally accepted. .

Overall revenues for these products reduced by almost £2 million but within this segment sales to the US smart meter market grew by almost 10%, although this number was adversely affected by the change in technical requirement of one of our customers, significantly reducing shipments in the second half. Overall prospects for the "Smart Metering" market  are very strong.  The potential  in the US alone is for over 100 million units and many other countries are showing interest in smart metering.  This is a high growth opportunity for the Company although it has to be recognised that margins will continue to be relatively tight in this product family.

Operations and Engineering

Our Engineering and Operations units are key to the success of Dialight as we continue to introduce new products and drive their costs down.  In 2009 we filed 17 new patents, were granted 8 and have 65 still pending. Our engineers worked diligently to improve our existing products and to ensure a steady stream of innovations. Margins in the Signals/Illumination segment once again increased with a 6% improvement over 2008.  This improvement is as a result of continuous reassessment of design and the incorporation of the latest techniques and technologies into our products. The methodical examination of our supply chain and the manufacturing techniques employed to service it are fundamental elements in our success.  Our operational performance is as much a component of our success as the selection of market segments and the activities of our sales teams.

Summary

2009 ended very strongly despite the economic turmoil at the start of the year. We are pleased not only with the full year results, but also with the underlying factors which drove them. The second half saw good growth in European Traffic along with growth in Obstruction Lighting and White Industrial Lighting, all three being major drivers of our future success. In addition we saw a substantial and sustainable margin improvement in our Signals/Illumination business. Our strategy for growth is proving effective and we look forward to continued progress as the Company takes full advantage of the exciting developments in ultra efficient lighting and signalling using LED technology, which brings not only financial benefit to our customers, but also enhances their "green" credentials through energy conservation and the reduction of carbon dioxide emissions.

The bottom line performance of the group demonstrates our commitment to driving shareholder value through strong management of our resources in all economic environments

Current trading and outlook

While the Signals and Illumination business continues to deliver increased revenues it is still at the early stages of what the Board believe will be a period of high growth as LED technology becomes increasingly adopted in the lighting sector.  2010 represents a very exciting period for Dialight when every new lighting product opens up yet greater potential for growth.

The Component businesses felt the effects of the global economic downturn but we were pleased to see some recovery in these markets in the second half of the year, and this recovery has been maintained in the first few months of 2010.

The board continues to be confident in the group's strategy of focusing on substantial niche markets in ultra efficient lighting and signalling and believes that the group has excellent prospects.

Roy Burton, Chief Executive                                                                                                                            Harry Tee CBE, Chairman

2 March 2010

Principal risks and uncertainties

The following section sets out the principal risks and uncertainties facing the Group. There may be other risks and uncertainties which are not yet known or which are currently considered to be immaterial but later turn out to have a material impact. Some of the areas set out will be outside of any influence that the business may exert. Should any of the risks actually materialise then Dialight's business, financial condition, prospects and share price could be materially and adversely affected.

Macro-economic conditions

A continuing significant slowdown in economic conditions globally and in certain territories such as North America could have a material effect on sales and operating profit in particular for the LED Indication business. Management of the LED Indication business monitor the general electronics demand index as well as industry forecasts so as to become aware of market trends. In addition the monthly Point of Sales data which is provided by US customers is reviewed on a monthly basis as this is also considered to provide valuable information on market demand.

Increasing inflationary pressures on areas such as raw material and sub-contract costs may have an adverse impact on operating margins.

The current adverse economic conditions may cause both private and public organisations to reduce and/or defer their capital spending budgets which may impact on sales of almost all of our products.

Changes in government legislation or policy

National and local policies with regard to energy savings in a number of areas such as transport and communication are constantly evolving. This should favour Dialight's efforts in growing sales in some key niche current and potential opportunities identified by the Signals/Illumination business.

Additionally legislation may introduce new higher and more exacting specifications for existing products which will require product redesign and regulatory re-certification. It is Dialight policy to operate in highly regulated markets which require suppliers to achieve compliance with demanding product standards. Our design and engineering departments have a proven track record in technical ability evidenced by strong working relationships with customers and regulatory boards, the design and introduction of new products and the portfolio of registered IPR. Therefore changes in product specifications should favour Dialight in giving us an advantage over competition.

Competitive environment

We operate in competitive markets and there exists a threat that existing competitors or potential new entrants will be successful in taking market share. The threat may, for example, come from an extremely aggressive pricing policy for larger traffic contract bids in US and Europe.

Our focus on identifying, developing and maintaining sales routes to market, servicing strong customer relationships, competitive and leading edge product portfolios and cost efficient manufacturing plants supports Dialight as a major player in our chosen markets and helps to reduce the risk of losing market share to competition.

Laws and regulations

The Group's operations are subject to a wide range of laws and regulations including employment, environmental and health and safety legislation. All Group companies have an employee handbook detailing employment practices and staff who receive the appropriate training and support to operate in their roles. Each site has a health and safety manager responsible for compliance and performance in this area.

 

Strategy for revenue growth - LED technology

The strategy of the Board includes the following financial goals:

1.         To grow sales by compound double-digit percentage

2.         Compound EPS growth in the mid teens

The achievement of the goals is dependent on growing sales in the chosen markets within the Signals/Illumination business such as industrial white lighting. The adoption by the market of LEDs for new applications is principally dependent on the increased efficiency and reduced cost of LEDs versus existing technologies such as Fluorescent or High Intensity Discharge. The achievability of the Group's longer term sales growth would be seriously at risk if the parties who are developing the LEDs did not achieve the expected progress such that new applications did not become feasible.

Additionally with the fast changing technology world that exists there is a possibility of a technology being developed that supersedes LEDs. Our engineers are actively contributing by their presence on industry related boards, attendance and presentations at industry seminars etc, so as to be proactively involved and keep abreast of developments on a regular basis.

Intellectual property

The development and ownership of intellectual property is critical in underpinning the growth potential for the business. The Group operates a stringent policy on the sharing of know how with third-parties as well as having a well defined policy on the in house identification and registration of patents. If the Group fails to or is unable to protect, maintain and enforce its existing intellectual property, it may result in the loss of the Group to the exclusive right to use technologies and processes which are included or used in its businesses. Over the last couple of years a plan to improve the quality of the New Product Introduction systems across the businesses has been implemented with good progress being made as evidenced by the expanding Patent portfolio.

Product liability risks

If a product of the Group does not conform to agreed specifications or is otherwise defective, the Group may be the subject to claims by its customers arising from end-product defects or other such claims. The Group carries product liability insurance.

Financial markets

Recent turmoil in global financial markets could pose risks to the financial position of both our customers and suppliers and also to the ability of the Group to renegotiate bank facilities.

Customers are subject to credit checks and there is very close review of trade debtor day's outstanding and overdue amounts. Purchase limits are set for all customers.

There are ongoing reviews of supplier bases to ensure wherever possible that there is not over-reliance on one specific supplier.

The Group has built up long standing relationships with the principal Group bankers. Currently the Group has not drawn down any borrowings against the existing facility. Regular contact will be kept with the banks to ensure that they understand the business and its requirements.

 

Currency exchange rate risk

The Group is exposed to translation exchange rate risk as a significant proportion of the Group's results and assets and liabilities are reported in US dollar and Euros and are therefore subject to translation to Sterling for incorporation into the Group's results. In addition, transactions are carried out by Group companies in currencies other than Sterling leading to transactional foreign exchange risk. Where possible the Group's nets such exposures and maintains a hedging programme utilising foreign exchange forward contracts and currency overdrafts to cover specific contracts and such proportion of other anticipated exposures as can be estimated with reasonable certainty.

 

Acquisition strategy

The Board plans to make acquisitions of businesses if the targets fit appropriately into the strategy by strengthening our product range and existing technologies, offering new and attractive sales routes to markets, have high performance and motivated management, and have a proven profit record.

The successful implementation of our acquisition strategy depends on our ability to identify targets, in completing the transaction, achievement of an acceptable rate of return, and a successful and timely integration post acquisition.

Responsibility statement

The Directors confirm that to the best of their knowledge:

(i)     the financial statements contained herein have been prepared in accordance with the applicable set of accounting standards and give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

(ii)     This announcement includes:

(a)        An indication of important events that have occurred during the financial year, and their impact on the financial statements contained herein;

(b)        A description of the principal risks and uncertainties; and

(c)      Details of any related party transactions that have taken place during the financial year and that have materially affected that financial position or the performance of the Group.

By order of the Board

Nick Giles

Company Secretary

Unit 2

Vantage Park

Washingley Road

Cambs

PE29 6SR

2 March 2010

CONSOLIDATED INCOME STATEMENT  

for the year ended 31 December 2009

	Note	2009 £'000	2008 £'000
Continuing operations
Revenue	1	77,304	77,855
Cost of sales		(58,621)	(61,595)
Gross profit		18,683	16,260
Distribution costs		(6,078)	(5,146)
Administrative expenses		(7,150)	(5,793)
Results from operating activities	1	5,455	5,321
Financial income		1,711	2,177
Financial expense		(1,884)	(1,861)
Net financing (expense)/income		(173)	316
Profit before income tax		5,282	5,637
Income tax expense	2	(1,990)	(2,168)
Profit from continuing operations		3,292	3,469
Prior periods discontinued operations
Adjustment to profit from businesses sold in prior years	3	2,140	-
Profit for the period attributable to equity holders of the Company		5,432	3,469
Earnings per share
Basic	4	17.5p	11.2p
Diluted	4	17.1p	10.9p

Consolidated statement of COMPREHENSIVE INCOME

For the year ended 31 December 2009

		2009	2008
		£'000	£'000
Exchange difference on translation of foreign operations		(2,398)	7,183
Actuarial gains/(losses) on defined benefit pension schemes		1,844	(3,407)
Income tax on actuarial gains/(losses) on defined benefit pension schemes		(663)	1,289
Other comprehensive income for the period, net of tax		(1,217)	5,065
Profit for the period		5,432	3,469
Total comprehensive income for the period attributable to equity holders of the Company		4,215	8,534

Consolidated statement of changes in equity

For the year ended 31 December 2009

	Share capital £'000	Merger reserve £'000	Translation reserve £'000	Capital redemption reserve £'000	Retained earnings £'000	Total £'000
Balance at 1 January 2009	591	546	5,486	2,232	28,649	37,504
Profit for the period attributable to equity holders of the Company	-	-	-	-	5,432	5,432
Other comprehensive income Foreign currency	-	-	(2,398)	-	-	(2,398)
Defined benefit plan actuarial gains, net of taxes	-	-	-	-	1,181	1,181
Dividends to shareholders	-	-	-	-	(1,937)	(1,937)
Share-based payments (net of tax)	-	-	-	-	322	322
Balance at 31 December 2009	591	546	3,088	2,232	33,647	40,104
At 1 January 2008	591	546	(1,697)	60	31,349	30,849
Profit for the period attributable to equity holders of the Company	-	-	-	-	3,469	3,469
Other Comprehensive Income Foreign currency	-	-	7,183	-	-	7,183
Defined benefit plan actuarial losses, net of taxes	-	-	-	-	(2,118)	(2,118)
Dividends to shareholders	-	-	-	-	(1,843)	(1,843)
Share-based payments	-	-	-	-	154	154
B shares redeemed	-	-	-	2,172	(2,172)	-
Own shares purchases	-	-	-	-	(190)	(190)
Balance at 31 December 2008	591	546	5,486	2,232	28,649	37,504

Own shares purchased comprises the cost of the Company's shares held by the Group. At 31 December 2009 the number of shares held by the Group through the Share Ownership Trust was 256,000 (2008: 256,000). The market value of these shares at 31 December 2009 is £560,000 (2008: £289,000).

CONSOLIDATED STATEMENT OF TOTAL FINANCIAL POSITION

As at 31 December 2009

		2009	2008
		£'000	£'000
Assets
Property, plant and equipment		7,248	7,793
Intangible assets		8,589	8,932
Deferred tax assets		1,914	3,042
Total non-current assets		17,751	19,767
Inventories		9,194	12,994
Trade and other receivables		18,186	20,366
Cash and cash equivalents		9,092	4,145
Total current assets		36,472	37,505
Total assets		54,223	57,272
Liabilities
Trade and other payables		(11,015)	(11,059)
Tax liabilities		(1,083)	(2,786)
Total current liabilities		(12,098)	(13,845)
Employee benefits		(948)	(4,469)
Provisions		(1,073)	(1,307)
Deferred tax liabilities		-	(147)
Total non-current liabilities		(2,021)	(5,923)
Total liabilities		(14,119)	(19,768)
Net assets		40,104	37,504
Equity
Issued share capital		591	591
Merger reserve		546	546
Other reserves		5,320	7,718
Retained earnings		33,647	28,649
Total equity attributable to equity shareholders of the parent company		40,104	37,504

 

 

 

 

CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2009

		2009	2008
		£'000	£'000
Operating activities
Profit for the year		5,432	3,469
Adjustments for:
Financial income		(1,711)	(2,177)
Financial expense		1,884	1,861
Income tax expense		1,990	2,168
Share based payments		197	154
Adjustment to profit on sale of businesses in prior years		(2,140)	-
Depreciation of property, plant and equipment		1,525	1,598
Amortisation of intangible assets		1,143	1,075
Operating cash flow before movements in working capital		8,320	8,148
Decrease/(increase) in inventories		2,882	(421)
Increase in trade and other receivables		(240)	(1,041)
Increase in trade and other payables		1,342	297
Pension contributions in excess of the income statement charge		(1,305)	(994)
Cash generated from operations		10,999	5,989
Income taxes (paid)/received		(1,581)	(2,382)
Interest paid		-	(47)
Net cash from operating activities		9,418	3,560
Investing activities
Interest received		12	125
Capital expenditure		(1,576)	(1,796)
Expenditure on development		(966)	(771)
Sale of tangible fixed assets		22	-
Net cash used in investing activities		(2,508)	(2,442)
Financing activities
Dividends paid		(1,937)	(1,843)
Redemption of preference shares treated as debt		-	(2,172)
Own shares acquired		-	(190)
Net cash used in financing activities		(1,937)	(4,205)
Net increase/(decrease) in cash and cash equivalents		4,973	(3,087)
Cash and cash equivalents at 1 January		4,145	6,561
Effect of exchange rates on cash held		(26)	671
Cash and cash equivalents at end of period		9,092	4,145

Notes to the financial statements for the year ended 31 December 2009

Statement of compliance

The summary financial statements have been prepared and approved by the directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs").

Basis of preparation

The summary financial statements have been prepared on the historical cost basis except for the revaluation of certain financial instruments which are carried at fair value.

The financial information set out in this announcement does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008. The financial information for 2008 is derived from the statutory accounts for 2008 which have been delivered to the registrar of companies. The auditors have reported on the 2008 accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The statutory accounts for 2009 will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of companies in due course.

Full financial statements for the year ended 31 December 2009, will be posted to shareholders on 8 April, and after adoption at the Annual General Meeting on 12 May 2010 will be delivered to the registrar.

1.         Operating Segments

The Group has three reportable segments, as described below, which are the Group's strategic business units.  The strategic units offer different products.  They require different technology and marketing strategies.  For each of the units the CEO reviews internal monthly reports monthly.  The following summary describes the operations in each of the Group's reportable segments.

The Group comprises the following business segments:

·  Signals/Illumination which addresses the increasing demands for Energy Efficient Lighting solutions through the use of high brightness LEDs and utilisation of a number of associated technologies.  Areas of business include Traffic and Rail Signals, Obstruction Lights and Solid State Lighting products.

·  Components comprising (1) the indication businesses whose sales are primarily to Electronics OEMs for status indication and (2) electromagnetic components which supplies smart meter disconnect switches which are used by utility companies to manage remotely electrical supply to residential and business premises.

There is no inter-segment revenue.

All revenue relates to the sale of goods. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated expenses comprise corporate costs including share-based payments and unallocated assets and liabilities comprise cash, borrowings, taxation and pension fund liabilities. 

Reportable segments

2009	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Revenue	13,333	17,576	30,909	46,395	77,304
Contribution	3,167	9,257	12,424	17,979	30,403
Overhead costs	(2,445)	(6,102)	(8,547)	(14,707)	(23,254)
Segment results	722	3,155	3,877	3,272	7,149
Unallocated expenses					(1,694)
Operating profit					5,455
Net financing income					(173)
Profit before tax					5,282
Income tax expense					(1,990)
Profit after tax					3,292

2008	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Revenue	15,073	19,389	34,462	43,393	77,855
Contribution	3,516	10,250	13,766	14,187	27,953
Overhead costs	(2,990)	(5,342)	(8,332)	(12,475)	(20,807)
Segment results	526	4,908	5,434	1,712	7,146
Unallocated expenses					(1,825)
Operating profit					5,321
Net financing income					316
Profit before tax					5,637
Income tax expense					(2,168)
Profit after tax					3,469

					2009
Other Information	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Capital Additions	402	208	610	1,822	2,432
Depreciation and amortisation	(380)	(527)	(907)	(1,746)	(2,653)

Not included above are central assets and depreciation/amortization not allocated to a segment (2008: Nil).

					2008
Other Information	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Capital Additions	475	180	655	1,141	1,796
Depreciation and amortisation	(411)	(582)	(993)	(1,661)	(2,654)

Balance Sheet - Assets					2009
	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Segment assets	9,089	9,135	18,224	27,235	45,459
Unallocated assets					8,764
Consolidated total assets					54,223

Balance Sheet - Liabilities					2009
	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Segment liabilities	(3,943)	(1,782)	(5,725)	(7,357)	(13,082)
Unallocated liabilities					(1,037)
Consolidated total liabilities					(14,119)

Balance Sheet - Assets					2008
	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Segment assets	8,099	9,854	17,953	31,756	49,709
Unallocated assets					7,563
Consolidated total assets					57,272

Balance Sheet - Liabilities					2008
	Electro magnetic components	LED Indication business	Total Components	Signals/ Illumination	Total
	£'000	£'000	£'000	£'000	£'000
Segment liabilities	(2,009)	(2,805)	(4,814)	(6,832)	(11,646)
Unallocated liabilities					(8,122)
Consolidated total liabilities					(19,768)

The Components and Signals/Illumination segments are managed on a worldwide basis, but operate in three principal geographic areas, UK, Europe and North America.  The following table provides an analysis of the Group's sales by geographical market, irrespective of the origin of the goods. All revenue relates to the sale of goods.

Analysis by geographical market

	2009 £'000	2008 £'000
North America	52,717	50,848
UK	7,790	9,740
Rest of Europe	8,436	8,823
Rest of world	8,361	8,444
	77,304	77,855

Continuing operations	Segmental assets		Non current assets
	2009 £'000	2008 £'000	2009 £'000	2008 £'000
North America	30,472	34,631	6,178	7,491
UK	15,307	13,746	5,141	5,707
Rest of Europe	8,444	8,895	6,432	6,569
	54,223	57,272	17,751	19,767

2.   Income tax expense

Recognised in the income statement
		2009	2008
		£'000	£'000
Current tax expense
Current year		1,945	2,402
Adjustment for prior years		-	(27)
		1,945	2,375
Deferred tax expense
Origination and reversal of temporary differences		288	(211)
Adjustment for prior years		(243)	4
Income tax expense		1,990	2,168

Reconciliation of effective tax rate

		2009	2009	2008	2008
		%	£'000	%	£'000
Profit from continuing operations			3,292		3,469
Total income tax expense			1,990		2,168
Profit excluding income tax			5,282		5,637
Income tax using the UK corporation tax rate of 28% (2008:28%)		28.0	1,479	28.0	1,578
Effect of tax rates in foreign jurisdictions		9.2	487	8.1	456
Non-deductible expenses		0.8	41	1.3	74
Unrecognised losses carried forward		4.3	226	2.7	152
Non taxable income		-	-	(2.4)	(139)
Share plan charge for lapsed awards		-	-	1.2	70
Over provision in prior years		(4.6)	(243)	(0.4)	(23)
		37.7	1,990	38.5	2,168

Deferred tax recognised directly in equity	2009 £'000	2008 £'000
Relating to pension accounting	(663)	1,289

3. Adjustment to profit from businesses sold in prior years

The adjustment to profit from businesses sold in prior years comprises two non-cash items being a release of a provision of £0.4 million for a business sold in 2003 and a release of a tax provision of £1.7 million in connection with the disposal of businesses in 2005, which are no longer required. 

4.   Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 December 2009 was based on the profit for the year of £5,432,000 (2008:£3,469,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2009 of 30,983,501(2008: 31,017,000).

Diluted earnings per share

The calculation of diluted earnings per share at 31 December 2009 was based on profit for the year of £5,432,000 (2008:£ 3,469,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2009 of 31,788,206 (2008: 31,769,000) calculated as follows: -

Weighted average number of ordinary shares (diluted)

		2009	2008
		'000	'000
Weighted average number of ordinary shares		30,983	31,017
Effect of share options on issue		805	752
Weighted average number of ordinary shares (diluted)		31,788	31,769

Underlying earnings per share are highlighted below as the Directors consider that this measurement of earnings gives valuable information on the performance of the Group.

	2009	2008
Basic earnings	17.5	11.2
Profit from businesses sold in prior years (note 3)	(6.9)	-
Underlying earnings	10.6	11.2
Diluted earnings	17.1	10.9
Profit from businesses sold in prior years (note 3)	(6.7)	-
Underlying earnings	10.4	10.9

5.   Dividends

The following dividends were paid in the year:

	2009	2008
	£'000	£'000
Interim-2.3p  per ordinary share (2008:2.1p)	719	656
2008 Final-3.9p per ordinary share (2007:3.8p)	1,218	1,187
	1,937	1,843

After the balance sheet date the following dividends were recommended by the Directors.  The dividends have not been provided for and there are no corporation tax consequences.

	2009	2008
	£'000	£'000
Second interim recommended dividend
4.3p per ordinary share (2008:Final 3.9p)	1,343	1,218

There will be an analyst and investor meeting at 09.30 hours this morning at Kreab Gavin Anderson, Scandinavian House, 2-6 Cannon Street, London EC4M 6XJ.

A slide presentation of the event will be available at 09.30 hours on http://www.dialight.com

Internet users will be able to view this announcement, together with other information about Dialight plc at the company's web site http://www.dialightplc.com.

-ENDS-

About Dialight  

Dialight plc is leading the lighting revolution for industrial users across the world. Applying leading edge LED technology it produces retro-fittable lighting fixtures designed specifically for hazardous locations, obstruction lighting, traffic and rail signalling to vastly reduce maintenance, save energy, improve safety and ease disposal. Versions of these high specification luminaires are also produced for more general commercial, industrial and outdoor situations.

Dialight consists of two business segments:-

Signals/Illumination

Which includes Traffic and Rail Signals; Obstruction Lights and Solid State Lighting

Components 

Comprising Light Emitting Diode ("LED") Indication Components and Electromagnetic Disconnects ('smart' meter disconnect switches)

The company is headquartered in the UK and listed on the London Stock Exchange (LSE:DIA.L,GB0033057794) with operating locations in the UK, USA, Germany and Mexico. More information is available at www.dialight.com.

 Cautionary statement

This announcement contains certain statements, statistics and projections that are or may be forward-looking. The accuracy and completeness of all such statements, including, without limitation, statements regarding the future financial position, strategy, projected costs, plans and objectives for the management of future operations of Dialight plc and its subsidiaries is not warranted or guaranteed. These statements typically contain words such as 'intends', 'expects', 'anticipated', 'estimates' and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. Although Dialight plc believes that the expectations will prove to be correct. There are a number of factors, many of which are beyond the control of Dialight plc, which could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements.

 

END

 

 

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