Unaudited Preliminary Results – Replacement
RNS Number : 2150B
Dialight PLC
14 February 2011
The following amendment has been made to the ‘Unaudited Preliminary Results for the Year ended 31 December 2010’ announcement released on 14/02/2011 at 07:00 under RNS No 1392B
Record date changed from 6th April 2011 to 8th April 2011
All other details remain unchanged.
14 February 2011
Dialight plc
Unaudited Preliminary Results for the Year ended 31 December 2010
Dialight plc (‘Dialight’ or the ‘Group’), the UK based leader in Applied LED Technology, announces its unaudited preliminary results for the year ended 31 December 2010.
Highlights
· Profit before tax of £11.3m (2009: £5.3m)
· Full year Revenues grew 28.3% to £99.2m (2009: £77.3m)
· Signals/Illumination segment revenues increased 31.7% to £61.1m (2009: £46.4m)
· Lighting sales more than doubled to £11.6m (2009: £5.5m)
· Two international initiatives completed
· Strong operating cash flow leading to net cash of £10.4m (2009: £9.1m)
· Final dividend of 5.2 pence (2009 Second Interim: 4.3 pence)
Roy Burton, Group Chief Executive, said:
“A very satisfactory performance in Solid State Lighting and indeed in the whole Signals/Illumination segment gives us confidence in our strategy and in the Group’s prospects for the coming years.”
Harry Tee CBE, Chairman, said:
“2010 has seen the strengthening of Dialight’s management team at both the corporate and operational levels in order to prepare the Group for its continued growth.”
For further information:
Roy Burton, Group Chief Executive and Mark Fryer, Group Finance Director, Dialight plc, Tel: 01638 778640
Simon Bridges, Canaccord Genuity Limited, Tel: 020 7050 6500
Robert Speed, Kreab Gavin Anderson, Tel: 020 7074 1800, dialight@kreabgavinanderson.com
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 https://www.dialight.com
Internet users will be able to view this announcement, together with other information about Dialight at the company’s web site https://www.dialight.com.
Financial results
Revenue in 2010 grew by 28.3% to £99.2m compared with £77.3m in 2009. This is a strong performance and is particularly pleasing given that there has been growth in each of the reported market segments and in each of the major reported territories. Contribution margins have increased from 39.3% to 41.0% with the benefit of significant investment in product re-engineering and cost reduction. Overall Group operating profit has more than doubled to £11.2m (2009: £5.5 million) and with tight working capital control, the Group have generated operating cash flow of £14.0m leading to a year-end cash balance of £10.4m. These results provide a solid base for future growth and continued commercial and technical investment will support that growth for the coming years.
Dividend
In line with the Group’s progressive dividend policy the Board has recommended a final dividend of 5.2 pence per share (2009: Second Interim: 4.3 pence) giving a total dividend of 8.0 pence (2009: 6.6 pence) which is an increase of 21.2%. Dividend cover is 3.0 times. Subject to approval by the shareholders at the Annual General Meeting on 20 April 2011, this dividend will be paid on 6th May 2011 to shareholders on the register at close of business on 8th April 2011. The total dividend on a paid basis in respect of 2010 is 7.1 pence (2009: 6.6 pence per share).
Board changes
In the middle of 2010, Robert Jeens retired from the Board after over nine years of service and Bob Lambourne joined the Board as his replacement. In September of 2010 Mark Fryer joined the Board as Group Finance Director and consequently George Ralph, who had been serving as Interim Finance Director, resigned from the Board and left the Company.
Business Review
Whilst global economic conditions showed modest recovery, our Signals/Illumination business saw full year revenues increase by 31.7% on the prior year, with Lighting revenues doubling versus 2009 as well as doubling half on half within 2010. Both Obstruction Lighting and European Traffic demonstrated very strong growth also. Our strategy in this segment of focussing on defensible niche markets is proving to be effective.
Revenues in the LED Indication components segment had been affected by the global economic downturn in the early part of 2009. This market saw recovery in 2010 although inventory build in the first half of this year was reversed in the second with revenues overall well ahead of 2009.
Sales of Electromagnetic components grew single digit on 2009 but significantly we secured a new customer for Electromagnetic Disconnect devices in the form of a major US meter manufacturer.
Of the more than £20m of growth in 2010, 65% came from the Signals/Illumination segment. As the efficiencies and cost of LED devices continue to improve, Dialight’s product offerings to this market will provide even stronger financial returns for our customers whilst at the same time contributing strongly to a better environment through significant reduction in energy consumption.
Signals/Illumination Segment
| 2010 | 2009 | ||
| Sales | £61.1m | £46.4m | |
| Segment profit | £8.7m | £3.3m |
Overall growth of more than 30% for the year with significant gains in Lighting, Obstruction Products and European Traffic Lights – our three nominated growth markets – is a very pleasing result. Lighting in particular with sales of over £7.5m in the second half is showing an accelerating trend which bodes well for the coming years. Once again margins strengthened showing better than five percentage point’s improvement over 2009.
During the year we were able to take advantage of the increased capacity in the white LED supply chain to reduce the prices we pay for our LEDs. This price reduction along with a spectacular improvement in the efficiencies available, has allowed us in some cases to reduce the LED cost in our products by almost 50%. We anticipate that this will be a long term trend and will both improve our margins and open up more applications where Solid State Lighting can add value to our customers.
Traffic Signals
Sales into the European Traffic market grew by over 34% with over half of that growth coming from the UK. We continue to conduct our business through major systems OEMs such as Siemens who supply a complete system to towns and cities throughout Europe. Whilst the UK provided the major part of our growth in 2010 the rest of Western Europe also demonstrated significant improvement. Adoption levels in Europe remain low and we expect increasing sales in this market to continue.
As previously reported, the market for LED traffic signals in the US is mature, much of the traffic light infrastructure having already been converted to LED. Although we do not expect to see sales growth in this market, 2010 saw some modest improvement in sales despite the lack of any major retrofit projects. Towards the end of the year we moved assembly of our Traffic Light products from our Mexican plant to our facility in North Carolina. This move gave us two benefits; firstly this significantly reduced our supply chain costs but also allowed us to claim “Buy American” status relating to the US stimulus programme (American Recovery and Reinvestment Act). Structurally there has been no change to the business and our extensive and exclusive dealer network remains as strong as ever.
As probably the largest supplier of LED Traffic Lights in the world, Dialight continues to improve both the performance and cost of these products to offer even more value to our customers. Our latest offering for the European market for example uses only a single LED with the same performance guarantee of more than five years life.
Obstruction Lighting
For many years, tall structures of all kinds have been marked by red lights and white strobes as a collision warning for nearby aircraft. These lights have long been a source of challenge to maintain since their location is by its nature difficult to access and maintenance is of course essential if they are to fulfil their function.
Dialight first produced LED versions of these lights back in 2002 using over a thousand red LEDs for the largest lights. Constant improvement and development has produced the latest versions using only twenty four LEDs and using only 20 watts compared to over 1400 watts for the conventional version. However, power consumption is not the main driver for the use of LEDs in this application; maintenance can be an expensive and risky business and Dialight’s five year warranty on its products is a major saver for our customers.
Whilst there exists an extensive installed base of Obstruction Lights, two specific applications offer Dialight substantial potential for growth. In the United States structures over 199 feet require a white daytime strobe light and the cellular telephone network uses many of these towers. In total there are over 80,000 structures requiring such lighting and Dialight’s LED strobe replaces an unreliable xenon based strobe tube. This market represents over a quarter of a billion dollar opportunity for the Company and we remain the only qualified supplier of this product in the United States. In 2009 the Company sold over a thousand strobes and in 2010 this number grew to almost two and a half thousand units. To date less than 5% of the current installed base of xenon strobes has been replaced with our high reliability LED product. The LED Strobe is guaranteed for five years of use although it is quite possible that our strobe may outlast the tower itself! Dialight has supplied to eight of the top ten tower operators in the US in 2010 as well as many smaller users and growth in this application is expected to continue to be strong.
The second growth market for Obstruction Lighting is in the Wind Turbine market for both on and offshore use. Whilst Dialight has been successful in addressing the North American Wind Turbine market – all of which has been onshore – we had been less successful in penetrating the European market and in particular the offshore portion of that. In April of 2010 we acquired the Danish company; BTI Light Systems A/S (‘BTI’). BTI has strong ties to a number of European wind turbine manufacturers and supplies a lighting system for offshore application. As one might expect, offshore installations can be a hazard to shipping as well as aircraft and BTI opens up a new market to Dialight for not only its existing products but also LED products for the marine market. Although the wind energy market has been depressed on both sides of the Atlantic in 2010, the long term future for wind energy and associated lights is promising and the BTI acquisition is key to our long term success in this market outside of North America.
As ever we continue to be at the cutting edge of solid state lighting technology and through BTI, in late 2010 we demonstrated a 100,000 candela strobe light for a very tall turbine tower in Sweden. This was not only five times brighter than our current strobe but will spend most of its life turned off as it is activated by integral radar which will detect the presence of nearby aircraft and only then activate our strobe. This is a prime example of BTI’s channel presence bringing Dialight’s technology to a market which would otherwise have been difficult to access.
Sales in Obstruction Lighting grew by over 70% in 2010 to £12.3m and by almost 50% even excluding the acquisition of BTI. Dialight’s position in this market should generate strong growth over the next several years.
Solid State Lighting
In recent years many lighting suppliers have concentrated on Architectural and Entertainment applications as the first uses of Solid State Lighting. By contrast Dialight has looked for those applications which deliver immediate value to our customers and has chosen lighting for hazardous, industrial and rugged applications as the primary thrust. Lights for these markets frequently need to be qualified to exacting international standards. The years 2008 and 2009 were really a period of foundation building for this strategy when not only product needed to be developed, but also sales teams were being recruited and trained, brand awareness was being created and channels to market developed. The last year’s results clearly demonstrate that our preparation has started to deliver its rewards and Dialight can surely claim to be the clear market leader in Solid State Lighting for industrial applications.
In 2009, Dialight sold approximately three thousand light fixtures in industrial markets, twice as many as in 2008. At the close of 2010 we had sold over five times as many units with sales accelerating throughout the year. Much of this growth has come from the Durosite High Bay light which was introduced in late 2009, although our original Safesite continued to grow in sales in spite of being superceded in the beginning of 2011 by an improved version. Our customer base in 2010 comprised over three hundred companies in diverse industries from Oil and Gas to Pharmaceuticals to Power Generation to Cold Stores and many in between. Many of these customers are still at the trial stage with our products and it is possible to view many of these sales as merely “seeding” the market.
As always our products are in a mode of continuous improvement and the Durosite Highbay which was initially introduced as a device with 8000 lumens of light at 150 watts is now available with 12,000 lumens at the same wattage and with the added features of being dimmable and with the option of proximity sensing for even more efficiency. Our main strategy in this market is to offer immediate value to our customers and we are regularly calculating payback periods of less than a year in installations where lighting is heavily used.
During the year we introduced a number of new products as well as improving existing fixtures. As mentioned earlier, LED performance has improved markedly over the year and we now have three viable suppliers of the best performing LEDs. At the end of 2009 we were using 100 lumen/watt devices in our lights and we now have a good supply at close to 140 lumens/watt with 160 not too far away. This allows us either to downsize a given fixture with the consequent cost reduction or improve the output at little to no extra cost.
Throughout 2010, most of our sales have been in North America having successfully set up an extensive network of Dialight Sales Managers, Independent Manufacturers Representatives and Electrical Distributors. During the latter part of 2010 we introduced product more specifically for the European and Asia/Pacific markets and made some key recruitment decisions to drive our sales into these geographies. We now have an Industrial Lighting organisation based in the UK with Dialight Sales Managers in the UK, France, Germany, Dubai and Singapore. In addition to these appointments we have recently acquired the major share in an Australian lighting distributor to address this sizeable industrial and mining marketplace.
Having enjoyed a successful 2010, we look forward to continued strong growth and a good return on the organisation investment we have made.
LED Indication Components Segment
| 2010 | 2009 | |
| Sales | £23.5m | £17.6m |
| Segment profit | £5.6m | £3.2m |
The LED Indication business consists of the supply of small LED assemblies for status indication for use by major OEMs in the professional end of electronics. This market has been a strong profit and cash generator for Dialight over many years. This is a niche business which we do not expect to grow over the long term but rather to fluctuate with the general market. More than half of our sales are channeled through electronics distributors who address over 15,000 Dialight customers. The balance of the business goes through contract manufacturers who build for our major OEM customers like IBM, Cisco, Lucent Alcatel and others. During the first half of 2010 we saw continuation of the strong finish to 2009. This resulted in a build up of inventory in the distributor channel with a consequent correction in the second half of the year. Encouragingly sales by our distributors to end users remained flat throughout the year. There was no price erosion and the business continues to be fundamentally sound but is also expected to continue to follow the fluctuations of the general electronics market.
Electromagnetic Components Segment
| 2010 | 2009 | |
| Sales | £14.6m | £13.3m |
| Segment profit | £0.1m | £0.7m |
Sales in this segment grew by approximately 10%. All of that growth came from sales into the utility market driven by demand for high current switches to be used in “Smart Meters” for the United States. A key event for Dialight in 2010 was the signing of a supply agreement with a third major meter manufacturer for the US market. Shipments to this new customer were modest in 2010 but we expect more significant revenues in the coming year. Although shorter term prospects for the “Smart Metering” market are strongest in the United States with over 100 million meters to be converted, the rest of the world is also moving towards mass conversion to smart metering. We are working on geographical expansion of this business where we believe we can generate long term growth for the business.
As commented last year, although the growth potential is significant, margins are and will remain tight in this market.
Operations and Engineering
Once again our Engineering and Operations units have been an important factor in the success of Dialight. Timely new product developments and continued cost and performance improvements can be seen in both the volume of sales for the Signals/Illumination segment and in the further enhancement to margins. Contribution margins improved by over three percentage points following the 6% improvement in 2009.
In 2010 we filed 29 new patents, 16 were granted and 61 are pending. Continuous innovation and the refusal to accept that status quo is good enough, is endemic in the thought processes of our technical staff and this driven approach is fundamental to our continued success.
Operationally we continue to tighten our supply chains and expand capacity ahead of the expected demands for our products. Investment in our North Carolina and Newmarket facilities has brought our manufacturing closer to our customers as well as reducing our dependence on third party suppliers. Inventories have remained nicely under control in spite of the increased volumes going through our factories and we are well prepared for the challenges that growing sales will bring in 2011.
Summary
2010 both started and ended very strongly as our innovative products begin to penetrate their individual markets bringing savings in energy, savings in maintenance and improved safety to our customers. Our strategy of selecting niche markets with strong growth potential for our products should set the scene for sustained improvements in the Group’s revenues along with the demonstrated margin improvement in our Signals/Illumination business. Our strategy is proving to be effective in delivering both top and bottom line growth and we see the exciting performance of our ultra efficient lighting business as being just the start of accelerating adoption of this technology in our chosen markets.
Current trading and outlook
Our Signals/Illumination business is delivering the level of growth and profit that we had forecasted and is no longer merely a business with a promising future. We are however still at the early stages of what the Board believes will be a period of continued high growth. Improvements in LED technology and our ability to turn them into even stronger value propositions for our customers represents an exciting opportunity for the Company over the coming years.
Our LED Indication business recovered somewhat from the downturn of 2009 and delivered its usual strong profits. Once again “smart meter” disconnects grew and we look forward to continued expansion in this market.
The Board’s continued confidence in the group’s excellent prospects is supported by the strong performance in 2010 and in particular by the progress in ultra efficient lighting and signalling.
Roy Burton, Group Chief Executive. Harry Tee CBE, Chairman.
14 February 2011
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:
- To grow sales by compound double-digit percentage
- 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 within 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. The Group is currently aware of a potential claim from a Signalling/Illumination customer which cannot be quantified.
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 debtors, 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 a new relationship with the principal Group bankers Barclays. Currently the Group has no draw down 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 Group’s acquisition strategy may not achieve its goals due to an inability to identify suitable acquisition targets and to integrate successfully acquired businesses into the Group.
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
Exning Road
Newmarket
Suffolk
CB8 0AX
14 February 2011
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2010
| Note | 2010
£’000 (unaudited) |
2009
£’000 (audited) |
|
| Continuing operations | |||
| Revenue | 1 | 99,183 | 77,304 |
| Cost of sales | (71,897) | (58,621) | |
| Gross profit | 27,286 | 18,683 | |
| Distribution costs | (7,212) | (6,078) | |
| Administrative expenses | (8,891) | (7,150) | |
| Results from operating activities | 1 | 11,183 | 5,455 |
| Financial income | 1,937 | 1,711 | |
| Financial expense | (1,821) | (1,884) | |
| Net financing income/(expense) | 116 | (173) | |
| Profit before income tax | 11,299 | 5,282 | |
| Income tax expense | 3 | (3,846) | (1,990) |
| Profit from continuing operations | 7,453 | 3,292 | |
| Prior periods discontinued operations | |||
| Adjustment to profit from businesses sold in prior years | 4 | – | 2,140 |
| Profit for the year | 7,453 | 5,432 | |
| Earnings per share | |||
| Basic | 5 | 23.8p | 17.5p |
| Diluted | 5 | 23.2p | 17.1p |
| Earnings per share – continuing operations | |||
| Basic | 5 | 23.8p | 10.6p |
| Diluted | 5 | 23.2p | 10.4p |
The accompanying Notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2010
| 2010
£’000 (unaudited) |
2009
£’000 (audited) |
||
| Other comprehensive Income | |||
| Exchange difference on translation of foreign operations | 319 | (2,398) | |
| Actuarial (losses)/gains on defined benefit pension schemes | (1,810) | 1,844 | |
| Income tax on actuarial (losses)/gains on defined benefit pension schemes |
631 |
(663) |
|
| Other comprehensive income for the period, net of tax | (860) | (1,217) | |
Profit for the period |
7,453 | 5,432 | |
Total comprehensive income for the period attributable to equity holders of the Company |
6,593 |
4,215 |
|
The accompanying Notes form an integral part of these financial statements.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2010
| Share capital £’000 | Merger reserve £’000 | Translation reserve £’000 | Capital redemption reserve £’000 | Retained earnings £’000 | Total £’000 | |
| Balance at 1 January 2010 | 591 | 546 | 3,088 | 2,232 | 33,647 | 40,104 |
| Profit for the period attributable to equity holders of the Company | – | – | – | – | 7,453 | 7,453 |
| Shares issued on acquisition | 6 | 903 | – | – | – | 909 |
| Other comprehensive income
Foreign currency |
– | – | 319 | – | – | 319 |
| Defined benefit plan actuarial losses, net of taxes | – | – | – | – | (1,179) | (1,179) |
| Dividends to shareholders | – | – | – | – | (2,228) | (2,228) |
| Unpaid dividends returned from shareholders | – | – | – | – | 6 | 6 |
| Share-based payments (net of tax) | – | – | – | – | 785 | 785 |
| Balance at 31 December 2010 | 597 | 1,449 | 3,407 | 2,232 | 38,484 | 46,169 |
| 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 |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2010
| 2010
£’000 (unaudited) |
2009
£’000 (audited) |
||
Assets |
|||
Property, plant and equipment |
8,218 | 7,248 | |
Intangible assets |
10,488 | 8,589 | |
Deferred tax assets |
3,162 | 1,914 | |
Total non-current assets |
21,868 | 17,751 | |
Inventories |
9,187 | 9,194 | |
Trade and other receivables |
18,856 | 18,186 | |
Cash and cash equivalents |
10,359 | 9,092 | |
Total current assets |
38,402 | 36,472 | |
Total assets |
60,270 | 54,223 | |
| Liabilities | |||
Trade and other payables |
(11,265) | (11,015) | |
Provisions |
(694) | – | |
Tax liabilities |
(239) | (1,083) | |
Total current liabilities |
(12,198) | (12,098) | |
Employee benefits |
(1,441) | (948) | |
Provisions |
(462) | (1,073) | |
Total non-current liabilities |
(1,903) | (2,021) | |
Total liabilities |
(14,101) | (14,119) | |
Net assets |
46,169 | 40,104 | |
Equity |
|||
Issued share capital |
597 | 591 | |
Merger reserve |
1,449 | 546 | |
Other reserves |
5,639 | 5,320 | |
Retained earnings |
38,484 | 33,647 | |
Total equity attributable to equity shareholders of the parent company |
46,169 |
40,104 |
CONSOLIDATED STATEMENT OF CASH FLOW
for the year ended 31 December 2010
| 2010
£’000 (unaudited) |
2009
£’000 (audited) |
||
| Operating activities | |||
Profit for the year |
7,453 | 5,432 | |
| Adjustments for: | |||
Financial income |
(1,937) | (1,711) | |
Financial expense |
1,821 | 1,884 | |
Income tax expense |
3,846 | 1,990 | |
Share based payments |
312 | 197 | |
Adjustment to profit on sale of businesses in prior years |
– | (2,140) | |
Depreciation of property, plant and equipment |
2,012 | 1,525 | |
| Amortisation of intangible assets | 1,588 | 1,143 | |
Operating cash flow before movements in working capital |
15,095 | 8,320 | |
| Decrease in inventories | 847 | 2,882 | |
Increase in trade and other receivables |
(233) | (240) | |
| Increase/(Decrease) in trade and other payables | (424) | 1,342 | |
| Pension contributions in excess of the income statement charge | (1,269) | (1,305) | |
| Cash generated from operations | 14,016 | 10,999 | |
| Income taxes paid | (4,657) | (1,581) | |
Interest paid |
(25) | – | |
| Net cash from operating activities | 9,334 | 9,418 | |
| Investing activities | |||
| Acquisition of Subsidiary, Net of Cash Acquired | (2,074) | – | |
Interest received |
23 | 12 | |
Capital expenditure |
(2,767) | (1,576) | |
Capitalised expenditure on development |
(1,208) | (966) | |
Sale of tangible fixed assets |
12 | 22 | |
Net cash used in investing activities |
(6,014) | (2,508) | |
| Financing activities | |||
| Dividends returned | 6 | – | |
| Dividends paid | (2,228) | (1,937) | |
Net cash used in financing activities |
(2,222) | (1,937) | |
Net increase in cash and cash equivalents |
1,098 | 4,973 | |
Cash and cash equivalents at beginning of the year |
9,092 | 4,145 | |
Effect of exchange rates on cash held |
169 | (26) | |
Cash and cash equivalents at end of year |
10,359 | 9,092 | |
Notes to the financial statements for the year ended 31 December 2010
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 2010 or 2009. The financial information for 2009 is derived from the statutory accounts for 2009 which have been delivered to the registrar of companies. The auditors have reported on the 2009 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 2010 will befinalisedon 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 2010, will be posted to shareholders on 21 March 2011, and delivered to the registrar after the Annual General Meeting on 20th April 2011.
- 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 Group 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.
· LED Indication components businesses whose sales are primarily to Electronics OEMs for status indication; and
· 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.
- Operating Segments continued
Reportable segments
| 2010 | Electro
magnetic components |
LED
Indication components |
Signals/ Illumination |
Total |
|
| £’000 | £’000 | £’000 | £’000 | ||
Revenue |
14,645 | 23,450 | 61,088 | 99,183 | |
Contribution |
2,516 | 12,406 | 25,753 | 40,675 | |
Overhead costs |
(2,443) | (6,809) | (17,079) | (26,331) | |
Segment results |
73 | 5,597 | 8,674 | 14,344 | |
Unallocated expenses |
(3,161) | ||||
Operating profit |
11,183 | ||||
Net financing income |
116 | ||||
Profit before tax |
11,299 | ||||
Income tax expense |
(3,846) | ||||
Profit after tax |
7,453 |
| 2009 | Electro
magnetic components |
LED
Indication components |
Signals/ Illumination |
Total |
|
| £’000 | £’000 | £’000 | £’000 | ||
Revenue |
13,333 | 17,576 | 46,395 | 77,304 | |
Contribution |
3,167 | 9,257 | 17,979 | 30,403 | |
Overhead costs |
(2,445) | (6,102) | (14,707) | (23,254) | |
Segment results |
722 | 3,155 | 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 |
Note: Contribution is revenue less direct materials, direct labour, freight and sales commission.
| 2010 | |||||
| Other Information | Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
|
| £’000 | £’000 | £’000 | £’000 | ||
Capital Additions |
550 | 459 | 2,851 | 3,860 | |
Depreciation and amortisation |
(395) | (627) | (2,374) | (3,396) |
| 2009 | |||||
| Other Information | Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
|
| £’000 | £’000 | £’000 | £’000 | ||
Capital Additions |
402 | 208 | 1,822 | 2,432 | |
Depreciation and amortisation |
(380) | (527) | (1,746) | (2,653) |
Not included above are central asset additions of £115,000 (2009: £2,000) and depreciation/amortisation of £14,000 (2009: £16,000) not allocated to a segment.
- Operating Segments continued
| Balance Sheet – Assets | 2010 | ||||
| Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
||
| £’000 | £’000 | £’000 | £’000 | ||
Segment assets |
10,795 | 8,379 | 30,011 | 49,185 | |
Unallocated assets |
11,085 | ||||
Consolidated total assets |
60,270 |
| Balance Sheet – Liabilities | 2010 | ||||
| Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
||
| £’000 | £’000 | £’000 | £’000 | ||
Segment liabilities |
(3,716) | (1,832) | (6,276) | (11,824) | |
Unallocated liabilities |
(2,277) | ||||
Consolidated total liabilities |
(14,101) |
| Balance Sheet – Assets | 2009 | ||||
| Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
||
| £’000 | £’000 | £’000 | £’000 | ||
Segment assets |
9,089 | 9,135 | 27,235 | 45,459 | |
Unallocated assets |
8,764 | ||||
Consolidated total assets |
54,223 |
| Balance Sheet – Liabilities | 2009 | ||||
| Electro magnetic components | LED
Indication components |
Signals/ Illumination |
Total |
||
| £’000 | £’000 | £’000 | £’000 | ||
Segment liabilities |
(3,943) | (1,782) | (7,357) | (13,082) | |
Unallocated liabilities |
(1,037) | ||||
Consolidated total liabilities |
(14,119) |
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
| 2010
£’000 |
2009
£’000 |
|
| North America | 68,156 | 52,717 |
| UK | 10,138 | 7,790 |
| Rest of Europe | 11,161 | 8,436 |
| Rest of world | 9,728 | 8,361 |
| 99,183 | 77,304 | |
| Continuing operations | Segmental assets | Non current assets | ||
| 2010
£’000 |
2009
£’000 |
2010
£’000 |
2009
£’000 |
|
| North America | 31,588 | 30,472 | 6,457 | 6,178 |
| UK | 17,830 | 15,307 | 7,516 | 5,141 |
| Rest of Europe | 10,852 | 8,444 | 7,895 | 6,432 |
| 60,270 | 54,223 | 21,868 | 17,751 | |
- Acquisition of subsidiary
On 28 April 2010, the Group acquired 100% of the issued share capital of BTI Light Systems A/S (“BTI”), a Danish company offering signalling and safety equipment for the wind, marine and airport industries. BTI was acquired from its management for an initial consideration of £3.0m, £2.1m of which was payable in cash with the remainder satisfied by the issue of 360,730 ordinary shares of 1.89p at a share price of 252.4 pence. In addition contingent consideration of £193,000 has beenrecognised. This is payable by March 2012 to the vendors and is contingent upon any claims made against the company in relation to events prior to the date of acquisition.
The acquisition enhances the Group’s rapidly growing signalling business, providing a strong channel to the growing European Offshore Wind market. This complements the Group’s already significant North American penetration of the Wind Turbine market and strengthens presence in Europe.
BTI contributed £1,886,000 to revenue and a loss of £115,000 to profit before tax for the period between the date of acquisition and the balance sheet date. The costs incurred, of £87,000, in making the acquisition have been expensed as required under the revised standard.
If the acquisition of BTI had been completed on the first day of the financial year Group revenues for the period would have been £100.3m and the Group profit before tax would have been £11.6m.
| Recognised amounts of identifiable assets acquired and liabilities assumed at fair value | £’000 |
| Property, plant and equipment | 117 |
| Intangible assets | – |
| Deferred tax | 66 |
| Current assets | 1,563 |
| Current liabilities | (1,123) |
| Net assets acquired | 623 |
| Allocation to Customer relationships | 1,804 |
| Allocation to Order Book | 17 |
| Allocation to Goodwill | 804 |
| Total Consideration | 3,248 |
| Satisfied by: | |
| Fair value of shares issued | 909 |
| Cash and cash equivalents | 2,146 |
| Contingent consideration | 193 |
| 3,248 | |
| Net cash outflow arising on acquisition | |
| Cash and cash equivalents acquired | 72 |
| Directly attributable costs | (87) |
| (15) |
- Income tax expense
| Recognised in the income statement | |||
| 2010 | 2009 | ||
| £’000 | £’000 | ||
Current tax expense |
|||
Current year |
3,677 | 1,945 | |
Adjustment for prior years |
(2) | – | |
| 3,675 | 1,945 | ||
| Deferred tax expense | |||
| Origination and reversal of temporary differences | 326 | 288 | |
| Adjustment for prior years | (155) | (243) | |
| Income tax expense | 3,846 | 1,990 |
Reconciliation of effective tax rate
| 2010 | 2010 | 2009 | 2009 | ||
| % | £’000 | % | £’000 | ||
Profit from continuing operations |
7,453 | 3,292 | |||
Total income tax expense |
3,846 | 1,990 | |||
Profit excluding income tax |
11,299 | 5,282 | |||
Income tax using the UK corporation tax rate of 28% (2008: 28%) |
28.0 |
3,164 |
28.0 |
1,479 |
|
Effect of tax rates in foreign jurisdictions |
8.3 | 943 | 9.2 | 487 | |
Change in tax rate |
0.6 | 65 | – | – | |
Non-deductible expenses |
0.5 | 60 | 0.8 | 41 | |
Unrecognised losses carried forward |
– | – | 4.3 | 226 | |
Losses now recognised |
(2.0) | (229) | – | – | |
Over provision in prior years |
(1.4) | (157) | (4.6) | (243) | |
| 34.0 | 3,846 | 37.7 | 1,990 |
| Deferred tax recognised directly in equity | 2010
£’000 |
2009
£’000 |
| Share based payments | 473 | 124 |
- Adjustment to profit from businesses sold in prior years
There is no adjustment to profit in 2010, the adjustment to profit in 2009 from businesses sold in prior years comprises two non-cash items being a release of a provision of £0.4m for a business sold in 2003 and a release of a tax provision of £1.7million in connection with the disposal of businesses in 2005, which are no longer required.
- Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2010 was based on the profit for the year of £7,453,000 (2009: £5,432,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2010 of 31,286,691(2009: 30,983,501).
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2010 was based on profit for the year of £7,453,000 (2009: £5,432,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2010 of 32,081,365 (2009: 31,788,206) calculated as follows: –
Weighted average number of ordinary shares (diluted)
| 2010 | 2009 | ||
| ‘000 | ‘000 | ||
Weighted average number of ordinary shares |
31,287 | 30,984 | |
Effect of share options on issue |
794 | 804 | |
| Weighted average number of ordinary shares (diluted) | 32,081 | 31,788 |
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.
| 2010 | 2009 | |
| Basic earnings per share (pence) | 23.8 | 17.5 |
| Profit from businesses sold in prior years (note 4) (pence) | – | (6.9) |
| Underlying earnings per share (pence) | 23.8 | 10.6 |
| Diluted earnings per share (pence) | 23.2 | 17.1 |
| Profit from businesses sold in prior years (note 4) (pence) | – | (6.7) |
| Underlying diluted earnings per share (pence) | 23.2 | 10.4 |
- Dividends
The following dividends were paid in the year:
| 2010 | 2009 | |
| £’000 | £’000 | |
| 2nd Interim – 4.3p (2008 Final: 3.9p) per ordinary share | 1,343 | 719 |
| Interim – 2.8p per ordinary share (2009: 2.3p) | 885 | 1,218 |
| 2,228 | 1,937 |
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.
| 2010 | 2009 | |
| £’000 | £’000 | |
| Final proposed dividend | ||
| 5.2p per ordinary share (2009: 2nd Interim 4.3p) | 1,627 | 1,343 |
-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 luminaries are also produced for more general commercial, industrial and outdoor situations.
Dialight 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 utilization of a number of associated technologies. Areas of business include Traffic and Rail Signals, Obstruction Lights and Solid State Lighting products.
· LED Indication components whose sales are primarily Electronic OEMs for status indication; and
· Electromagnetic components which supplies smart meter disconnect switches which are used by utility companies to manage remotely electrical supply to residential and business premises.
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, Denmark and Mexico. More information is available at dialightdev.wpenginepowered.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.
This information is provided by RNS
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