Dialight plc 2009 Results 3 March 2010 Agenda Business review and outlook Financial results Q&A Highlights Turnover maintained at £77.3m (2008: £77.9m) Signals/Illumination showing good revenue growth in difficult market Record Operating profit £5.5m (2008: £5.3m) Strong Operating Cash Flow. Net cash £9.1m (2008:£4.1m) Second Interim Dividend 4.3 pence (2008:3.9 pence Final) Revenues 2009 2008 Revenue £77.3m £77.9m Signals/Illumination £46.4m £43.4m Electromagnetic components £13.3m £15.1m Indication business £17.6m £19.4m Operating Profit 2009 2008 Signals/Illumination £3.3m £1.7m Electromagnetic Components £0.7m £0.5m Indication Components £4.9m £3.2m Indication Components Revenues down almost 25% (US$) versus 2008 Some recovery in H2 Fundamentals of the business unchanged Margins solid Recovery continues in 2010 Electromagnetic Components Revenues down £1.8m versus 2008 200 amp Disconnect still showing growth but slowed by design change with one customer Traditional business down with economy but showing some signs of recovery Prospects for Disconnect still promising but on thin margins Signals/Illumination Revenue 2009 2008 Revenue: £46.4m £43.4m Traffic £23.1m £24.4m Obstruction £7.2m £4.6m Transportation £10.4m £8.3m Lighting £5.7m £6.1m Signals - Traffic US traffic down due to lack of big contracts in the year and tough comparison Strong European recovery in second half to maintain revenues at 2008 levels UK performance and prospects good Margins improved Interest in street lights from customers in both US and Europe Signals - Obstruction 50% year on year growth (again!) Sales of Red Beacons helped by second half recovery of US Wind Turbine Market New Beacon introduced end of the year New White Strobe introduced end of the year Two major contracts announced Over 1000 units sold Installed cell tower base over 80,000 units Only qualified product today 2000 2004 2006 2009 2006 2007 2008 2009 Obstruction Lighting Illumination Revenues down overall Industrial White Lighting sales 300% of 2008 Highly successful launch of Safesite High Bay Payback approaching tipping point Multiple street lighting trials Pipeline of new products 2010 starting strongly White Light Strategy How do LEDs compare to the competition ? Type Efficiency lm/W Life -hours x1000 Cost Per lumen $ Colour Rendering Ra High Pressure Sodium 60 -120 10 - 20 0.0004 30 Ceramic Metal Halide 60 -100 6 -12 0.0010 70 - 95 Fluorescent 40 -100 6 - 45 0.0005 60 - 90 Halogen & Tungsten 8 -22 2 - 10 0.0002 100 Cool white LED 6000k 90 -130 50 0.015 70 Warm white LED 3000k 20 - 50 50 0.04 75 -90 White Light LED Lamp Price vs. Fluorescent Lamp (Projection) World Lighting Fixture Market 2010 Projection: $75 billion Parts & Accessories 14% Residential 23% Industrial 7% Portable 18% Commercial 21% Outdoor 17% Source: Freedonia Why LEDs? Long Life High Efficiency Shock & Vibration Extreme Climates Zero Maintenance Low Case Temperature Precise Optical Control Instant Light Switching Cycles Colour Performance = Low Cost Of Ownership 250W HPS 100W SafeSite Downlight 60% Energy Saving No Mercury or Hazardous material 10+ years expected life Dow Corning Product: SafeSite HZC Downlight Qty: 423 Units Location: Midland, MI Application – Silicon Plant 250W HID Dialight 150W LED High Bay 40% Energy Saving 50% less weight & 75% reduced size No Mercury or Hazardous material 10+ years expected life Frontline Manufacturing Product: LED High Bay Qty: 59 units Location: Frontline Manufacturing Application – Warehouse Rockline Manufacturing Product: LED High Bay Qty: 130 units Location: Rockline Manufacturing Application – Warehouse US installed base of Street & Area Light Fixtures 2007 Total: 131 million units Type Millions of units Area Lights 47.8 Floodlights 45.8 Street Lights 34.7 Parking Lot/Garage 3.1 Total 131.4 US DOE Report: Energy Savings Estimates of Light Emitting Diodes in Niche Lighting Applications 2008 Pittsburgh Street Light Trial Product: StreetSENSE LED Street Light Qty: 3 units Location: Pittsburgh, PA Application: Residential road Dialight US Street Light Trials Pittsburgh, PA - 3 Pocatella, ID - 1 Tacoma, WA - 5 Indio, CA - 4 Brea, CA - 1 Fargo, ND - 3 Pierre, SD – 1 Stevens Point, WI - 1 St. Peters, MO - 4 Mobile, AL - 1 Longmont, CO - 1 Macob Co, MI - 1 VA Beach, VA - 3 O'Fallon, MO - 4 Riverside, CA - 2 Product: LED Street Light Qty: 4 units Location: Edinburgh, Scotland Application: Princes Street Outlook Signals/Illumination positioned for continued growth with stronger margins Improved LED efficiency and cost is moving the adoption point Pipeline of new and improved White Lighting products Continued reengineering and cost reduction LED Indication showing recovery and still a strong profit and cash generator Group shows excellent prospects for future Revenue Growth and Profitability George Ralph- Finance Director Summary Profit & Loss 2009 £M 2008 £M Revenue 77.3 77.9 Gross Profit 18.7 16.3 Gross Profit % 24.2 20.9 Overhead costs (13.2) (11.0) Operating profit 5.5 5.3 (0.2) 0.3 5.3 5.6 (2.0) (2.2) Profit from cont. ops 3.3 3.4 Exceptional profit 2.1 - Retained profit 5.4 3.4 Net financing cost Profit before tax Tax 2009 Segments result Emech Components £M Indication £M Signals/ Illum £M Total £M 13.3 17.6 46.4 77.3 3.2 9.3 18.0 30.5 Contribution % 23.8 52.7 38.8 39.3 Overheads (2.5) (6.1) (14.7) (23.3) 0.7 3.2 3.3 7.2 Revenue Contribution Segment profit Taxation Effective tax rate in 2009 was 37.7% Effective tax rate in 2008 was 38.5% Issues impacting Profits in high tax locations Unrelievable UK losses Dividends and Earnings Per Share 2009 2008 Dividends per share 6.6p 6.0p Basic EPS 17.5p 11.2p Dividend cover 2.7 times 1.9 times Adjusted EPS 10.2p 11.2p Adjusted Dividend cover 1.5 times 1.9 times Summary Balance Sheet 2009 £M 2008 £M 17.8 19.8 9.1 4.1 27.3 33.3 (12.1) (13.8) Non current liabilities (2.0) (5.9) Net Assets 40.1 37.5 Non current assets Cash Other current assets Current liabilities Working Capital Inventories Trade and other receivables Trade and other payables Working Capital 2009 £M 2008 £M 9.2 13.0 18.2 20.4 (11.0) (11.1) 16.4 22.3 Summarised Cash flow 2009 £M 2008 £M Operating cash 8.3 8.1 Working capital 2.7 (2.1) Cash from operations 11.0 6.0 Tax/financing (1.6) (2.3) Investing activities (2.5) (2.4) Financing activities (1.9) (4.2) 5.0 3.1 Net cash generated Cash flow Inventory – strong inventory management performance giving significant reduction Working capital generated cash rather than consumed cash Cash - Continuing strong cash flow from Operations with debt free balance sheet Summary Profitable business in difficult market conditions Strong 2nd half performance Cash generative Debt free balance sheet All above provides good platform to build on in 2010 and beyond