HalfYearlyResults2014 210714021329

21 July 2014
Dialight plc
Half Yearly financial report
Dialight plc (“Dialight” or the “Group”), the UK-based leader in applied LED technology, announces its unaudited
results for the six months ended 30 June 2014.
Financial highlights (£’m)
Group revenue
Group underlying operating profit
Lighting revenue
Lighting operating profit
Underlying EPS (p)
Interim dividend per share (p)
Net cash
H1 2014
70.9
6.5
43.0
7.1
14.2
5.2
2.8
H1 2013
59.9
5.5
29.3
4.4
11.6
4.9
11.2
Change
+18%
+18%
+46%
+60%
+22%
+6%
n/a
Change at
constant
currency
+25%
+26%
+53%
+73%
n/a
n/a
n/a
Key points
•
Lighting revenue increased 46% (53% at constant currency) to £43.0m (H1 2013: £29.3m)
•
Lighting operating profit up 60% to £7.1m (H1 2013: £4.4m)
•
Underlying operating profit increased 18% (26% at constant currency) to £6.5m (H1 2013: £5.5m)
•
Statutory operating profit increased 7% to £5.4m (H1 2013: £5.1m)
•
Underlying earnings per share 14.2p (H1 2013: 11.6p)
•
Closing net cash £2.8m (31 December 2013: £7.1m) with new £25m 4-year committed bank facility signed
•
Interim dividend increased 6.1% to 5.2p (H1 2013: 4.9p)
Roy Burton, Group Chief Executive, said:
“Our continued focus on addressing the LED lighting needs of the hazardous and heavy industrial markets has
produced considerable growth in both sales and underlying operating profits. This is a very significant market
where our sales have been very strong but the market penetration is still limited. The opportunity for growth is
substantial and the Board remains confident that the Group is well positioned to capitalise on this opportunity.
For the current year the Group continues to trade in line with the Board’s expectations despite the continuing
currency headwinds.”
Enquiries:
Dialight plc
Roy Burton, Group Chief Executive
Paul Haworth, Group Financial Controller
+44 (0) 1638 778640
Canaccord Genuity Limited
Simon Bridges
+44 (0) 20 7523 8000
FTI Consulting
Nick Hasell
+44 (0) 20 3727 1340
Further information:
There will be an analyst and investor meeting at 09.00 hours this morning at FTI Consulting, 200 Aldersgate,
London, EC1A 4HD.
A live audiocast and slide presentation of the event will be available at 09.00 hours on the company’s website,
www.dialight.com. Internet users will be able to view this announcement, together with other information
about Dialight at the company's web site www.dialight.com
Chief Executive’s statement
Finance review
Group revenue increased 18% (25% at constant currency) to £70.9m (2013: £59.9m). Lighting revenue increased
46% (53% at constant currency) to £43.0m (2013: £29.3m). Lighting contribution margin was higher at 44.9%
(2013: 44.0%). Group underlying operating profit increased 18% (26% at constant currency) to £6.5m. Underlying
EPS increased 22% to 14.2p (2013: 11.6p).
Non-underlying operating costs related to employee severance and restructuring were £1.1m. After charging
non-underlying operating costs of £1.1m and finance costs of £0.2m, profit before tax was £5.2m (2013: £4.9m).
Net cash at 30 June 2014 was £2.8m (31 December 2013: £7.1m). Operating cashflow before working capital was
£7.3m (2013: £6.6m). Working capital cash outflow was £3.2m (2013: outflow of £3.6m). Tax paid was £1.8m
(2013: £1.4m) and cash used in investing activities was £3.3m (2013: £2.4m). Dividends paid were £3.1m (2013:
£3.1m).
On 30 April 2014, the Group signed a 4-year unsecured £25m multi-currency Revolving Credit Facility with HSBC
Bank plc. Under the terms of the facility, the Group also has a £25m “accordion” facility, by which further
facilities may be made available under the current terms. This ensures that the Group has access to funds to
continue its growth.
The Board has declared an interim dividend of 5.2p per ordinary share (2013: 4.9p). The interim dividend is
payable on 6 October 2014 to shareholders whose names are on the register of Members at close of business on
5 September 2014.
Business Review
Lighting Segment
£’m
Revenue
Operating profit
2014
43.0
7.1
2013
29.3
4.4
Once again the Lighting segment has demonstrated strong growth in both revenues and segment profit.
Revenues grew by 53% at constant currency with growth in all regions. Lighting segment profit grew by 60% to
£7.1m including the costs of the previously announced Philips licence agreement. Contribution margin grew from
44.0% to 44.9%.
Our focus on cost, performance and rapid and continuous product development has sustained our leadership in
our chosen markets. The introduction of our industry leading Vigilant product line has been highly successful and
over 30% of High Bay sales in the first half were Vigilant.
Expansion of our sales channels progressed in 2014. Recruitment of direct sales personnel continued at a more
modest pace than previous periods as we work to leverage the strengths of our Distribution and Agent partners
around the world. Sales headcount at the end of the half increased to 108 after the withdrawal from both the
Japanese and Russian markets. As we enter the second half of 2014, ongoing expansion of the salesforce is being
implemented on a region by region basis to ensure continued growth. The market is still significantly
underpenetrated and the potential for significant growth will exist for a substantial period of time.
The majority of our business continues to be retrofit projects where we are replacing existing lighting
installations, although good progress is being made with the major engineering companies who are responsible
for the design of substantial new projects, in particular in the oil and gas markets. To date revenues from this
sector have been minimal. Our market focus has been replacement of lights in Heavy Industrial and Hazardous
applications on a site by site basis. Although there is no change to our market strategy, it would appear that as
the use of LED technology becomes more prevalent, there is more interest from our customers at a corporate
level. Revenues from this shift in market were small in the first half but we hope to see some more traction in the
coming months and accordingly we have applied some sales resource to address this potential change.
Signals Segment
£’m
Revenue
Operating profit
2014
18.3
1.4
2013
20.2
1.6
The Signals segment comprises our Obstruction, Traffic and Transportation businesses. During the half, we have
seen encouraging growth in Obstruction, offset by some challenging conditions in Traffic with Transportation
remaining stable.
Obstruction Signals
Sales in the first half showed an increase of 23% at constant currency compared to the same period last year. The
US posted a particularly pleasing recovery even though no major contracts were awarded in the half. Sales to a
major US tower operator for repair and maintenance were encouraging and confirms we are a viable candidate
for any future contracts. We continue to position this business as a monitoring and control business rather than
an LED Signalling business. We are in the process of trialling our cloud based monitoring systems for more
parameters than just the LED lights thus providing significant savings for the tower operators versus their current
systems.
The available market remains very significant and while it is important to recognise that timing is difficult to
predict, as we enhance the value proposition for our customers, a major retrofit by our customers becomes more
probable.
Although our European business has a slightly different market focus to the US, being more oriented to offshore
wind turbines, the technologies used are similar and we remain encouraged by its long term growth prospects.
Our flexible solutions enable turbine manufacturers to tackle the challenging and varied regulatory requirements.
Traffic Signals
Traffic Light sales were down 24% at constant currency versus the same period last year with softness in both the
North American and European markets. Bad weather in the US in the early part of the year clearly had some
effect on sales and we saw some recovery in the second quarter. Europe was adversely affected by the conclusion
of the Manchester retrofit project in the early part of the year. While we have seen some good acceptance of our
new 15 year Traffic product, we expect market conditions to remain challenging.
Components Segment
£’m
Revenue
Operating profit
2014
9.6
(0.4)
2013
10.4
1.0
Sales in this segment were down 8% (broadly flat at constant currency) at £9.6m (H1 2013: £10.4m). Business
conditions remain relatively stable and the outlook for the rest of the year looks to remain so based on input from
our channels to market. We do not anticipate any material change in the performance of this segment in the near
future. Contribution margin is down against 2013 due mainly to one-off costs incurred in securing efficient
channel access through our distributor partners.
Operations and Engineering
Our Operations and Engineering teams once again performed an invaluable role in the successful execution of our
strategy. Growth of more than 50% in Lighting revenues in the half was achieved while at the same time
introducing multiple new products. As ever, continuous improvement in our product performance and value to
our customers is paramount to our continued market leadership. Our groundbreaking 125 lumens per watt
products have been supplemented by a 60,000 lumen fixture which will replace a 1000 watt metal halide fixture
using less than 40 % of the power and with an unmatched 10 year warranty.
Board changes
As announced on 27 June 2014, Fariyal Khanbabi will join Dialight’s Board as Group Finance Director with effect
from 29 September 2014. Kevin Higginson, who has been Dialight’s Interim CFO since 21 January 2014, leaves the
Group as of today. Pending Fariyal’s appointment, the senior finance role at Dialight has been assumed by Paul
Haworth, Group Financial Controller.
Current Trading and Outlook
Our continued focus on addressing the LED lighting needs of the hazardous and heavy industrial markets has
produced considerable growth in both sales and underlying operating profits. This is a very significant market
where our sales have been very strong but the market penetration is still limited. The opportunity for growth is
substantial and the Board remains confident that the Group is well positioned to capitalise on this opportunity.
For the current year the Group continues to trade in line with the Board’s expectations despite the continuing
currency headwinds.
Roy Burton
Group Chief Executive
Condensed consolidated income statement
For the period ended 30 June 2014
6 months
ended
30 June
2014
(unaudited)
6 months
ended
30 June
2013
(unaudited)
12 months
ended
31 December
2013
(audited)
Note
Total
£’m
Total
£’m
Total
£’m
2
70.9
59.9
131.2
Cost of sales
(50.0)
(41.9)
(89.6)
Gross profit
20.9
18.0
41.6
Distribution costs
(9.5)
(8.3)
(18.1)
Administrative expenses
(6.0)
(4.6)
(11.9)
6.5
5.5
14.5
(1.1)
(0.4)
(2.9)
5.4
5.1
11.6
Continuing operations
Revenue
Underlying profit from continuing
operations*
Non-underlying administrative expenses
4
Profit from continuing operations
2
Financial income
5
-
-
-
Financial expense
5
(0.2)
(0.2)
(0.4)
Net financing expense
5
(0.2)
(0.2)
(0.4)
6.4
5.4
14.4
(1.1)
(0.4)
(2.9)
(0.1)
(0.1)
(0.3)
5.2
4.9
11.2
(1.8)
(1.5)
(3.5)
3.4
3.4
7.7
-
0.7
0.7
3.4
4.1
8.4
Underlying profit before tax*
Non-underlying administrative expenses
Non-underlying finance expense
4
5
Profit before tax
Income tax expense
6
Profit from continuing operations after tax
Discontinued operations
Gain loss from discontinued operations (net
of taxes)
3
Profit for the period
Profit for the period attributable to:
Equity owners of the Company
Non-controlling Interests
3.4
4.2
8.5
-
(0.1)
(0.1)
3.4
4.1
8.4
Earnings per share – underlying**
Basic
7
14.2p
11.6p
30.8p
Diluted
7
14.1p
11.5p
30.5p
Basic
7
10.5p
12.8p
26.2p
Diluted
7
10.4p
12.6p
25.9p
Basic
7
10.5p
10.6p
23.9p
Diluted
7
10.4p
10.5p
23.7p
Earnings per share
Earnings per share – continuing operations
* Underlying profit measures exclude non-underlying items, which are analysed in note 4.
** Underlying earnings per share excludes non-underlying items (analysed in note 4), discontinued operations (analysed in note 3) and allocates
tax at the appropriate rate (see note 6).
The accompanying Notes form an integral part of these interim financial statements.
Condensed consolidated statement of comprehensive income
For the period ended 30 June 2014
6 months
ended
30 June
2014
(unaudited)
£’m
6 months
ended
30 June
2013
(unaudited)
£’m
12 months
ended
31 December
2013
(audited)
£’m
Other comprehensive income
Exchange difference on translation of foreign operations
(1.8)
1.6
(1.3)
Income tax on exchange differences on transactions of foreign operations
0.2
(0.5)
-
Remeasurement of defined benefit liability
0.1
(0.3)
0.7
-
0.1
(0.2)
(1.5)
0.9
(0.8)
Profit for the period
3.4
4.1
8.4
Total comprehensive income for the period
1.9
5.0
7.6
Income tax on remeasurement of defined benefit liability
Other comprehensive income for the period, net of tax
Attributable to:
-
Owners of the parent
-
Non-controlling interest
Total comprehensive income for the period
The accompanying Notes form an integral part of these interim financial statements.
1.9
5.1
7.7
-
(0.1)
(0.1)
1.9
5.0
7.6
Condensed consolidated statement of changes in equity
For the period ended 30 June 2014 (Unaudited)
Share
capital
£’m
Balance at 1 January 2014
Capital
Merger Translation redemption
reserve
reserve
reserve
£’m
£’m
£’m
Retained
earnings
£’m
Total
£’m
Noncontrolling
interests
£’m
Total
Equity
£’m
0.6
1.4
0.8
2.2
61.8
66.8
(0.1)
66.7
-
-
-
-
3.4
3.4
-
3.4
Foreign currency translation differences, net of
taxes
-
-
(1.6)
-
-
(1.6)
-
(1.6)
Defined benefit plan actuarial losses, net of
taxes
-
-
-
-
0.1
0.1
-
0.1
Total other comprehensive income
-
-
(1.6)
-
0.1
(1.5)
-
(1.5)
Total comprehensive income for the period
-
-
(1.6)
-
3.5
1.9
-
1.9
-
-
-
-
(3.1)
(3.1)
-
(3.1)
Dividends on shares awarded to employees
-
-
-
-
-
-
-
-
Share–based payments, net of tax
-
-
-
-
0.2
0.2
-
0.2
Profit
Other comprehensive income:
Transactions with owners, recorded directly
in equity:
Dividends
Total contributions by and distributions to
owners
-
-
-
-
(2.9)
(2.9)
-
(2.9)
Balance at 30 June 2014
0.6
1.4
(0.8)
2.2
62.4
65.8
(0.1)
65.7
Balance at 1 January 2013
0.6
1.4
2.1
2.2
56.7
63.0
-
63.0
-
-
-
-
8.5
8.5
(0.1)
8.4
Foreign currency translation differences, net of
taxes
-
-
(1.3)
-
-
(1.3)
-
(1.3)
Remeasurement of defined benefit liability, net
of taxes
-
-
-
-
0.5
0.5
-
0.5
Total other comprehensive income
-
-
(1.3)
-
0.5
(0.8)
-
(0.8)
Total comprehensive income for the period
-
-
(1.3)
-
9.0
7.7
(0.1)
7.6
Share–based payments, net of tax
-
-
-
-
0.7
0.7
-
0.7
Dividends
-
-
-
-
(4.6)
(4.6)
-
(4.6)
Profit
Other comprehensive income:
Transactions with owners, recorded directly
in equity:
Total contributions by and distributions to
owners
Balance at 31 December 2013
-
-
-
-
(3.9)
(3.9)
-
(3.9)
0.6
1.4
0.8
2.2
61.8
66.8
(0.1)
66.7
Condensed consolidated statement of changes in equity continued
For the period ended 30 June 2013 (Unaudited)
Share
capital
£’m
Balance at 1 January 2013
Capital
Merger Translation redemption
reserve
reserve
reserve
£’m
£’m
£’m
Retained
earnings
£’m
Total
£’m
Noncontrolling
interests
£’m
Total
Equity
£’m
0.6
1.4
2.1
2.2
56.7
63.0
0.0
63.0
-
-
-
-
4.2
4.2
(0.1)
4.1
Foreign currency translation differences, net of
taxes
-
-
1.1
-
-
1.1
-
1.1
Defined benefit plan actuarial losses, net of
taxes
-
-
-
-
(0.2)
(0.2)
-
(0.2)
Total other comprehensive income
-
-
1.1
-
(0.2)
0.9
-
0.9
Total comprehensive income for the period
-
-
1.1
-
4.0
5.1
(0.1)
5.0
Dividends
-
-
-
-
(3.1)
(3.1)
-
(3.1)
Dividends on shares awarded to employees
-
-
-
-
-
-
-
-
Share–based payments, net of tax
-
-
-
-
0.2
0.2
-
0.2
Total contributions by and distributions to
owners
-
-
-
-
(2.9)
(2.9)
-
(2.9)
0.6
1.4
3.2
2.2
57.8
65.2
(0.1)
65.1
Profit
Other comprehensive income:
Transactions with owners, recorded directly
in equity:
Balance at 30 June 2013
Condensed consolidated statement of total financial position
As at 30 June 2014 (Unaudited)
30 June
2014
(unaudited)
£’m
30 June
2013
(unaudited)
£’m
31 December
2013
(audited)
£’m
Property, plant and equipment
13.8
12.1
13.4
Intangible assets
21.1
19.7
21.1
Assets
Deferred tax asset
0.8
1.5
0.4
Total non-current assets
35.7
33.3
34.9
Inventories
24.5
21.0
24.2
Trade and other receivables
27.8
25.7
27.9
Cash and cash equivalents
10.4
11.2
8.8
Total current assets
62.7
57.9
60.9
Total assets
98.4
91.2
95.8
Liabilities
Trade and other payables
(19.1)
(18.2)
(21.0)
Provisions
(0.3)
(0.5)
(0.3)
Contingent consideration
(0.6)
(0.6)
(0.6)
Tax liabilities
(1.2)
(2.0)
(1.7)
Borrowings
(7.6)
-
(1.7)
Total current liabilities
(28.8)
(21.3)
(25.3)
Employee benefits
(0.3)
(1.5)
(0.4)
Contingent consideration
(2.8)
(2.8)
(2.7)
Provisions
(0.8)
(0.5)
(0.7)
Total non-current liabilities
(3.9)
(4.8)
(3.8)
(32.7)
(26.1)
(29.1)
65.7
65.1
66.7
Issued share capital
0.6
0.6
0.6
Merger reserve
1.4
1.4
1.4
Other reserves
1.4
5.4
3.0
Retained earnings
62.4
57.8
61.8
65.8
65.2
66.8
Non-controlling interests
(0.1)
(0.1)
(0.1)
Total equity
65.7
65.1
66.7
Total liabilities
Net assets
Equity
Condensed consolidated statement of cash flows
For the period ended 30 June 2014 (Unaudited)
6 months
ended
30 June
2014
(unaudited)
£’m
6 months
ended
30 June
2013
(unaudited)
£’m
12 months
ended
31 December
2013
(audited)
£’m
3.4
4.1
8.4
Financial expense
0.2
0.2
0.4
Income tax expense
1.8
1.4
3.4
Operating activities
Profit for the period
Adjustments for:
Share–based payments
-
0.2
0.4
Depreciation of property, plant and equipment
1.1
1.1
2.0
Amortisation of intangible assets
0.8
0.6
1.1
Impairment losses on intangible assets and goodwill
-
-
0.3
Gain on sale of discontinued operation, net of tax
-
(1.0)
(1.0)
7.3
6.6
15.0
Increase in inventories
(0.7)
(0.7)
(5.2)
Decrease / (increase) in trade and other receivables
(0.5)
2.2
(1.5)
Decrease in trade and other payables
(2.0)
(5.1)
(1.2)
-
-
0.1
(0.3)
Operating cash flow before movements in working capital
Increase in provisions
Pension contributions in excess of the income statement charge
-
-
4.1
3.0
6.9
Income taxes paid
(1.8)
(1.4)
(2.2)
Interest paid
(0.1)
-
(0.1)
2.2
1.6
4.6
-
-
0.1
Cash generated from operations
Net cash from operating activities
Investing activities
Non-controlling interest
Disposal of discontinued operation
Capital expenditure
Sale of tangible fixed assets
-
1.3
1.3
(1.8)
(1.9)
(4.9)
-
0.1
0.1
Capitalised expenditure on development
(1.5)
(1.9)
(4.4)
Net cash used in investing activities
(3.3)
(2.4)
(7.8)
(3.1)
(3.1)
(4.6)
-
Financing activities
Dividends paid
Drawdown of bank facility
8.0
-
(0.3)
-
-
4.6
(3.1)
(4.6)
Net increase/ (decrease) in cash and cash equivalents
3.5
(3.9)
(7.8)
Cash and cash equivalents at 1 January
7.1
15.0
15.0
Effect of exchange rates on cash held
(0.2)
0.1
(0.1)
Cash and cash equivalents at end of period
10.4
11.2
7.1
Payment of upfront loan facility costs
Net cash from / (used in) financing activities
Notes to the financial statements
For the period ended 30 June 2014 (unaudited)
1. Basis of preparation and principal accounting policies
Dialight Plc (the “Company”) is a company domiciled in the UK. The condensed set of financial statements as at, and for, the six
month period ended 30 June 2014 comprises the Company and its subsidiaries (together referred to as the “Group”).
The Group financial statements as at, and for, the year ended 31 December 2013 prepared in accordance with IFRSs as
adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS, are
available upon request from the Company’s registered office at Exning Road, Newmarket CB8 0AX.
The comparative figures for the year ended 31 December 2013 are not the Company’s statutory accounts for that year. Those
accounts have been reported on by the Company’s auditors and delivered to the registrar of companies. The report of the
auditors was (i) unqualified (ii) did not include any 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 498(2) or (3) of the Companies Act
2006.
The condensed set of financial statements for the six month ended 30 June 2014 is unaudited but has been reviewed by the
auditors. The Independent review report is set out at the end of this report.
Statement of compliance
The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS
34 Interim Financial Reporting as adopted by the EU. The condensed set of financial statements do not include all of the
information required for full annual financial statements, and should be read in conjunction with the Group’s financial statements
as at, and for the year ended 31 December 2013.
This condensed set of financial statements was approved by the Board of Directors on 21 July 2014.
Adoption of new and revised standards
No changes to new or revised accounting standards have had a material impact on the consolidated financial statements of the
Group.
Estimates and judgements
The preparation of a condensed set of financial statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and
expense. Actual results may differ from these estimates.
2. Operating segments
The Group comprises three reportable operating segments. These segments have been identified based on the internal information
that is supplied regularly to the Group’s Chief Operating Decision Maker for the purposes of assessing performance and allocating
resources. The Chief Operating Decision Maker is considered to be the Group’s Chief Executive.
The three reportable operating segments are:
•
Lighting, which develops, manufactures and supplies highly efficient LED lighting solutions for hazardous and industrial
applications in which lighting performance is critical.
•
Signals, which develops, manufactures and supplies highly efficient LED signalling solutions for markets including anticollision obstruction lighting and traffic signals.
•
Components, which develops, manufactures and supplies status indication components for electronics OEMs, together with
niche industrial and automotive electronic components.
There is no inter-segment revenue.
All revenue relates to the sale of goods. Segment results 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.
There are no individual customers representing more than 10% of revenue.
2. Operating segments continued
6 months ended 30 June 2014
Lighting
£’m
Signals
£’m
Components
£’m
ElectroContinuing
magnetic
Operations
components
Total (discontinued)
£’m
£’m
70.9
-
Total
£’m
Revenue
43.0
18.3
9.6
Contribution
19.3
7.6
4.2
31.1
-
31.1
(12.2)
(6.2)
(4.6)
(23.0)
-
(23.0)
7.1
1.4
(0.4)
8.1
-
8.1
(1.6)
-
(1.6)
Overhead costs
Segment operating profit / (loss)
Unallocated expenses
Underlying operating profit
Non-underlying income / (expense)
Operating profit
Net financing income / (expense)
Profit before tax
Income tax expense
Profit for the period
6 months ended 30 June 2013
Lighting
£’m
Signals
£’m
Components
£’m
70.9
6.5
-
6.5
(1.1)
-
(1.1)
5.4
-
5.4
(0.2)
-
(0.2)
5.2
-
5.2
(1.5)
-
(1.5)
3.7
-
3.7
ElectroContinuing
magnetic
Operations
components
Total (discontinued)
£’m
£’m
59.9
0.5
Total
£’m
Revenue
29.3
20.2
10.4
Contribution
12.9
8.0
5.3
26.2
0.1
26.3
Overhead costs
(8.5)
(6.4)
(4.3)
(19.2)
(0.5)
(19.7)
4.4
1.6
1.0
Segment operating profit
Unallocated expenses
Underlying operating profit
Non-underlying income / (expense)
Operating profit
Net financing income / (expense)
Profit before tax
Income tax expense
Profit for the period
Year ended 31 December 2013
Revenue
Contribution
Overhead costs
Segment operating profit
Lighting
£’m
68.5
Signals
£’m
41.8
Components
£’m
20.9
60.4
7.0
(0.4)
6.6
(1.5)
-
(1.5)
5.5
(0.4)
5.1
(0.4)
-
(0.4)
5.1
(0.4)
4.7
(0.2)
-
(0.2)
4.9
(0.4)
4.5
(1.5)
0.1
(1.4)
3.4
(0.3)
3.1
ElectroContinuing
magnetic
Operations
components
Total (discontinued)
£’m
£’m
131.2
0.5
Total
£’m
131.7
31.3
17.5
9.9
58.7
0.1
58.8
(19.8)
(12.3)
(8.6)
(40.7)
(0.5)
(41.2)
11.5
5.2
1.3
18.0
(0.4)
17.6
(3.5)
Unallocated expenses
(3.5)
-
Underlying operating profit
14.5
(0.4)
14.1
Non-underlying income / (expense)
(2.9)
-
(2.9)
Operating profit
11.6
(0.4)
11.2
Net financing income
(0.4)
-
(0.4)
-
1.3
1.3
Profit on sale
Profit before tax
11.2
0.9
12.1
Income tax expense
(3.5)
(0.2)
(3.7)
7.7
0.7
8.4
Profit for the period
Note: Contribution is revenue less direct material, direct labour, freight and sales commission.
2. Operating segments continued
Geographical segments
The Lighting, Signals and Components segments are managed on a worldwide basis, but operate in four principal geographic
areas, North America, UK, Europe and Rest of World. 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.
Sales revenue by geographical market
6 months
ended
30 June
2014
£’m
6 months
ended
30 June
2013
£’m
12 months
ended
31 December
2013
£’m
45.9
37.2
82.8
UK
6.4
6.3
12.0
Rest of Europe
8.4
8.7
17.5
Rest of World
10.2
8.2
19.4
-
(0.5)
(0.5)
70.9
59.9
131.2
North America
Electro-magnetic components (discontinued)
Consolidated revenue
3. Discontinued operations
The Group disposed of the assets of its electromagnetic components business in late 2012. In 2013, the Group
received contingent consideration of £1.3m (before tax) and sold some residual inventory. The results of these
activities have been presented as discontinued operations.
Results of discontinued operation
6 months
ended
30 June
2014
£’m
6 months
ended
30 June
2013
£’m
12 months
ended
31 December
2013
£’m
Revenue
-
0.5
0.5
Expenses
-
(0.9)
(0.9)
Results from operating activities
-
(0.4)
(0.4)
Tax
-
0.1
0.1
Results from operating activities, net of tax
-
(0.3)
(0.3)
Gain on sale of discontinued operation
-
1.3
1.3
Tax on gain on sale of discontinued operation
-
(0.3)
(0.3)
Gain / (loss) for the period
-
0.7
0.7
Basic earnings (loss) per share
-
2.1p
2.2p
Diluted earnings (loss) per share
-
2.1p
2.5p
4. Non-underlying expenses
From time to time, the Group incurs costs and earns income that is non-recurring in nature or that is otherwise
considered to be not reflective of the underlying performance of the business. In the assessment of performance of
the components of the Group, management examines underlying performance, which removes the impact of nonunderlying costs and income. The results of discontinued operations are also considered to form part of the nonunderlying operations.
The table below presents the components of non-underlying profit or loss recorded within administrative expenses:
6 months
ended
30 June
2014
£’m
6 months
ended
30 June
2013
£’m
12 months
ended
31 December
2013
£’m
Intellectual property past-use access fee
-
-
(1.4)
Goodwill and asset write-down
-
-
(0.8)
(1.1)
(0.4)
(0.4)
-
-
(0.3)
(1.1)
(0.4)
(2.9)
6 months
ended
30 June
2014
£’m
6 months
ended
30 June
2013
£’m
12 months
ended
31 December
2013
£’m
Employee severance and restructuring costs
Other
Non-underlying costs recorded in administrative expenses
5. Net financing expense
Interest on bank deposits
-
-
-
Fair value profit on financial instruments recognised at fair value through the income
statement
-
-
-
Net interest on net defined benefit liability
-
-
-
Financial income
-
-
-
Interest expense on financial liabilities
(0.1)
(0.1)
(0.1)
Non-underlying unwind of discount on contingent consideration
(0.1)
(0.1)
(0.3)
Financial expense
(0.2)
(0.2)
(0.4)
Net financing (expense) / income
(0.2)
(0.2)
(0.4)
6. Income tax expense
The tax charge on continuing operations of £1.8m for the half year to 30 June 2014 reflects the anticipated effective tax rate on
underlying earnings of 33.7% for the year ending 31 December 2014. Non-underlying items have been taxed using the relevant
tax rates. The effective tax rate is higher than the current UK tax rate of 21.5% due to the level of Group profits in the US which
has an effective tax rate of 38.0%. The effective tax rate at the period ended 30 June 2013 was 31.0% and for the year ended
31 December 2013 was 30.9%.
7. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2014 was based on profits for the period of £3.4m (2013: £4.1m) and a
weighted average number of ordinary shares outstanding during the six months ended 30 June 2014 of 32,503,258 (2013:
32,148,923).
Weighted average number of ordinary shares
Weighted average number of shares
Diluted effect of share options
Diluted weighted average number of shares
6 months
ended
30 June
2014
Number ‘000
6 months
ended
30 June
2013
Number ‘000
Year
ended
31 December
2013
Number ‘000
32,503
32,149
32,248
232
432
355
32,735
32,581
32,603
Underlying earnings per share are highlighted below as the Directors consider that this measurement of earnings give valuable
information on the performance of the Group.
6 months
ended
30 June
2014
Per share
6 months
ended
30 June
2013
Per share
12 months
ended
31 December
2013
Per share
Basic earnings
10.5p
12.6p
26.2p
Underlying basic earnings*
14.2p
11.6p
30.8p
Continuing operations basic earnings
10.5p
10.4p
23.9p
Diluted earnings
10.4p
12.4p
25.9p
Underlying diluted earnings*
14.1p
11.5p
30.5p
Continuing operations diluted earnings
10.4p
10.3p
23.7p
* Underlying earnings excludes non-underlying items as explained in note 4 and discontinued operations as explained in note 3
and allocates tax at the appropriate rate (see note 6)
8. Dividends
During the period the following dividends were paid:
6 months
ended
30 June
2014
£’m
6 months
ended
30 June
2013
£’m
12 months
ended
31 December
2013
£’m
Final – 9.5p (2013: 9.5p) per ordinary share
3.1
3.1
3.1
Interim – nil (2013: 4.9p) per ordinary share
-
-
1.5
Less: dividends on shares held in trust
-
-
-
3.1
3.1
4.6
Final dividend – 9.5p (2013: 9.5p) on shares award not yet vested *
-
-
-
Interim dividend – nil (2013:nil) on shares awarded not yet vested*
-
-
-
Dividends accrued on shares awarded but not yet vested*
-
-
-
Dividends paid on shares awarded under the PSP vested during the period
Total (amount shown in the statement of changes in equity)
-
-
-
3.1
3.1
4.6
* Relates to shares awarded under the PSP and deferred share bonus plan.
The Directors have declared an interim dividend of 5.2p per share (2013: 4.9p) costing £1.7m (including dividends on shares
awarded under the PSP and deferred share bonus plan but not yet vested) (2013: £1.5m). It is payable on 6 October 2014 to
shareholders whose names are on the Register of Members at close of business on 5 September 2014.
As the dividend was declared after the end of the period being reported and in accordance with IAS 10 “Events after the
Balance Sheet Date”, the interim dividend has not been accrued for in these financial statements. It will be shown as a
deduction from equity in the financial statements for the year ending 31 December 2014.
9. Debt facilities
On 30 April 2014, the Company signed a 4-year unsecured £25m multi-currency Revolving Credit Facility with HSBC Bank plc.
Under the terms of the facility, the Group also has a £25m “accordion” facility, by which further facilities may be made available
by HSBC under the current terms to support significant investment opportunities that may arise. At 30 June 2014, £8.0m was
drawn on the facility.
10. Principal exchange rates
6 months
ended
30 June
2014
6 months
ended
30 June
2013
Year ended
31 December
2013
US dollar
1.67
1.54
1.57
Euro
1.22
1.18
1.18
30 June
2014
30 June
2013
31 December
2012
US dollar
1.71
1.53
1.66
Euro
1.25
1.17
1.20
Average for the period
Spot rate
11. Related party transactions
There have been no changes in the nature of related party transactions to those described in the 2013 Annual Report that could
have a material effect on the financial position or performance of the Group in the period to 30 June 2014.
12. Principal risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group for the next six months of 2014 remain those
that are described on pages 34 to 37 of the Annual Report for the year ended 31 December 2013 (which can be found at
www.dialight.com).
These include the impact of wider macro-economic conditions, changes in government legislation/policy, changes in the
competitive landscape, worldwide regulatory and legal compliance, problems with LED development or introduction of superior
or preferred technology, failure to protect intellectual property portfolio, product liability, uncertain financial markets, the impact
of foreign exchange rates and a failure to identify and integrate suitable acquisition targets.
Responsibility statement of the directors in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as
adopted by the EU;
• the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six
months of the current financial year and that have materially affected the financial position or performance of the entity during
that period; and any changes in the related party transactions described in the last annual report that could do so.
By order of the Board
Roy Burton
Group Chief Executive
21 July 2014
Bill Ronald
Chairman
Independent review report to Dialight plc
Introduction
We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report
for the six months ended 30 June 2014 which comprises the Condensed consolidated income statement, Condensed
consolidated statement of comprehensive income, the Condensed consolidated statement of changes in equity, the Condensed
consolidated statement of financial position, the Condensed consolidated statement of cash flows and the related explanatory
notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the company in meeting
the requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Conduct Authority (“the UK FCA”).
Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Company for our review work, for this report, or for the conclusions we have reached.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the
EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
IAS 34 Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use
in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us
to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30 June 2014 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Graham Neale
Senior Statutory Auditor
for and on behalf of KPMG LLP
Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
21 July 2014
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
signals and traffic signalling to vastly reduce maintenance, save energy, improve safety and ease disposal.
Dialight comprises the following business segments:
• Lighting 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 are Solid State
Lighting products for Hazardous and Non-Hazardous Industrial application.
• Signals which addresses the increasing demands for energy efficient Signalling solutions through the use of high
brightness LEDs and utilisation of a number of associated technologies. Areas of business include Traffic Signals
and Obstruction Signals
• Components whose sales are primarily to Electronics OEMs for status indication and residual disconnect
components for automotive and niche industrial application
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, Australia, Singapore, Brazil, Malaysia 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.