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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dialight Plc | LSE:DIA | London | Ordinary Share | GB0033057794 | ORD 1.89P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| -0.50 | -0.31% | 160.00 | 150.00 | 170.00 | 53 | 16:35:17 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Semiconductor,related Device | 169.7M | 400k | 0.0121 | 132.64 | 53.27M |
From Apr 2019 to Apr 2024
TIDMDIA
RNS Number : 8168L
Dialight PLC
24 July 2017
24 July 2017
Dialight plc
("Dialight" or "the Group")
Half year results for the six months ended 30 June 2017
Platform for long-term sustainable growth
Dialight plc (LSE: DIA.L), the leading LED lighting technology company, announces its interim results for the six months ended 30 June 2017.
Hot Features
Premium
2017 2016
GBPm GBPm
---------------------------- ------ --------
Revenue 92.7 79.8
Underlying gross profit 36.2 28.8
Underlying(1) operating
profit 6.5 4.2
Underlying basic EPS 12.8p 7.8p
Statutory profit/(loss) 4.1 (6.9)
from operating activities
Statutory profit/(loss) 4.0 (7.1)
before tax
Statutory EPS 8.0p (14.4)p
Net cash 12.7 7.2
Financial highlights * Revenue up 16% (3% at constant currency)
* Gross profit increased to GBP36.2m (2016: 28.8m)
* Profit growth in Lighting and Signals & Components up
47% and 14% respectively
* Lighting revenues up 23%, order intake(2) up 15% (9%
and 2% respectively at constant currency)
Strong balance sheet
supported by good working
capital management * Net Cash of GBP12.7m (2016: GBP7.2m)
* Operating model changes reflected in non-underlying
items charge of GBP2.4m (2016: GBP11.1m)
* Platform Engineering completed
Operational highlights
* Final product lines in transfer to manufacturing
partner
Scalable production * Increased distributors, expanded sales team, progress
platform with strategic accounts and automation initiatives
Transition from rebuild, * Pivot to growth
lead and grow
* Optimise operational platform
Shifting focus to grow, * Invest in growth opportunities
optimise and invest
Michael Sutsko, Group Chief Executive, said:
"We are focused on executing the Group's ambitious growth strategy as we seek to capture the opportunity in the industrial LED lighting market. The transformation to a robust and scalable manufacturing platform has advanced significantly in the period. We have completed platform engineering, and nine out of twelve product lines have transferred to our manufacturing partner with the final three lines to be completed by the end of the year. We remain excited by the Group's prospects and remain confident of delivering continued growth and shareholder value. Our expectations for the second half of 2017 remain unchanged."
Results presentation:
A presentation to analysts and investors will be held today at 09.00 GMT at Investec Bank Plc's offices at, 2 Gresham Street, London EC2V 7QP, United Kingdom. The presentation and an audiocast will be made available on the company's website, www.dialight.com.
Contacts:
Dialight Plc
Michael Sutsko - Group Chief Executive
Tel: +44 (0)203 058 3542
Fariyal Khanbabi - Group Finance Director
Tel: +44 (0)203 058 3542
MHP Communications
Tim Rowntree
Tel: +44 (0)20 3128 8100
About Dialight:
Dialight (LSE: DIA.L) is a global leader in sustainable LED lighting for industrial applications. Dialight's LED products are providing the next generation of lighting solutions that deliver reduced energy consumption and create a safer working environment. Our products are specifically designed to provide superior operational performance, reliability and durability, reducing energy consumption and ongoing maintenance and achieving a rapid return on investment.
The company is headquartered in the UK with operations in the USA, UK, Denmark, Germany, Malaysia, Singapore, Australia, Mexico and Brazil. www.dialight.com.
Notes:
1. Defined as excluding non-underlying items of GBP2.4m (2016: GBP11.1m). 2. Order intake is the value of orders received in a given period.
3. 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 announcement contains inside information on Dialight Plc.
OVERVIEW
We are focused on executing our plan to capture the industrial LED market opportunity. The shift in the Group's operating model strategically positions us to focus on long term sustainable growth. The strategy gives the organisation agility, allowing us to respond quickly to changing customer and market dynamics.
During the period, we have delivered an increase in underlying profit as well as growth in cash generation. Group revenue was GBP92.7m (2016: GBP79.8m), including a favourable currency impact of GBP10.0m. The US, which generates the majority of our revenues, was up 10% on a constant currency basis. The European business was down 25%. This was partly due to certain product lines within the Signals and Components segments being discontinued. Additionally, Europe represents a significant lighting opportunity where we are rebuilding our capabilities, developing our sales force and expanding our distribution network. Our new product road map includes the breadth of product features and certification requirements needed to capture these European opportunities.
Lighting order intake grew 2% year on year at constant currency despite the impact of the transition delays, discussed below. Our customers have delayed placing orders pending new product launches. This has been partly mitigated by encouraging new business wins. Underlying operating profit increased to GBP6.5m (2016: GBP4.2m), including a favourable currency impact of GBP1.1m. Non-underlying costs totalled GBP2.4m (2016: GBP11.1m); further details are provided in the Financial Review section.
Platform engineering, a key pre-requisite of the transition of our manufacturing footprint has been successfully completed. The move to a platform concept allows Dialight to deliver solutions to customers that better match their specific requirements while being configured from a greatly reduced set of sub-assemblies. This has improved forecast accuracy for manufacturing planning and will result in reduced inventory once the transition to our manufacturing partner has been completed. We have fundamentally improved supply chain management and streamlined our operations. This is clearly demonstrated in the gross margin expansion we have achieved in the period.
Completion of the transition is taking slightly longer than expected. We have experienced delays in the certification of some of the products being transferred, but we expect to complete the transition by the end of the year. To ensure continuity of supply to our customers, we decided to keep our own facility running in parallel and this will lead to a short period of dual running costs.
As we finalise the foundations of a robust and scalable manufacturing platform, we pivot our attention to driving revenue growth in the industrial lighting market. Purchase decisions are driven by payback and risk, our value proposition continues to ensure that Dialight products provide the best cost of ownership to heavy industrial customers with paybacks based on energy savings, maintenance cost avoidance backed by a ten year warranty.
There has been progress in integrating Dialight lighting with leading factory automation solutions. Dialight and its strategic customers continue to explore new ways to use these solutions to enhance factory safety and productivity.
Dialight's sales model is direct specification sale to end users, transacting through distributors. Direct sale allows for the value proposition to be articulated, distributor inclusion enables simplified contracting and support for larger supply contracts. We have added 22 new distributors with a key focus on expanding the distribution network in Europe.
Market conditions
The main barrier to LED conversion is capex budget constraints. There are three key approaches to proactively drive accelerated market adoption by changing spending paradigms:
1 Enable maintenance spend - target a one year payback
2 Access different budgets- the corporate sustainability and safety budget, design engineering budgets and process productivity budgets
3 Promote market awareness of advantages of LEDs
Dialight recognises the opportunity to drive focus on corporate wide LED conversion programmes. The majority of Dialight's targeted strategic customers have a public commitment to sustainability, including carbon footprint reduction and energy savings programmes. Additionally, customers place a premium on work place safety. Driving awareness of the economic benefits as well as the sustainability and safety benefits of our lighting at the corporate level can change the perception of lighting away from just maintenance cost savings. We target corporate energy, sustainability and EHS directors and maintain a team focused on serving large new build projects.
Current quoting activity remains favorable with a strong pipeline and both short and long-term drivers of the markets we serve remain positive. We expect to grow in the markets we serve by executing our strategy focused on opportunities in underpenetrated geographies and industries, and growth from the continued introduction of new lighting and building management solutions as part of our integrated, solutions strategy. Based on various leading indicators and our focused investments in key strategic areas, we remain confident regarding the Company's prospects for long term profitable growth.
Outlook
We are focused on executing the Group's ambitious growth strategy as we seek to capture the opportunity in the industrial LED lighting market. The transformation to a robust and scalable manufacturing platform has advanced significantly in the period. We have completed platform engineering, and nine out of twelve product lines have transferred to our manufacturing partner with the final three lines to be completed by the end of the year. We remain excited by the Group's prospects and remain confident of delivering continued growth and shareholder value. Our expectations for the second half of 2017 remain unchanged.
FINANCIAL REVIEW
In the half year, we delivered an increase in underlying profit and cash flow on revenue growth of 16% (3% at constant currency). Group revenue was GBP92.7m (2016: GBP79.8m), including a favourable currency exchange impact of GBP10.0m. The US, which generates the majority of our revenue was up 10% on a constant currency basis. The European business was down 25%. This was partly due to certain product lines within the Signals and Components segments being discontinued. We also continued our efforts to develop outside of the US with Australian revenues up 19% at constant currency.
Underlying operating profit increased to GBP6.5m (2016: GBP4.2m), including a favourable exchange impact of GBP1.1m.
The increase in the Group's underlying profit was a result of the fundamental shift in Dialight's operating model, which has reduced costs and enabled scalable, efficient production:
-- Procurement programmes resulting in GBP1.3m improvement in cost of sales
-- The closure of the UK facility has delivered savings of GBP1.4m and further efficiencies of GBP1.2m at our Mexico plant
-- Offset partly by an increase of GBP0.9m in the cost base due to continued investment in the sales and product management teams
Currency impact
Dialight reports its results in Sterling. Our major trading currency is the US Dollar with 70% of revenue denominated in US Dollars. The Group has both translational and transactional currency exposure. Translational exposures arise on the consolidation of overseas company results into Sterling and this is the major currency exposure. Transactional exposure is more limited with natural hedging on revenue and purchases mitigating the majority of the currency risk.
The strengthening of the US dollar compared to the first half of 2016 has been the main driver for the currency impact. The average rate for the US Dollar against Sterling has moved from 1.43 in first half of 2016 to 1.26 in the first half of 2017.
The performance of each business segment is reviewed individually below. Allocation of overheads in each segment is based on directly attributed costs plus an allocation based on segmental revenue.
Lighting segment
2017 2016 Variance
Lighting GBPm GBPm %
----------------- ------- ------- ---------
Revenue 72.4 59.0 +23%
Gross profit 30.6 23.9 +28%
Gross profit % 42% 41% +100bps
Overheads (23.1) (18.8) (23%)
----------------- ------- ------- ---------
Underlying EBIT 7.5 5.1 +47%
----------------- ------- ------- ---------
The Lighting segment represents 78% of the Group's revenue and 82% of the Group's segmental operating profit.
Revenues were 23% higher than the prior period (9% at constant currency). Year on year order intake increased by 2%. We have seen growth in order intake in the US and Australia but this was offset by reduced orders in Europe. Transition delays have impacted the Group's order intake as certain customers have delayed placing orders pending new product launches. We continue to diversify our end markets and geographies, reducing our exposure to individual vertical markets. Oil and gas as a percentage of total lighting revenue was 300bps lower than the previous half year at 18%. This was offset by growth in Mining, Power and Pulp & Paper.
Gross margin has increased to 42% due to the focus on commodity management delivering material costs savings of GBP1.3m. Last year we closed our manufacturing plant in the UK and relocated the majority of production activity to Mexico. The strategic relocation and further production efficiencies at the Mexico plant resulted in a saving of GBP2.6m. The delays in the transition will defer expected savings from our manufacturing partner to Q1 2018.
Overheads increased by GBP4.3m compared to 2016, with GBP2.2m due to currency movements. The remainder of the increase relates to additional headcount to enhance our product development capabilities and expand our sales team. We have invested in training for the existing team and continue to be heavily focused on our HR initiatives.
The overall impact of the above was that profit in the Lighting segment increased by 47% (28% at constant currency).
Signals and components
2017 2016 Variance
Signals and Components GBPm GBPm %
------------------------ ------ ------ ---------
Revenue 20.3 20.8 (2%)
Gross profit 5.6 4.9 +14%
Gross profit % 28% 24% +400bps
Overheads (4.0) (3.5) (14%)
------------------------ ------ ------ ---------
Underlying EBIT 1.6 1.4 +14%
------------------------ ------ ------ ---------
Signals and Components are high volume businesses operating within highly competitive markets. There is significant competition from low cost producers but margins improved as a result of the transfer of traffic production from the US to Mexico in 2016. We continue to target further cost reduction measures to combat pricing pressure. There was a marginal increase in overheads due to foreign exchange movements, but the gross margin expansion resulted in an overall EBIT improvement of GBP0.2m (14%).
Central overheads
Central overheads are not allocated to these segments. In 2017 they amounted to GBP2.6m, an increase of GBP0.3m over the prior year.
Non-underlying costs
The Group incurs costs and earns income that is non-underlying in nature or that is otherwise considered to not be 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 non-underlying costs and income.
Over the past two years the Group has been implementing our strategic plan to transform to a robust and scalable manufacturing platform. As we come to the end of this process we are incurring the final tranche of costs relating to transition to our manufacturing partner.
The table below presents the components of non-underlying profit or loss recorded within cost of sales and administrative expenses.
2017 2016
Non-underlying costs GBPm GBPm
-------------------------------------- ------ ------
Employee severance and restructuring
costs - 5.1
Goodwill and asset write-down - 5.1
Production transfer costs 2.4 0.7
Other - 0.2
Non-underlying costs recorded in
administrative expenses 2.4 11.1
-------------------------------------- ------ ------
In the first half, we incurred costs of GBP2.4m relating to the transfer of lighting assembly to our manufacturing partner. These related to set-up costs, project management and dedicated engineering time. This transition has suffered some delays due to the quantum of the transfer but is still expected to be completed in the year. We expect further costs of up to GBP2m to be incurred in the second half.
In the prior year, non-underlying costs related to the closure of the UK manufacturing facility, expected redundancy costs at the Mexican production facility, goodwill impairment on the European Traffic business and initial production transfer costs to our manufacturing partner.
Finance arrangements
We continue to have a strong balance sheet supported by good working capital management, finishing the six months with net cash of GBP12.7m. The Group has a revolving credit facility with HSBC Bank plc for GBP25m with a further GBP25m "accordion" feature and has a five-year term ending in 2021. The Group has no borrowings against the facility at the balance sheet date and is fully compliant with its covenant requirements.
As the Group generates higher levels of cash there is increased focus on capital allocation, ensuring it is aligned to our long term strategic goals. Our capital allocation strategy is firstly to ensure investment in operating capex and product development. We seek to maintain a strong balance sheet with significant financial flexibility. We will be good stewards of capital with strong capital discipline. Any excess capital will be utilised to invest in compelling (organic and acquisitive) growth or will be returned to shareholders.
The Board is not proposing an interim dividend payment for 2017 (2016: nil).
Michael Sutsko, Group Chief Executive
Fariyal Khanbabi, Group Finance Director
24 July 2017
Condensed consolidated income statement
For the period ended 30 June 2017
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
---------------------------- ---- ------------- -------------
Total Total
Note GBP'm GBP'm
---------------------------- ---- ------------- ------------- -----------------------
Revenue 2 92.7 79.8 182.2
Cost of sales 3 (56.5) (51.0) (116.4)
---------------------------- ---- ------------- ------------- -----------------------
Gross profit 36.2 28.8 65.8
Distribution costs (17.4) (14.3) (32.7)
Administrative
expenses 3 (14.7) (21.4) (36.4)
---------------------------- ---- ------------- ------------- -----------------------
Underlying profit
from operating
activities * 6.5 4.2 13.1
Non-underlying
cost of sales &
administrative
expenses 3 (2.4) (11.1) (16.4)
-----------------------
Profit/(Loss) from
operating activities 2 4.1 (6.9) (3.3)
Financial income 4 - - -
Financial expense 4 (0.1) (0.2) (0.5)
---------------------------- ---- ------------- ------------- -----------------------
Net financing expense 4 (0.1) (0.2) (0.5)
---------------------------- ---- ------------- ------------- -----------------------
Underlying profit
before tax * 6.4 4.0 12.6
Non-underlying
cost of sales &
administrative
expenses 3 (2.4) (11.1) (16.4)
Profit/(Loss) before
tax 4.0 (7.1) (3.8)
---------------------------- ---- ------------- ------------- -----------------------
Income tax (expense)/income 5 (1.4) 2.4 1.0
---------------------------- ---- ------------- ------------- -----------------------
Profit/(Loss) for
the period 2.6 (4.7) (2.8)
---------------------------- ---- ------------- ------------- -----------------------
Profit/(Loss) for
the period attributable
to:
---------------------------- ---- ------------- ------------- -----------------------
Equity owners of
the Company 2.3 (4.7) (2.8)
Non-controlling
Interests 0.3 - -
---------------------------- ---- ------------- ------------- -----------------------
2.6 (4.7) (2.8)
---------------------------- ---- ------------- ------------- -----------------------
Earnings per share
Basic 6 8.0p (14.4p) (8.4p)
Diluted 6 7.9p (14.4p) (8.4p)
---------------------------- ---- ------------- ------------- -----------------------
* Underlying profit measures exclude non-underlying items, which are analysed in note 3.
The accompanying Notes form an integral part of these interim financial statements.
Condensed consolidated statement of comprehensive income
For the period ended 30 June 2017
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
--------------------------------------------------------- ------------- -------------------- ------------
Other comprehensive income
--------------------------------------------------------- ------------- -------------------- ------------
Exchange difference on translation of foreign operations (3.5) 6.5 11.3
Income tax on exchange differences on transactions of
foreign operations 1.3 (2.2) (0.9)
Remeasurement of defined benefit liability 1.5 (1.2) (1.5)
Income tax on remeasurement of defined benefit liability (0.5) 0.4 0.3
--------------------------------------------------------- ------------- -------------------- ------------
Other comprehensive income for the period, net of tax (1.2) 3.5 9.2
--------------------------------------------------------- ------------- -------------------- ------------
Profit/(Loss) for the period 2.6 (4.7) (2.8)
--------------------------------------------------------- ------------- -------------------- ------------
Total comprehensive income for the period 1.4 (1.2) 6.4
--------------------------------------------------------- ------------- -------------------- ------------
Attributable to:
* Owners of the parent 1.1 (1.2) 6.4
* Non-controlling interest 0.3 - -
--------------------------------------------------------- ------------- -------------------- ------------
Total comprehensive income for the period 1.4 (1.2) 6.4
--------------------------------------------------------- ------------- -------------------- ------------
The accompanying Notes form an integral part of these interim financial statements.
Condensed consolidated statement of changes in equity
For the period ended 30 June 2017 (Unaudited)
Capital Non-
Share Merger Translation redemption Retained controlling Total
capital reserve reserve reserve earnings Total interests Equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
---------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 1 January
2017 0.6 1.4 15.4 2.2 57.6 77.2 (0.1) 77.1
Profit - - - - 2.3 2.3 0.3 2.6
Other comprehensive
income:
Foreign currency
translation differences,
net of taxes - - (2.2) - - (2.2) - (2.2)
Remeasurement of
defined benefit liability,
net of taxes - - - - 1.0 1.0 - 1.0
Total other comprehensive
income - - (2.2) - 1.0 (1.2) - (1.2)
---------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total comprehensive
income for the period - - (2.2) - 3.3 1.1 0.3 1.4
---------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Transactions with
owners, recorded
directly in equity:
Dividends - - - - - -
Share-based payments,
net of tax - - - - 0.4 0.4 - 0.4
Total contributions
by and distributions
to owners - - - - 0.4 0.4 - 0.4
---------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 30 June
2017 0.6 1.4 13.2 2.2 61.3 78.7 0.2 78.9
---------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Capital Non-
Share Merger Translation redemption Retained controlling Total
capital reserve reserve reserve earnings Total interests Equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 1 January
2016 0.6 1.4 5.0 2.2 61.0 70.2 (0.1) 70.1
Loss - - - - (4.7) (4.7) - (4.7)
Other comprehensive
income:
Foreign currency
translation differences,
net of taxes - - 4.3 - - 4.3 - 4.3
Defined benefit plan
actuarial losses,
net of taxes - - - - (0.8) (0.8) - (0.8)
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total other comprehensive
income - - 4.3 - (0.8) 3.5 - 3.5
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total comprehensive
income for the period - - 4.3 - (5.5) (1.2) - (1.2)
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Transactions with
owners, recorded
directly in equity:
Dividends - - - - - - - -
Dividends on shares
awarded to employees - - - - - - - -
Share-based payments,
net of tax - - - - 0.4 0.4 - 0.4
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total contributions
by and distributions
to owners - - - - 0.4 0.4 - 0.4
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 30 June
2016 0.6 1.4 9.3 2.2 55.9 69.4 (0.1) 69.3
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Condensed consolidated statement of changes in equity
For the period ended 30 June 2017 (Unaudited)
Capital Non-
Share Merger Translation redemption Retained controlling Total
capital reserve reserve reserve earnings Total interests Equity
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 1 January
2016 0.6 1.4 5.0 2.2 61.0 70.2 (0.1) 70.1
Loss - - - - (2.8) (2.8) - (2.8)
Other comprehensive
income:
Foreign currency
translation differences,
net of taxes - - 10.4 - - 10.4 - 10.4
Defined benefit plan
actuarial losses,
net of taxes - - - - (1.2) (1.2) - (1.2)
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total other comprehensive
income - - 10.4 - (1.2) 9.2 - 9.2
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total comprehensive
income for the period - - 10.4 - (4.0) 6.4 - 6.4
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Transactions with
owners, recorded
directly in equity:
Dividends - - - - - - - -
Dividends on shares
awarded to employees - - - - - - - -
Share-based payments,
net of tax - - - - 0.6 0.6 - 0.6
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total contributions
by and distributions
to owners - - - - 0.6 0.6 - 0.6
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Balance at 31 December
2016 0.6 1.4 15.4 2.2 57.6 77.2 (0.1) 77.1
-------------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Condensed consolidated statement of total financial position
As at 30 June 2017 (Unaudited)
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
------------------------------ ------------ ------------ -----------
Assets
Property, plant and equipment 15.4 16.2 15.9
Intangible assets 15.2 17.1 15.4
Deferred tax asset 4.7 3.8 3.5
Total non-current assets 35.3 37.1 34.8
------------------------------ ------------ ------------ -----------
Inventories 26.2 32.0 31.4
Trade and other receivables 32.0 28.5 40.0
Asset held for sale - - 2.0
Cash and cash equivalents 12.7 7.2 8.0
------------------------------ ------------ ------------ -----------
Total current assets 70.9 67.7 81.4
------------------------------ ------------ ------------ -----------
Total assets 106.2 104.8 116.2
------------------------------ ------------ ------------ -----------
Liabilities
Trade and other payables (24.4) (25.0) (31.3)
Provisions (2.0) (5.9) (3.8)
Tax liabilities (0.3) (2.7) (1.9)
Total current liabilities (26.7) (33.6) (37.0)
------------------------------ ------------ ------------ -----------
Employee benefits 0.4 (1.1) (1.3)
Provisions (1.0) (0.8) (0.8)
Total non-current liabilities (0.6) (1.9) (2.1)
------------------------------ ------------ ------------ -----------
Total liabilities (27.3) (35.5) (39.1)
------------------------------ ------------ ------------ -----------
Net assets 78.9 69.3 77.1
------------------------------ ------------ ------------ -----------
Equity
Issued share capital 0.6 0.6 0.6
Merger reserve 1.4 1.4 1.4
Other reserves 15.4 11.5 17.6
Retained earnings 61.3 55.9 57.6
------------------------------ ------------ ------------ -----------
78.7 69.4 77.2
Non-controlling interests 0.2 (0.1) (0.1)
------------------------------ ------------ ------------ -----------
Total equity 78.9 69.3 77.1
------------------------------ ------------ ------------ -----------
Condensed consolidated statement of cash flows
For the period ended 30 June 2017 (Unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
-------------------------------------------------------- ------------ ------------ ------------
Operating activities
Profit/(Loss) for the period 2.6 (4.7) (2.8)
Adjustments for:
Financial expense 0.1 0.2 0.5
Income tax expense 1.4 (2.4) (1.0)
Share-based payments 0.4 0.4 0.6
Depreciation of property, plant and equipment 1.7 1.5 3.1
Amortisation of intangible assets 0.9 1.4 4.0
Impairment losses on intangible assets and goodwill - 4.0 5.1
Impairment losses/(gains) on tangible assets - 1.1 (0.2)
Legal settlement - 1.3 1.3
Operating cash flow before movements in working capital 7.1 2.8 10.6
Decrease/(increase) in inventories 4.1 (3.0) (0.2)
Decrease/(increase) in trade and other receivables 6.7 8.1 (1.5)
(Decrease)/Increase in trade and other payables (6.0) 0.4 5.0
(Decrease)/Increase in provisions (1.8) 5.3 2.9
Pension contributions in excess of the income statement
charge (0.2) (0.2) (0.5)
Cash generated from operations 9.9 13.4 16.3
Income taxes (paid)/received (3.4) 0.7 0.3
Interest paid (0.1) (0.1) (0.5)
Net cash from operating activities 6.4 14.0 16.1
-------------------------------------------------------- ------------ ------------ ------------
Capital expenditure (1.9) (1.4) (3.9)
Sale of fixed assets 2.0 - 0.9
Capitalised expenditure on development (1.3) (1.8) (2.1)
Net cash used in investing activities (1.2) (3.2) (5.1)
-------------------------------------------------------- ------------ ------------ ------------
Financing activities
Repayment of bank facility - (9.5) (9.5)
Net cash from / (used in) financing activities - (9.5) (9.5)
-------------------------------------------------------- ------------ ------------ ------------
Net increase in cash and cash equivalents 5.2 1.3 1.5
-------------------------------------------------------- ------------ ------------ ------------
Cash and cash equivalents at 1 January 8.0 5.5 5.5
Effect of exchange rates on cash held (0.5) 0.4 1.0
Cash and cash equivalents at end of period 12.7 7.2 8.0
-------------------------------------------------------- ------------ ------------ ------------
Notes to the financial statements
For the period ended 30 June 2017 (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 2017 comprises the Company and its subsidiaries (together referred to as the "Group"). The Directors have a reasonable expectation that the Group has sufficient resources to continue in existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing financial statements.
The Group financial statements as at, and for, the year ended 31 December 2016 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 Leaf C, Level 36 Tower 42, 25 Old Broad Street, London, EC2N 1HQ.
The comparative figures for the year ended 31 December 2016 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 2017 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 2016.
This condensed set of financial statements was approved by the Board of Directors on 24 July 2017.
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 two 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 two reportable operating segments are:
a) Lighting, which develops, manufactures and supplies highly efficient LED lighting solutions for hazardous and industrial
applications in which lighting performance is critical and includes anti-collision obstruction lighting; and
b) Signals and Components, which develops, manufactures and supplies status indication components for electronics OEMs, together with niche industrial and automotive electronic components and highly efficient LED signalling solutions for the traffic and signals markets.
All revenue relates to the sale of goods. Segment gross profit is revenue less the costs of materials, labour, production and freight that are directly attributable to a segment. Overheads comprise operations management, selling costs plus corporate costs, which include share-based payments.
There are no individual customers representing more than 10% of revenue and there is no inter-segment revenue.
2. Operating segments continued
Lighting Signals and Components Total
6 months ended 30 June 2017 GBP'm GBP'm GBP'm
---------------------------- -------- ------------------------ ------
Revenue 72.4 20.3 92.7
----------------------------- -------- ------------------------ ------
Gross Profit 30.6 5.6 36.2
Overhead costs (23.1) (4.0) (27.1)
----------------------------- -------- ------------------------ ------
Segment operating profit 7.5 1.6 9.1
Unallocated expenses (2.6)
------
Underlying operating profit 6.5
Non-underlying expenses (2.4)
------
Operating profit 4.1
Net financing expense (0.1)
------
Profit before tax 4.0
Income tax expense (1.4)
----------------------------- -------- ------------------------ ------
Profit for the period 2.6
----------------------------- -------- ------------------------ ------
Lighting Signals and Components Total
Other segmental data GBP'm GBP'm GBP'm
----------------------------- -------- ------------------------ --------
Depreciation 1.3 0.4 1.7
Amortisation 0.8 0.1 0.9
Lighting Signals and Components Total
6 months ended 30 June 2016 GBP'm GBP'm GBP'm
------------------------------------------------- -------- ------------------------ ------
Revenue 59.0 20.8 79.8
-------------------------------------------------- -------- ------------------------ ------
Gross Profit 23.9 4.9 28.8
Overhead costs (18.8) (3.5) (22.3)
-------------------------------------------------- -------- ------------------------ ------
Segment operating profit 5.1 1.4 6.5
Unallocated expenses (2.3)
------
Underlying operating profit 4.2
Non-underlying expenses (11.1)
------
Operating loss (6.9)
Net financing expense (0.2)
------
Loss before tax (7.1)
Income tax income 2.4
-------------------------------------------------- -------- ------------------------ ------
Loss for the period (4.7)
-------------------------------------------------- -------- ------------------------ ------
Lighting Signals and Components Total
Other segmental data GBP'm GBP'm GBP'm
-------------------------------------------------- -------- ------------------------ --------
Depreciation 1.1 0.4 1.5
Amortisation 1.1 0.3 1.4
Impairment losses on intangible asset write-down - 4.0 4.0
Impairment losses on tangible asset 0.8 0.3 1.1
-------------------------------------------------- -------- ------------------------ --------
2. Operating segments continued
Lighting Signals and Components Total
Year ended 31 December 2016 GBP'm GBP'm GBP'm
---------------------------- -------- ------------------------ ------
Revenue 136.6 45.6 182.2
----------------------------- -------- ------------------------ ------
Gross Profit 57.4 12.1 69.5
Overhead costs (43.9) (7.2) (51.1)
----------------------------- -------- ------------------------ ------
Segment operating profit 13.5 4.9 18.4
Unallocated expenses (5.3)
------
Underlying operating profit 13.1
Non-underlying expense (16.4)
------
Operating loss (3.3)
Net financing expenses (0.5)
Loss before tax (3.8)
Income tax expense 1.0
----------------------------- -------- ------------------------ ------
Loss for the period (2.8)
----------------------------- -------- ------------------------ ------
Signals
Lighting and Components Total
Other segmental data GBP'm GBP'm GBP'm
-------------------------------- -------- --------------- ------
Depreciation 2.3 0.8 3.1
Amortisation 3.3 0.7 4.0
Gain on disposal of tangible
assets (0.2) (0.2)
Impairment losses on intangible
asset write-down 1.1 4.0 5.1
-------------------------------- -------- --------------- ------
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 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'm GBP'm GBP'm
--------------------- -------- -------- ------------
North America 69.9 56.0 129.7
UK 4.0 5.4 11.3
Rest of Europe 6.3 8.3 17.4
Rest of World 12.5 10.1 23.8
Consolidated revenue 92.7 79.8 182.2
--------------------- -------- -------- ------------
3. Non-underlying items
The Group incurs costs and earns income that is non-underlying in nature or that is otherwise considered to not be 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 non-underlying costs and income.
Over the past two years the Group has been implementing our strategic plan to transform to a robust and scalable manufacturing platform. As we come to the end of this process we are incurring the final tranche of costs relating to transition to our manufacturing partner.
The table below presents the components of non-underlying profit or loss recorded within cost of sales.
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'm GBP'm GBP'm
-------------------------------------------------- ----------- ---------- ------------
Inventory Provision - - (3.7)
Non-underlying costs recorded in cost of sales - - (3.7)
The underlying cost of sales for the year ended 31 December 2016 was GBP112.7m and
the underlying gross profit was GBP69.5m.
The table below presents the components of non-underlying profit or loss recorded within administrative expenses
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'm GBP'm GBP'm
--------------------------------------------------------- ---------- ---------- ------------
Intangible asset write-down - (4.0) (5.1)
Fixed asset impairments - (1.1) 0.2
Production transfer and start up (2.4) (0.7) (2.4)
Employee severance costs - (5.1) (5.3)
Other - (0.2) (0.1)
--------------------------------------------------------- ---------- ---------- ------------
Non-underlying costs recorded in administrative expenses (2.4) (11.1) (12.7)
In the first half, we incurred costs of GBP2.4m relating to the transfer of lighting assembly to our manufacturing partner. These related to set-up costs, project management and dedicated engineering time. This transition has suffered some delays due to the quantum of the transfer but is still expected to be completed in the year. We expect further costs of up to GBP2m to be incurred in the second half.
In the prior year, non-underlying costs related to the closure of the UK manufacturing facility, expected redundancy costs at the Mexican production facility, goodwill impairment on the European Traffic business and initial production transfer costs to our manufacturing partner.
Administrative costs contain items treated as underlying and non-underlying.
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'm GBP'm GBP'm
------------------------------ -------- -------- ------------
Underlying costs 12.3 10.3 23.7
Non-underlying costs 2.4 11.1 12.7
------------------------------ -------- -------- ------------
Total administrative expenses 14.7 21.4 36.4
------------------------------ -------- -------- ------------
4. Net financing expense
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'm GBP'm GBP'm
---------------------------------------------- ---------- ---------- ------------
Net interest on net defined benefit liability - - (0.2)
Interest expense on financial liabilities (0.1) (0.2) (0.3)
---------------------------------------------- ---------- ---------- ------------
Net financing (expense) / income (0.1) (0.2) (0.5)
---------------------------------------------- ---------- ---------- ------------
5. Income tax expense
The tax charge of GBP1.4m for the half year to 30 June 2017 reflects the anticipated effective tax rate of 35.3% for the year ending 31 December 2017. Non-underlying items have been taxed using the relevant tax rates. The effective tax rate is higher than the current UK tax rate of 20.0% due to the level of Group profits in the US which has an effective tax rate of 38.0%. The effective tax rate credit for the period ended 30 June 2016 was 33.8% and for the year ended 31 December 2015 was 24.9%.
6. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2017 was based on a profit for the period of GBP2.6m (2016: loss of GBP4.7m) and a weighted average number of ordinary shares outstanding during the six months ended 30 June 2017 of 32,511,298 (2016: 32,503,258).
Weighted average number of ordinary shares
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Number '000 Number Number
'000 '000
------------------------------------------ ------------ -------- ------------
Weighted average number of shares 32,511 32,503 32,503
Dilutive effect of share options 589 229 275
------------------------------------------ ------------ -------- ------------
Diluted weighted average number of shares 33,100 32,732 32,778
------------------------------------------ ------------ -------- ------------
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.
6 months 6 months
ended ended 12 months
30 June 30 June ended
2017 2016 31 December
Per share Per 2016
share Per share
----------------------------- ---------- -------- ------------
Basic earnings 8.0p (14.4p) (8.4)p
Underlying basic earnings* 12.8p 7.8p 26.9p
----------------------------- ---------- -------- ------------
Diluted earnings 7.9p (14.4p) (8.4)p
Underlying diluted earnings* 12.5p 7.8p 26.7p
* Underlying earnings excludes non-underlying items as explained in note 3 and allocates tax at the appropriate rate (see note 5)
7. Dividends
There were no dividends declared or paid in the 12 months ended 31 December 2016. The Directors have not declared an interim dividend for 2017 (2016: nil).
8. Debt facilities
On 12 December 2016, the Company signed a 5-year unsecured GBP25m multi-currency Revolving Credit Facility with HSBC Bank plc. Under the terms of the facility, the Group also has a GBP25m "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 2017, there were no borrowings against the facility.
9. Principal exchange rates
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
----------------------- -------- -------- ------------
Average for the period
US dollar 1.26 1.43 1.36
Euro 1.16 1.28 1.22
Mexican Peso 24.42 25.88 25.25
30 June 30 June 31 December
2017 2016 2016
------------- ------- ------- -----------
Spot rate
US dollar 1.30 1.34 1.23
Euro 1.14 1.21 1.17
Mexican Peso 23.07 25.25 25.56
10. Related party transactions
There have been no changes in the nature of related party transactions to those described in the 2016 Annual Report that could have a material effect on the financial position or performance of the Group in the period to 30 June 2017.
11. Principal risks and uncertainties
The principal risks and uncertainties affecting the business activities of the Group for the next six months of 2017 remain as listed on pages 36 to 37 of the Annual Report for the year ended 31st December 2016 (which can be found at www.dialight.com).
This and the other principal risks will continue to be evaluated, monitored and managed through the remainder of 2017.
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
Michael Sutsko Fariyal Khanbabi Group Chief Executive Group Finance Director
24 July 2017
Independent review report to Dialight Plc
Conclusion
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 2017 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 and the related explanatory notes.
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 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
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. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) 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. .
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 International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 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.
The purpose of our review work and to whom we owe our responsibilities
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 DTR of 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.
Graham Neale
Senior Statutory Auditor
for and on behalf of KPMG LLP
Statutory Auditor
Chartered Accountants
One Snowhill
Snow Hill Queensway
Birmingham
B4 6GH
24 July 2017
About Dialight
Dialight (LSE: DIA.L) is a global leader in sustainable LED lighting for industrial applications. Dialight's LED products are providing the next generation of lighting solutions that deliver reduced energy consumption and create a safer working environment. Our products are specifically designed to provide superior operational performance, reliability and durability, reducing energy consumption and ongoing maintenance and achieving a rapid return on investment.
The company is headquartered in the UK with operations in the USA, UK, Denmark, Germany, Malaysia, Singapore, Australia, Mexico and Brazil. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUGAMUPMGMG
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July 24, 2017 02:00 ET (06:00 GMT)
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