Final Results
Dialight PLC
03 March 2008
Date: Embargoed until 07.00am, Monday 3 March 2008
Contacts: Roy Burton - Group Chief Executive
Cathy Buckley - Finance Director
Dialight PLC
Tel: 01480 447490
Chris Bowman
Canaccord Adams Limited
Tel: 020 7050 6500
Alistair Mackinnon-Musson
Nicola Savage
Hudson Sandler
Tel: 020 7796 4133
Email: dialight@hspr.com
DIALIGHT PLC
Preliminary results for the year to 31 December 2007
Dialight plc, the UK based leader in Applied LED Technology, announces its
Preliminary results for the year ended 31 December 2007.
Dialight consists of two business segments:-
O Signals/Illumination which includes Traffic and Rail Signals, Obstruction
Lights and the new product area of Solid State Lighting
O Components comprising Light Emitting Diode ('LED') Indication Components and
Electromagnetic Disconnects ('smart' meter disconnect switches)
Highlights
O Signals/Illumination sales up 17% at constant currency
O Group sales up 8% at constant currency
O Profit before tax £4.5m - in line with market expectations
O Earnings per share of 8.8p (2006:11.8p)
O Operating cash flow increased to £5.8m from £2.4m in 2006
O Recommended final dividend increased by 9% to 3.8p
O Initial conclusion of Strategic Review to realise full value of LED
Indication Components business
Roy Burton, Group Chief Executive, said
'We are pleased to report our strategy of identifying and then servicing large
niche markets for LED based products is progressing well. In 2007, sales in the
Signals/Illumination segment of our business grew over 17%. With an excellent
pipeline of new products complementing the Safesite and White Strobe products,
we are confident of continued growth in our Signals/Illumination business.'
Financial results
With two-thirds of the Group's sales denominated in US$, the US$:£ exchange rate
is a major influence on Dialight's results. The average USD:£ rate declined 9%
from 1.84 to 2.0 from 2006 to 2007 and as a result, while Group sales in 2007 in
constant currency terms increased by 8% to £63.4 million, the effect of the
dollar's decline was to constrain the Group's reported revenue growth to 2%.
There were marked differences in the performance of the Group's two business
segments. The Signals/Illumination division showed strong growth of 17% at
constant currency, versus 10% at actual exchange rates. Within this, the Traffic
product line, which is a lower margin Signals product, grew by an impressive
20%. Reported revenue in the Components segment was down by 6% but this decline
was principally due to adverse currency movements.
Second half Group sales increased over the first half by 19% to £34.5 million,
returning an operating profit for the half of £2.9 million (compared to £966,000
in the first half) at an operating margin of 8.4%. The increase in profitability
over the first half was due to higher sales and the successful implementation of
the material cost reduction programme delayed in the first half.
Margins for the Group remained healthy; however, the adverse impact of currency
would have reduced the 2006 reported contribution of the Components and Signals/
Illumination segments by £1 million and £0.6 million respectively.
There was further investment in resource to support the expanding Signals/
Illumination business during the second half of the year, increasing the
expected year on year overhead base by 9%. The Components business reported a
segment profit of £5.3 million and for the first time Signals/Illumination
business reported a profit at £0.1 million.
In line with market expectations, Group profit before tax decreased by 23% to
£4.5 million from £5.8 million; this was a 15% decline on a constant currency
basis. Earnings per share were 8.8p compared with 11.8p in 2006. The Group
generated net cash inflow from operations of £5.8 million (2006: £2.4 million)
representing 149% of operating profit and the Group ended the year with a cash
balance of £6.6 million (2006: £4.3 million).
Dividend
The Board is recommending a final dividend of 3.8 pence per share an increase of
9% over last year's final dividend. The dividend will be paid on 9 May 2008 to
shareholders on the register at close of business on 14 March 2008. The full
year dividend is 5.7 pence per share and the dividend cover is 1.5 times.
Strategic Review
In January, the Board announced the commissioning of a strategic review of the
Group's businesses. This review has been received and after consideration by the
Board it has been concluded that we should explore the possibilities of
divesting the LED Indication Components business (from the Group's Components
division) with a view to realising the Board's view of appropriate shareholder
value and streamlining the profile of the Group to more accurately reflect
Dialight as a focused Solid State Lighting business.
Operating Review
Signals/Illumination
Change 2007 2006
Sales + 10% £33.4m £30.3m
Segment result (see page 14) £0.1m £(0.4)m
Dialight's strategy is to address large niche markets which have some measure of
regulation or other barriers to entry. Whilst there are many areas where LEDs
can be used, Dialight has been careful to select those markets which fit its
strategy and allow defensible and profitable growth.
During 2007, the efficiency of white LEDs has improved significantly and a
number of new applications are becoming economically viable, bringing new
opportunities for the Company. This segment of our business saw significant
growth in 2007 and the availability of more efficient white LEDs enabled us to
launch some important new products which we expect to deliver continued growth
for 2008. Overall this segment grew at 17% for the year at constant currency.
Traffic
Our Traffic Light Business showed growth of 20% year on year with both Europe
and North America contributing strongly; however, in Group terms this is a
relatively low margin activity. Under normal circumstances, we would expect
North American sales to be relatively flat but increased adoption of the 2006
ITE Standard for Traffic Lights helped Dialight to grow. Dialight was the first
company to have a comprehensive portfolio of traffic light products that are
fully compliant to the new standard and we believe we gained market share for
that reason. In developing lights for the new standard, we have filed several
patents to protect our investment in this area.
Towards the end of the year, we were awarded a contract to supply over 70,000
traffic lights for Miami Dade County in Florida. A minor portion of this
contract was supplied in 2007 and it is expected that the balance will be
delivered in 2008.
With the exception of major contracts like Miami, the US Traffic Business should
continue at current levels and will be serviced in the main through our
extensive and exclusive network of Traffic Dealers who allow us to maintain our
market share in North America. Whilst a majority of the installed base of lights
has been converted to LEDs, the earliest installed LED lights are coming to the
end of their useful life, after well over five years in service. The cycle of
replacement of these lights should sustain this business for the foreseeable
future.
European traffic lights have been targeted by Dialight as a major growth
opportunity due to the current low adoption of LED traffic lights in Europe.
This market is serviced through traffic systems OEMs who are nationally based
and standards are set either by the OEM or by the individual countries in
Europe. Dialight has increased its list of OEM partners in both Western and
Eastern Europe and is well placed to service this market growth. We have
relationships with at least one major OEM in almost every European country. The
largest multinational OEM is Siemens and we continue to develop our
relationships with them building on a strong base with Siemens in Germany.
Former US President Bill Clinton has been instrumental through the Clinton
Climate Initiative in setting up volume pricing arrangements with companies
providing energy efficient products. In November Dialight announced the signing
of a volume pricing agreement with the Clinton Foundation to make attractive
pricing for our LED traffic lights available to cities on a global basis. It is
hoped that this agreement will help to accelerate the adoption of our energy
efficient traffic lights by cities around the world.
Obstruction Lights
For the past five years, Dialight has been developing products for the aircraft
obstruction light market. This is a true niche market with strong regulation
which represents an opportunity to substitute LED based lights in an installed
base worth well over $300 million in North America alone, with similar
regulatory standards being applied throughout the world. Obstruction lights are
positioned on broadcast towers, cellular phone towers, tall buildings and
structures and latterly on wind turbines. The wind turbine lighting market
represents a new build opportunity of several million dollars over the next five
years if wind energy projections are met.
Dialight has been the global innovator in the obstruction light market and has
established clear market leadership and a growing business for products using
red LEDs. However, half of the installations in this obstruction light market
use white lighting and up until early in 2007, no qualified white LED products
were available; the advent of brighter and less expensive white LEDs has changed
that situation.
Early in 2007, we launched a ground breaking white LED strobe light to address
the cell phone tower market in North America and for the new wind installations
niche in Europe. The initial version of this new light was introduced after
extensive development efforts by our scientists and engineers and once again
resulted in several patents being filed. This was succeeded by the introduction
of an improved version to meet this very demanding specification and in the
second half of 2007 we announced the qualification of our new smaller, lighter
and lower price product which performed to the same exacting standards as our
first generation.
In the North American market, there are over 50,000 conventional versions of
this light installed on towers and the complete unit is replaced on a ten year
cycle, with a change of strobe tubes six or seven times in this period - our LED
light does not need to be replaced. Although our improved product was only
launched in the second half of 2007, we sold close to a hundred units by the end
of the year, into a market which is inherently cautious of adopting new
technology. The Company foresees excellent growth prospects for this product in
2008 which has already been adopted as a standard by one North American cellular
operator.
The largest potential for Obstruction Lights is in North America and overall our
sales grew by 25% in that market in 2007. As the white strobe light was only in
its initial year it made no more than small contribution to this growth. 2008
should see continued opportunity for this whole product line, helped by
aggressive adoption of the white strobe light and by further installations on
wind turbines.
Lighting
In the LED world, there is much talk of the potential for LEDs to replace
conventional light sources for illumination purposes and undoubtedly there is
the possibility that in time this will become a reality. Up until now, the
majority of LED use for illumination has been in coloured lighting for
architectural or entertainment uses and in order to gain a presence in this part
of the market, Dialight acquired Lumidrives two years ago. This acquisition has
been successfully integrated into the Group and we have been able to bring
Lumidrives coloured products to the North American market and to open up
opportunities in our distributor channel, due to our existing relationships with
those distributors.
Although we have had some success with lighting OEMs in North America, with
sophisticated coloured and colour mixing lights using our patented technologies,
sales progress has been slower than we would have liked, as the lighting
companies themselves take time to roll out their new Dialight offerings and to
obtain the appropriate approvals. In May 2007, in conjunction with Hydrel, a
division of Acuity Brands, we were awarded a prize for a coloured underwater
fixture at the Lightfair Show in New York and we expect to see sales growth of
this and similar products in 2008.
Growth of the whole Lighting product line was 2% in 2007 although volume sales
grew just under 10 per cent offset by some price erosion. Along with the slow
adoption by US based OEMs, in Europe we were adversely affected by some delay in
the introduction of next generation products for the Dialight Lumidrives line.
This in turn resulted in some price erosion as our less sophisticated
competition was able to replicate our old range of products. By the end of the
year, a complete new line of products had been successfully introduced and we
fully expect to get back to good growth in 2008 and be able to distance
ourselves once more from the competition.
Whilst great technical improvements in white LEDs have been realised in 2007,
these devices are still expensive and have no better energy performance than the
most efficient conventional light sources. Dialight believes there are
applications in industrial white lighting today where LEDs can do a better and
more effective job than the incumbent conventional light. We identified lights
qualified for use in hazardous locations as a good potential for LED lighting
and in late 2006 'relamped' an existing hazardous location fixture with LEDs.
Encouraged by the favourable reaction to this light, we have developed a custom
LED fixture which fulfils the same application and the SafeSite range was shown
at the New York Lightfair show with a very complimentary reaction. This light
was finally qualified and launched to the market in the fourth quarter of 2007.
SafeSite is designed to emulate an existing 150 watt HID (very efficient)
conventional fixture and would be used typically as an area illumination light
in oil refineries, offshore rigs, mines, pharmaceutical plants, food processing
plants and so on. It is qualified to the appropriate Underwriters Laboratories
specifications and is a 'sealed for life' product - life being at least five
years.
Although it is noted earlier in this report that LED light sources available
today cannot outperform the better conventional light sources (like HID), we
have demonstrated that through clever and unique design, the SafeSite fixture
can offer a 40% energy saving over its conventional rival, whilst delivering the
same amount of useful light. In addition, this is a product which requires no
maintenance and is warranted for at least five years - in fact we expect
significantly longer life. It sells at close to the price of a conventional
light and addresses a market of at least $250 million a year in new
installations. There is also a significant installed base of conventional lights
which offer potential for retrofit.
While the SafeSite only became available late in the year, we are pleased to
have sold some 300 lights, most of which were for initial trial purposes before
our customers commit to major adoption or refits. In one case, however, a major
US operator of offshore exploration rigs has decided to refit a complete rig
with over forty SafeSites and to test it in the field.
Dialight, through its distributor Unimar, has recently reached an agreement with
Rio Tinto to install Dialight's LED based SafeSite fixtures throughout many of
their coal distribution centres, thus improving safety and decreasing
maintenance and energy costs in these locations.
Dialight is in discussion with a number of OEMs to private label this product in
addition to opening up its own routes to market. SafeSite provides an immediate
value proposition for lighting users in the hazardous location market and there
is the potential for Dialight to ship several thousands of these lights in 2008
and beyond.
This hazardous location light is an example of using our strong technical skills
to develop a product for a market where today the special attributes of LEDs can
make an attractive proposition for the end user. Other examples are in the area
of 'rough service'; we have been qualified to supply an LED light for use in
mobile shelters for field hospitals, communications centres, command posts etc.
The rugged nature of LEDs, combined with the ability to offer a low profile
light with the certainty that however roughly the shelter has been transported,
the LED light will still work, is a very attractive proposition.
For some years Dialight has been the predominant supplier of coloured LED
exterior lights for the US transit bus industry. We have an excellent position
and command a major share of this market with a strong reputation for quality
based on the lifetime warranty that we provide to the bus operators. As
mentioned earlier, the efficiency and economics of white LEDs improved
significantly in 2007, enabling us to solve a problem with the interior lighting
of these buses. Typically, fluorescent tubes are used for the interior
illumination of a bus. These tubes do not perform well due to their sensitivity
to shock, vibration, cold and also being switched on and off frequently. This
results in a significant maintenance cost for the operators. Dialight has
started shipping LED lights to a number of transit authorities to replace these
fluorescent tubes. Our LED lights are impervious to vibration and shock and they
can be switched off and on any number of times without deterioration. Since they
have a warranty for the life of the bus, they eradicate the maintenance issue of
conventional lights. Each year there are almost 5,000 new buses built which
could use these lights and of course, there is a significant retrofit
opportunity for those buses which are already in service.
With the continuing improvements in white LED performance, a number of larger
lighting markets such as roadway, tunnel and industrial lighting are beginning
to open up. Creating a value proposition against existing technology in these
demanding applications means we need to harness all the unique properties of LED
technology. To expand our knowledge base we are working with the University of
Manchester, with strategic grant support from the UK Technology and Strategy
Board, to develop a number of key technologies essential to create reliable and
efficient LED lighting systems.
The results of the project can be used to produce new generation street lighting
solutions - with levels of reliability, control and performance never before
possible and with a superior light quality to today's solutions.
During the year, Dialight's technical staff filed 19 patents and had 7 granted
with 47 pending approval. We typically spend over 6% of our Signals/Illumination
revenues on R & D as we keep pace with the developments in efficiency and
economics of our LED suppliers. Dialight has teams of engineers and scientists
from optical, mechanical and electrical/electronic backgrounds, in the USA, UK,
Germany and Mexico, working to keep Dialight at the forefront in LED
application.
Components
2007 2006
Sales
LED Indication Components £19.0m £20.6m
Electromagnetic Disconnects £11.0m £11.4m
Total sales £30.0m £32.0m
Segment results
LED Indication Components £5.4m £6.6m
Electromagnetic Disconnects £(0.1)m £0.5m
Total segment result (see page 14) £5.3m £7.1m
Dialight's Components business comprises two product areas: LED Indication
Components - LED indicator lights supplied to the OEM market; and
Electromagnetic Disconnects - 'smart' meter disconnect switches which are used
by utility companies to manage remotely electrical supply to residential and
business premises. As described above, the Group is exploring the possibilities
of divesting the LED Indication Components business which would leave the '
smart' meter operation as the segment's sole activity.
The start of 2007 was adversely affected by a slowdown in orders for indicator
lights which had first impacted in December 2006. This was principally as the
result of a decision by one of our major distributors to reduce inventory, which
had the effect of reducing our revenues in the first quarter. However, as
anticipated there was no slowdown in the demand from end users and we saw a
recovery to normal revenues by the end of the quarter, which continued for the
rest of the year.
Dialight's Indication business services a mature niche in the electronics market
place which will exhibit low growth over time. Sales of our US distributors grew
at over 3% in the year and our sales to OEMs were steady. Many such components
businesses are commodities and are subject to severe price pressures, however,
Dialight is in a unique position in a market niche which avoids such major
pressures to reduce price and once again our margins have been maintained.
Whilst most of our Components business relates to LED Indicators, Dialight also
supplies 'smart' meter disconnect switches to the utility industry. In the
United States there is a major move to implement an advanced meter
infrastructure in the electricity market. This requires the replacement of up to
130 million electricity meters over the next several years. Each one of these
meters may need a switch capable of safely handling 200 amps. Dialight
manufactures such a switch and is qualified with three of the top suppliers of
these new 'smart' meters.
Market projections are that up to 18 million switches will be needed by the end
of 2010 and Dialight is well positioned to supply over a quarter of these. The
Dialight switch is the result of significant development effort and uses several
unique approaches for which patents have been filed. Supply of these switches is
expected to drive significant growth for Dialight, beginning this year and
Elster, one of the major US smart meter manufacturers, has placed a blanket
order for 200,000 switches worth over $4,000,000 of which volume shipment is
expected to start late in the first half.
Outlook
The return of our Components segment to normal levels is expected to continue,
given no major market downturns, with the added potential for good performance
from the 'smart' meter disconnect products in 2008. As reported above, the Board
believes that the divesture of the LED Indication Components business may be the
most appropriate way to deliver value to shareholders from this part of the
group and to assist the focus on the Solid State Lighting business.
During 2007, the Signals/Illumination segment achieved strong growth and
importantly, a number of key new products were introduced. The Dialight
Lumidrives line was completely redesigned, SafeSite was successfully launched
and the newest version of the White Strobe is showing strong acceptance in the
market. In addition there is a pipeline of other new white light based products
for 2008.The Board is therefore confident that in 2008 and beyond, our strategy
for growth in the Signals/Illumination market will show continued success
following the double digit sales performance in 2007.
Roy Burton Harry Tee
Chief Executive Chairman
Safe Harbour 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.
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2007
Note 2007 2006
£'000 £'000
Continuing operations
Revenue 1 63,408 62,302
Cost of sales (49,137) (46,202)
Gross profit 14,271 16,100
Distribution expenses (5,053) (5,126)
Administrative expenses (5,325) (5,650)
Operating profit 1 3,893 5,324
Financial income 2,383 2,154
Financial expense (1,796) (1,665)
Net financing costs 587 489
Profit before tax 4,480 5,813
Income tax expense 2 (1,751) (2,145)
Profit for the year attributable to equity holders of the parent 2,729 3,668
Earnings per share
Basic earnings per share 3 8.8p 11.8p
Diluted earnings per share 3 8.6p 11.7p
CONSOLIDATED BALANCE SHEET
As at 31 December 2007
2007 2006
£'000 £'000
Assets
Property, plant and equipment 6,072 5,557
Intangible assets 7,913 7,495
Deferred tax assets 1,209 1,249
Total non-current assets 15,194 14,301
Inventories 9,846 10,397
Trade and other receivables 15,629 14,629
Cash and cash equivalents 6,561 4,346
Total current assets 32,036 29,372
Total assets 47,230 43,673
Liabilities
Current liabilities
Interest-bearing loans and borrowings (2,172) (2,184)
Trade and other payables (9,271) (8,478)
Tax liabilities (2,822) (765)
Total current liabilities (14,265) (11,427)
Non-current liabilities
Employee benefits (1,227) (1,671)
Provisions (779) (802)
Deferred tax liabilities (110) (83)
Total non-current liabilities (2,116) (2,556)
Total liabilities (16,381) (13,983)
Net assets 30,849 29,690
Equity
Issued share capital 591 591
Merger reserve 546 546
Other reserves (1,637) (1,842)
Retained earnings 31,349 30,395
Total equity 30,849 29,690
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2007
Note 2007 2006
£'000 £'000
Operating activities
Profit for the year 2,729 3,668
Adjustments for:
Financial income (2,383) (2,154)
Financial expense 1,796 1,665
Income tax expense 1,751 2,145
Share based payments 196 130
Depreciation of property, plant and equipment 1,155 1,154
Amortisation of intangible assets 843 658
Operating cash flow before movements in working capital 6,087 7,266
Decrease/(increase) in inventories
475 (4,152)
Increase in trade and other receivables (1,356) (2,062)
Increase in trade and other payables 800 1,504
Decrease in pension liabilities (192) (615)
Transfer from 'Restricted Cash' - 485
Cash generated from operations 5,814 2,426
Income taxes received/(paid) on profit on ordinary activities 423 (1,623)
Income tax paid on gain on disposals - (2,559)
Interest paid (152) (100)
Net cash from operating activities 6,085 (1,856)
Investing activities
Interest received 484 355
Acquisition of subsidiary (net of cash received) - (2,449)
Capital expenditure (1,626) (1,207)
Expenditure on development (958) (976)
Sale of tangible fixed assets 11 82
Net cash used in investing activities (2,089) (4,195)
Financing activities
Dividends paid (1,687) (1,484)
Transfer to 'Restricted Cash' 5 - 2,559
Preference shares redeemed (12) (29)
Own shares acquired - (308)
Net cash (used in)/generated from financing activities (1,699) 738
Net increase/(decrease) in cash and cash equivalents 2,297 (5,313)
Cash and cash equivalents at 1 January 4,346 9,829
Effect of exchange rates on cash held (82) (170)
Cash and cash equivalents at 31 December 6,561 4,346
Consolidated statement of recognised income and expense
For the year ended 31 December 2007
2007 2006
£'000 £'000
Exchange difference on translation of foreign operations 193 (1,900)
Actuarial losses on defined benefit pension schemes (339) 303
Tax on items taken directly in equity 131 (133)
Effect of change in UK Tax rate (64) -
Income and expense recognised directly in equity (79) (1,730)
Profit for the period 2,729 3,668
Total recognised income and expense for the period attributable to 2,650 1,938
equity holders of the parent
Notes to the consolidated financial statements
for the year ended 31 December 2007
The consolidated financial statements of the Company for the year ended 31
December 2007 comprise the Company and its subsidiaries (together referred to as
the 'Group').
Statement of compliance
The consolidated financial statements have been prepared and approved by the
directors in accordance with International Financial Reporting Standards as
adopted by the EU ('Adopted IFRSs'). The Company has elected to present its
parent company financial statements in accordance with UK GAAP.
Basis of preparation
The financial statements have been prepared on the historical cost basis except
for the revaluation of certain financial instruments which are carried at fair
value.
The financial information contained in this preliminary announcement does not
constitute the Company's statutory accounts for the years ended 31 December 2007
and 2006. Statutory accounts for 2006 have been delivered to the registrar of
companies, and those for 2007, will be delivered in due course. The auditors
have reported on these accounts, their reports were unqualified and did not
contain statements under section 237 (2) or (3) of the Companies Act 1985. Full
financial statements for the year ended 31 December 2007, will shortly be posted
to share holders, and after adoption at the Annual General Meeting on 7 May 2008
will be delivered to the registrar.
1. Segment reporting
Business segments
The Group comprises the following business segments: -
• Components comprising the indication business and electromagnetic
disconnects
• Signals/Illumination which includes Traffic and Rail Signals, Obstruction
Lights and the new Solid State Lighting products.
All revenue relates to the sale of goods. The primary format used for segmental
reporting is by business segment as this reflects the internal management
structure and reporting of the Group. Segment results, assets and liabilities
include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis. Unallocated expenses comprise corporate costs
including share based payments and unallocated assets and liabilities comprise
cash, borrowings, and pension fund liabilities. The 2006 segmental results have
been restated in line with the format included in this year's report.
Business segments
2007 Electro LED
magnetic Indication Total Signals/
components business Components Illumination Total
£'000 £'000 £'000 £'000 £'000
Revenue 11,000 19,029 30,029 33,379 63,408
Contribution 2,656 10,525 13,181 10,774 23,955
Overhead costs (2,808) (5,083) (7,891) (10,660) (18,551)
Segment results (152) 5,442 5,290 114 5,404
Unallocated expenses (1,511)
Operating profit 3,893
Net financing income 587
Profit before tax 4,480
Income tax expense (1,751)
Profit after tax 2,729
2006 Electro LED
magnetic Indication Total Signals/
components business Components Illumination Total
£'000 £'000 £'000 £'000 £'000
Revenue 11,361 20,654 32,015 30,287 62,302
Contribution 3,078 11,701 14,779 10,602 25,381
Overhead costs (2,598) (5,076) (7,674) (10,970) (18,644)
Segment results 480 6,625 7,105 (368) 6,737
Unallocated expenses (1,413)
Operating profit 5,324
Net financing income 489
Profit before tax 5,813
Income tax expense (2,145)
Profit after tax 3,668
2007
Other Information Electro magnetic LED
components Indication Total Components Signals/
business Illumination Total
£'000 £'000 £'000 £'000 £'000
Capital Additions 222 431 653 973 1,626
Depreciation and 441 420 861 1101 1,962
amortisation
2006
Other Information Electro magnetic LED
components Indication Total Components Signals/
business Illumination Total
£'000 £'000 £'000 £'000 £'000
Capital Additions 209 344 553 654 1,207
Depreciation and 352 397 749 1,020 1,769
amortisation
Balance Sheet - Assets 2007
Electro magnetic LED
components Indication Total Components Signals/
business Illumination Total
£'000 £'000 £'000 £'000 £'000
Segment assets 6,320 7,999 14,319 24,495 38,814
Unallocated assets 8,416
Consolidated total assets 47,230
Balance Sheet - Liabilities 2007
Electro magnetic LED
components Indication Total Components Signals/
business Illumination Total
£'000 £'000 £'000 £'000 £'000
Segment liabilities (1,267) (2,705) (3,972) (5,757) (9,729)
Unallocated liabilities (6,652)
Consolidated total (16,381)
liabilities
Balance Sheet - Assets 2006
Electro magnetic LED
components Indication Total Components Signals/
business Illumination Total
£'000 £'000 £'000 £'000 £'000
Segment assets 6,901 7,033 13,934 23,828 37,762
Unallocated assets 5,911
Consolidated total assets 43,673
Balance Sheet - Liabilities 2006
Electro magnetic LED
components Indication Total Signals/
business Components Illumination Total
£'000 £'000 £'000 £'000 £'000
Segment liabilities (1,448) (1,773) (3,221) (5,455) (8,676)
Unallocated liabilities (5,307)
Consolidated total (13,983)
liabilities
Geographical segments
The Components and Signals/Illumination segments are managed on a worldwide
basis, but operate in three principal geographic areas, UK, Europe and North
America. The following table provides an analysis of the Group's sales by
geographical market, irrespective of the origin of the goods. All revenue
relates to the sale of goods.
Sales revenue by geographical market
Total
2007 2006
£'000 £'000
North America 37,116 36,386
UK 11,401 10,896
Rest of Europe 7,300 7,690
Rest of world 7,591 7,330
63,408 62,302
Continuing operations Segmental assets Capital expenditure
2007 2006 2007 2006
£'000 £'000 £'000 £'000
North America 26,059 22,394 1,125 899
UK 14,487 15,248 460 259
Rest of Europe 6,684 6,031 41 49
47,230 43,673 1,626 1,207
2. Income tax expense
Recognised in the income statement
2007 2006
£'000 £'000
Current tax expense
Current year 1,825 1,838
Adjustment for prior years (110) (209)
1,715 1,629
Deferred tax expense
Origination and reversal of temporary differences 58 505
Adjustment for prior years (22) 11
Total income tax expense 1,751 2,145
Reconciliation of effective tax rate
2007 2007 2006 2006
% £'000 % £'000
Profit for the period 2,729 3,668
Total income tax expense 1,751 2,145
Profit excluding income tax 4,480 5,813
Income tax using the UK corporation tax rate of 30% 30.0 1,344 30.0 1,744
Effect of tax rates in foreign jurisdictions 6.7 302 6.0 346
Non-deductible expenses 1.2 54 0.6 37
Research and development credit - - (0.7) (41)
Unrecognised losses 4.3 194 4.4 257
Change in UK tax rate (0.2) (11) - -
Over provision in prior years (2.9) (132) (3.4) (198)
39.1 1,751 36.9 2,145
Deferred tax recognised directly in equity 2007 2006
£'000 £'000
Relating to pension accounting 67 (133)
3. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2007 was based on the
profit for the year of £2,729,000 (2006:£3,668,000) and a weighted average
number of ordinary shares outstanding during the year ended 31 December 2007 of
31,084,000 (2006:31,150,000).
Diluted earnings per share
The calculation of diluted earnings per share at 31 December 2007 was based on
profit for the year of £2,729,000 (2006:£3,668,000) and a weighted average
number of ordinary shares outstanding during the year ended 31 December 2007 of
31,619,000 (2006:31,367,000) calculated as follows: -
Weighted average number of ordinary shares (diluted)
2007 2006
'000 '000
Weighted average number of ordinary shares 31,084 31,150
Effect of share options on issue 535 217
Weighted average number of ordinary shares (diluted) 31,619 31,367
4. Dividends
The following dividends were paid in the year:
2007 2006
£'000 £'000
Interim-1.90p per ordinary share (2006:1.75p) 594 547
2006 Final-3.5p per ordinary share (2005:3.0p) 1093 937
1,687 1,484
After the balance sheet date the following dividends were recommended by the
Directors. The dividends have not been provided for and there are no
corporation tax consequences.
2007 2006
£'000 £'000
Final recommended dividend
3.8p per ordinary share (2006:3.5p) 1,187 1,093
5. Restricted cash
As part of the Capital Reduction in 2005 the Court required certain cash to be
set aside into a separate bank account 'Creditors Account' for the protection of
actual, prospective or contingent liabilities of the Company. At 31 December
2007 the balance on the restricted cash balance was £956,000 (2006:£956,000) and
is included in trade and other receivables.
- ENDS -
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