REG-Dialight PLC Interim Results
Date/Range: 18-SEP-2006
Short Abstract: REG-Dialight PLC Interim Results
Date: Embargoed until 07:00 am Monday 18 September 2006
Contacts: Roy Burton – Group Chief Executive
Cathy Buckley – Finance Director
Dialight PLC
Tel: 01480 447490
Alistair Mackinnon-Musson
Nicola Savage
Hudson Sandler
Tel: 020 7796 4133
Email: dialight@hspr.com
DIALIGHT PLC
Interim results for the six months ended 30 June 2006
Dialight plc, the UK based leader in applied LED technology, announces its
Interim Results for the six months ended 30 June 2006.
Dialight consists of two business segments:
– Components comprising indication products and electromagnetic components
– Signals / Illumination which includes Traffic and Rail Signals,
Obstruction Lights and the new Solid State Lighting products of the Group
Highlights
– Continuing operations
– Turnover up 16% to £30m
– Order intake up 24% year on year
– Operating profit up 53% to £2.3m
– Earnings per share up 63% to 5.2p
– Interim dividend of 1.75 pence per share
– Successful acquisition and integration of Lumidrives
Roy Burton, Group Chief Executive, said
“I am pleased to report both our Components and Signals/Illumination segments
increased sales, order intake and profit contribution.”
“The relocation of our European traffic light production to the UK and the
developing relationship we have with key European traffic systems OEMs will
enable us to build further our presence in the European solid state traffic
signal market, as adoption rates accelerate.”
“The Lumidrives acquisition and the recently announced license agreement provide
an excellent platform for expansion in the growing Solid State Lighting market.”
“With continuing healthy demand, the Board considers the Group to be well
positioned to make progress in the second half.”
Overview
This is the first period of reporting Dialight as a stand alone business focused
on Applied LED technology and the emerging solid state lighting market. We are
pleased to report improved performance for the first half of the year in both
business segments, Components and Signals/Illumination, with increased sales,
order intake and profit contribution in each.
As previously announced, Lumidrives, a leading supplier of solid state lighting
fixtures and components, was acquired in January 2006 and we can confirm the
successful integration of this company into the Group. In addition, we have
completed the transfer of the Group’s traffic light manufacturing facility from
Wang, Germany to Newmarket, UK. The operation is now well organised to service
the expansion of the European traffic business. Our US subsidiary signed a
license agreement with Color Kinetics, an important strategic step for our solid
state lighting business in architectural, entertainment and general lighting
applications in North America.
Financial Results
Revenue for the six months to 30 June 2006 increased by 16% to £30 million
(2005: £25.8 million) and operating profit increased by 53% to £2.3 million
(2005: £1.5 million). Basic earnings per share rose by 63% to 5.2 pence per
share (2005: 3.2 pence).
During the first half of the year the Group had a net cash outflow of £4.3
million after the payment of £2.5 million for the acquisition of Lumidrives,
payment of the 2005 final dividend of £0.9 million and £0.3 million to fund the
purchase of 156,000 shares for the Employee Share Plan. Working capital absorbed
£2.4 million with inventory increasing by £4.2 million from the start of the
year. Unallocated overheads represent all costs other than direct material,
direct labour and sales commission. The increase in unallocated costs over last
year is due principally to the addition of Lumidrives to the Group and
additional employment costs partly offset by a reduction to corporate costs of
£0.5 million.
Business Review
Components
Orders in the Components segment showed a 30% increase for the half versus the
prior year, including two sizeable one-off orders for electromagnetic disconnect
products, most of which have been delivered in the first half. As commented on
in March, the general electronics market is seeing a healthy increase in
activity which has increased demand for our indicator products.
Overall, sales in the period showed a 27% increase versus the first half of
2005. Our business maintained the same strong sales channel position both
through the major electronic distributors and direct to the major OEMs and there
has been no significant change to contribution margins. The Restriction of use
of Hazardous Substances regulations have now become mandatory in Europe and all
required shipments are fully compliant.
Signals/ Illumination
The Signals/Illumination segment showed an 18% increase in orders and an
underlying growth in sales of 13%, before the impact of a contract cancellation
in the US traffic market (6% increase after the cancellation). Contribution
increased by 12% over the comparative period.
This segment is driven by the adoption rate of high brightness LEDs in
applications such as traffic lights, rail signals and aircraft obstruction
lights, where coloured LEDs provide major energy savings; and by industrial
white lighting where the long life and reliability of LEDs provide safety and
maintenance cost benefits.
Our traffic light business in the relatively mature North American market does
not vary significantly from period to period. However, in this half there has
been the introduction of a new ITE (Institute of Traffic Engineers) standard for
traffic lights in the US. Dialight introduced a preliminary version of this
light early in 2005 and followed this with an upgraded more efficient signal in
June.
Whilst adoption of this new standard is not mandatory, it is expected that
adoption will accelerate in the second half of 2006. Significantly, we are the
first supplier to conform fully to the new standards which gives Dialight the
opportunity to build advantage over its competitors. To conform to the new
standard posed a significant challenge to our optical and thermal engineers
which we are pleased to say they have overcome, with the design of an efficient
and cost effective signal.
Inventory rose in the period, particularly of traffic related material. This was
largely due to the transition between standards and the requirement, for the
foreseeable future, to continue to supply product to our customers under both
the old and new standards. We expect inventory to reduce to normal levels during
the remainder of the year as the balance of customer demand for product under
the old and new standards stabilises. We will, however, be shipping to both old
and new standards for some time.
The European traffic business started the year slowly due to adverse weather
conditions but showed a healthy upturn during the second quarter. The assembly
of traffic lights was transferred successfully from Germany to Newmarket in the
UK and output performance targets reached, making us confident of delivering
product against the expected growth in demand.
The costs of this transfer, incurred in the first half, are expected to be
recovered in the second half of the year. We remain optimistic for the prospects
of the European traffic business in particular, through our relationship with
Siemens and other major traffic OEMS. We believe we are taking market share as
well as seeing an enhanced adoption due to the introduction of the new German
OCIT standard. To date adoption of LED based traffic lights across all European
territories has been relatively low, nevertheless, our customer base is
expanding as we gain further customer specific approvals and we are currently
working on custom products for the UK market.
In Asia we have identified a number of “regulated” markets for LED traffic
lights where products of the quality and specification of Dialight’s can be
appropriately specified and where the value proposition is recognised. We are
targeting these markets for product approval. There exists a market in certain
Asian countries for “unregulated” and therefore low price, low specification LED
products, but this is not a market which we plan to pursue.
Our rail business remains steady. In Europe initial shipments were made to
Danish Rail although further deliveries are held pending a final review by the
safety authorities. Discussions continue with a number of rail authorities in
both Europe and Asia but we expect the adoption of LED rail signals to be slower
than for our other markets due to the inherent conservatism of the rail
industry.
Aircraft obstruction lights have been a successful application for red LEDs for
the past four years. Dialight was the first manufacturer to qualify a light for
this application and has been a pioneer in the market. We sell our product
across global markets to operators of broadcast and telecommunications towers,
wind towers and latterly oil refineries. At the end of 2005, we introduced a Red
Beacon which is qualified for hazardous locations such as oil refineries and
offshore platforms.
Sales of obstruction lights were flat on last year; however 2005 did benefit
from significant demand from Poland where the adoption of LED obstruction lights
was high. This year the geographical spread of our customer base and sales has
increased significantly. During the half, we qualified our new low power beacon
to the Federal Aviation Authority specification and have shipped the first
volumes of Hazardous Location Beacons to a number of refineries in the USA.
Acquisition and Licensing
In January of this year, in line with our solid state lighting strategy, we
completed the acquisition of Lumidrives Limited, a UK based supplier of solid
state lighting fixtures and modules. Lumidrives gives Dialight a position in the
European Solid State Lighting market for Architectural and Entertainment
applications. Sales in 2005 were over £3 million, almost entirely in Europe and
primarily through other lighting OEMs. The business has performed well since
acquisition, in line with our expectations and has expanded sales of its own
products in Europe. We are now seeing some benefit from taking complementary ‘
Dialight’ products through these channels.
As previously mentioned, Lumidrives sales have been primarily in Europe. An
exciting opportunity for solid state lighting exists in the North American
market and Dialight has developed products and technologies to address this
opportunity. In June of this year at the request of our customers, we concluded
a license agreement with Color Kinetics. There had been uncertainty in the
United States lighting industry regarding ownership of intellectual property in
relation to colour mixing and the application of LED technology. As a result of
this agreement, Dialight is able to provide its US customers with the licensed
intellectual property of Color Kinetics enhanced by Dialight’s own products,
technology and intellectual property including those of Lumidrives. We have
opened up new sales channels in North America and are driving our full product
range into that market. As with the European market, our strategy is to sell
through the major lighting OEMs and to that end discussions are proceeding.
In addition to OEM sales, there has been increasing interest in solid state
lighting from the major electronics distributors. Future Electronics has been
addressing this market for some time as the exclusive distributor for Phillips
Lumileds. Arrow Electronics has launched a lighting initiative as has Premier
Farnell. Dialight has long standing relationships with these distributors
through its components business and the first orders from these distributors
have been received for the Lumidrives range of lighting related modules.
Dividend
Following the disposal of the Solartron businesses last year the Board announced
the future dividend policy would be designed to reflect the new profile and
growth potential of the continuing Group. The final dividend for 2005 was 3
pence per share, which based on our historic pattern, would have followed an
interim dividend for 2005 of 1.5 pence for the continuing Group.
In light of the performance of the Group your Board recommends an interim
dividend of 1.75 pence per share to be paid on 26 October 2006 to all
shareholders registered on 29 September 2006.
Outlook
Demand for the Group’s Components products continues to be in line with the
encouraging levels achieved in the first half, although it is recognised this
business segment remains sensitive to overall world market levels of demand. The
Lumidrives acquisition and the recently announced license agreement position us
well in the growing solid state lighting market.
The prospects for the European traffic market are good, especially with our
focus on developing our relationships with key traffic systems OEMs. Our other
markets remain promising, driven by the adoption of LED technology based on
strong value propositions. The weakness of the US Dollar, in which two-thirds of
our sales are denominated, will if maintained at current levels, have a modest
adverse impact on our expected growth in sterling terms.
With continuing healthy demand the Board considers the Group to be well
positioned to make progress in the second half.
CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2006 (unaudited)
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
Note £’000 £’000 £’000
Continuing operations
Revenue 3 29,997 25,820 56,129
Cost of sales (22,240) (19,099) (41,432)
Gross Profit 7,757 6,721 14,697
Distribution costs (2,221) (2,198) (4,485)
Administrative expenses (3,224) (3,007) (6,266)
Operating profit 3 2,312 1,516 3,946
Financial income 1,104 723 2,201
Financial expense (835) (835) (1,691)
Net financing income 4 269 (112) 510
Profit before tax 2,581 1,404 4,456
Income tax expense 5 (961) (442) (1,403)
Profit after tax from continuing operations 1,620 962 3,053
Profit from discontinued operations, net of 11 – 2,416 24,945
tax
Profit for the year attributable to equity
holders of the parent
– Continuing operations 1,620 962 3,053
– Discontinued operations – 2,416 24,945
1,620 3,378 27,998
Earnings per share
Basic 7 5.2p 11.2p 92.2p
Diluted 7 5.2p 11.1p 92.2p
Continuing operations
Basic 7 5.2p 3.2p 10.1p
Diluted 7 5.2p 3.2p 10.1p
The accompanying Notes form an integral part of these Interim Financial
Statements
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the period ended 30 June 2006 (unaudited)
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
£’000 £’000 £’000
Exchange difference on translation of foreign (947) 833 1,100
operations
Exchange realised on disposal of businesses – – (13)
Actuarial losses on defined benefit pension – (612) (1,266)
schemes
Tax on items taken directly in equity – 269 424
Net expense recognised directly in equity (947) 490 245
Profit for the period 1,620 3,378 27,998
Total recognised income and expense for the 673 3,868 28,243
period attributable to equity holders of the
parent
Effect of change in accounting policy
Impact of adoption of IAS32 and 39 (net of tax) to:
– retained earnings: Cash flow hedges 190 190
– share capital: Reclassification of preference shares (2,280) (2,280)
Attributable to members (2,090) (2,090)
The accompanying Notes form an integral part of these Interim Financial
Statements
CONSOLIDATED BALANCE SHEET
As at 30 June 2005 (unaudited)
30 June 2006 30 June 2005 31 December 2005
Note £’000 £’000 £’000
Assets
Property, plant & equipment 5,752 5,922 5,983
Intangible assets 8 7,274 4,096 4,321
Deferred tax asset 1,873 2,618 2,405
Total non-current assets 14,899 12,636 12,709
Inventories 10,805 8,392 6,742
Trade and other receivables 13,493 12,642 16,685
Cash and cash equivalents 5,517 1,711 9,829
Assets classified as held for resale – 49,054 –
Total current assets 29,815 71,799 33,256
Total assets 44,714 84,435 45,965
Liabilities
Loans and borrowings (2,196) (2,232) (2,213)
Trade and other payables (9,335) (7,472) (7,477)
Tax liabilities (942) (767) (3,364)
Liabilities classified as held for resale – (13,467) –
Total current liabilities (12,473) (23,938) (13,054)
Employee benefits (2,408) (9,681) (3,104)
Provisions (871) (800) (890)
Deferred tax liability (52) (39) (53)
Total non-current liabilities (3,331) (10,520) (4,047)
Total liabilities (15,804) (34,458) (17,101)
Net assets 28,910 49,977 28,864
Equity
Issued share capital 9 591 569 587
Share premium 9 546 6,049 –
Other reserves 9 (901) 40,175 29
Retained earnings 9 28,674 3,184 28,248
Total equity 28,910 49,977 28,864
CONSOLIDATED CASH FLOW STATEMENT
For the period ended 30 June 2006 (unaudited)
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
£’000 £’000 £’000
Operating activities
Profit for the year 1,620 3,378 27,998
Adjustments for:
Financial income (1,104) (921) (2,399)
Financial expense 835 1,134 1,993
Income tax expense 961 1,972 2,742
Share based payments 68 – –
Gain on disposal of discontinued operations – – (22,022)
Depreciation of property, plant and equipment 636 628 1,423
Amortisation of intangible assets 317 218 567
Operating cash flow before movements in working 3,333 6,409 10,302
capital
(Increase)/decrease in inventories (4,197) (116) 1,017
Decrease/(increase) in trade and other receivables 136 (2,923) (3,115)
Increase/(decrease) in trade and other payables 1,562 828 (168)
Decrease in pension liabilities (452) – (418)
Cash generated from operations 382 4,198 7,618
Income taxes paid on profit on ordinary activities (511) (1,263) (2,777)
Income tax paid on gain on disposals (2,397) – (5,237)
Interest paid (832) (1,177) (1,986)
Net cash from operating activities (3,358) 1,758 (2,382)
Investing activities
Interest received 1,104 921 2,399
Acquisition of business net of cash acquired (2,449) – –
Disposal of discontinued operations – – 65,689
Capital expenditure (602) (1,429) (2,228)
Expenditure on development (507) (1,020) (1,505)
Sale of tangible fixed assets – – 44
Net cash (utilised)/generated from investing (2,454) (1,528) 64,399
activities
Financing activities
Dividends paid (937) (2,288) (3,341)
Proceeds from the issue of shares – – 2,089
Transfer from/(to) “Restricted Cash” 2,813 – (4,000)
Special contributions to pension funds – – (7,374)
Preference shares redeemed (17) (48) (67)
Own shares acquired (308) – –
Return to shareholders following disposal of – – (46,524)
businesses
Net cash generated by/(used in) financing 1,551 (2,336) (59,217)
activities
Net (decrease)/increase in cash and cash (4,261) (2,106) 2,800
equivalents
Cash and cash equivalents at 1 January 9,829 6,768 6,768
Effect of exchange rates on cash held (51) 514 261
Cash held as asset held for sale – (3,465) –
Cash and cash equivalents at end of period 5,517 1,711 9,829
Significant Accounting Policies
For the period ended 30 June 2006 (unaudited)
1) Basis of preparation
The consolidated interim financial statements have been prepared on the
historical cost basis except for the revaluation of certain financial
instruments. The financial information for the six months ended 30 June 2006 and
the comparative figures for the six months ended 30 June 2005 are unaudited and
have been prepared applying the accounting policies and presentation that were
applied in the preparation of the company’s published consolidated financial
statements for the year ended 31 December 2005 except for the following changes:
As required by the Listing Rules of the Financial Services Authority, as a
result of the endorsement by the EU of new or changed IFRSs that are applicable
or available for early adoption in the preparation of the company’s next
consolidated financial statements for the year ending 31 December 2006, the
directors have changed their accounting policies in respect of the amendment to
IAS39. Where Dialight plc, the company enters into financial guarantee contracts
to guarantee the indebtedness of other companies within its group, the company
considers these to be insurance arrangements, and accounts for them as such. In
this respect, the company treats the guarantee contract as a contingent
liability until such time as it becomes probable that the company will be
required to make a payment under the guarantee. The company does not expect the
amendment to have any impact on the financial statements for the period
commencing 1 January 2006.
In respect of the Defined Benefit plans no actuarial gains or losses were
recognised in the period. There will be a full review performed at the year end
and any actuarial gains and losses arising will be recognised through the
statement of recognised income and expense at that date.
The comparative figures for the year ended 31 December 2005 does not constitute
statutory accounts as defined in section 240 of the Companies Act 1985. A copy
of the statutory accounts for that year have been delivered to the Registrar of
Companies and include an audit report which was unqualified and did not contain
a statement under either Section 237(2) or 237(3) of the Companies Act 1985.
Basis of consolidation
Subsidiaries are entities controlled by the Group. The financial statements of
subsidiaries are included in the consolidated financial statements from the date
control commences until the date that control ceases.
2) Accounting estimates and judgements
The preparation of interim 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 the estimates.
Except as described below, in preparing these interim financial statements, the
significant judgements made by management in applying the Group’s accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements as at and for the year
ended 31 December 2005.
– Recoverable amount of intangible assets related to the acquisition of
Lumidrives (see note 10).
3) Segmental reporting
The Group’s primary reporting format is business segments and its secondary
format is geographical segments. A business segment is a component of the Group
that is engaged in providing a group of related products and is subject to risks
and returns that are different from those other business segments. A
geographical segment is a component of the Group that operates within a
particular economic environment and this is subject to risks and returns that
are different from those of components operating in other economic environments.
Business segments
The Group comprises the following business segments: –
– Components comprising the indication businesses and the electromagnetic
components.
– Signals/Illumination which includes Traffic and Rail Signals, Obstruction
Lights and Solid State Lighting products.
All revenue relates to the sale of goods. The contribution shown below
represents sales less direct costs incurred by each business segment.
Business segments
Six months ended 30 June 2006 Components Signals/
Illumination Total
£’000 £’000 £’000
Revenue 15,790 14,207 29,997
Contribution 7,564 5,162 12,726
Unallocated expenses (10,414)
Operating profit 2,312
Net financing income 269
Profit before tax 2,581
Six months ended 30 June 2005 Components Signals/
Illumination Total
£’000 £’000 £’000
Revenue 12,423 13,397 25,820
Contribution 6,365 4,611 10,976
Unallocated expenses (9,460)
Operating profit 1,516
Net financing income (112)
Profit before tax 1,404
Year ended 31 December 2005 Components Signals/
Illumination Total
£’000 £’000 £’000
Revenue 26,564 29,565 56,129
Contribution 13,313 9,902 23,215
Unallocated expenses (19,269)
Operating profit 3,946
Net financing income 510
Profit before tax 4,456
The tables above exclude the segmental results of the Solartron businesses which
were sold in 2005.
4. Net financing income
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
£’000 £’000 £’000
Interest income 193 24 717
Expected return on assets in the pension schemes 911 699 1,484
1,104 723 2,201
Interest expense (43) (9) (42)
Interest charge on pension scheme liabilities (792) (826) (1,649)
(835) (835) (1,691)
Net financing income 269 (112) 510
5. Income tax expense
The tax charge of £961,000 for the half year to 30 June 2006 reflects the
anticipated effective tax rate for the year ending 31 December 2006.
6. Dividends
During the period the following dividends were paid:
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
£’000 £’000 £’000
Final – 3.0p (2005:7.6p) per ordinary share 937 2,288 2,288
Interim – 3.4p per ordinary share – – 1,053
937 2,288 3,341
The following dividends were declared/proposed at the balance sheet date:
6 months ended 6 months ended 12 months ended
30 June 2006 30 June 2005 31 December 2005
£’000 £’000 £’000
3.0p final dividend proposed – – 937
1.75p (2005:3.4p) interim dividend declared 547 1,053 –
547 1,053 937
7. Earnings per share
The calculation of basic earnings per share is based on the profit for the
period of £1,620,000 (2005:£3,378,000) and a weighted average number of ordinary
shares outstanding during the six months ended 30 June 2006 of 31,219,000 (2005:
30,102,000).
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2006 2005 2005
£’000 £’000 £’000
Profit on ordinary activities after taxation-Continuing 1,620 962 3,053
-Total 1,620 3,378 27,998
Number Number Number
Weighted average number of shares 31,219,000 30,102,000 30,369,000
Diluted effect of share options – 354,000 2,000
Diluted weighted average number of shares 31,219,000 30,456,000 30,371,000
The weighted average number of shares used in the basic earnings per share
calculation excludes 156,000 shares held by the Dialight Employees’ Share
Ownership Plan Trust.
8. Intangible assets
Concessions, Goodwill Development Total
patents, licences costs
and trademarks
£’000 £’000 £’000 £’000
Costs
Balance at 1 January 2006 573 3,291 1,470 5,334
Acquisition through business combinations 664 2,112 – 2,776
Other acquisitions – internally developed – – 507 507
Effects of foreign exchange movement – 19 (43) (24)
Balance at 30 June 2006 1,237 5,422 1,934 8,593
Amortisation and impairment losses
Balance at 1 January 2006 (573) – (440) (1,013)
Amortisation for the period (83) – (234) (317)
Effects of foreign exchange movement – – 11 11
Balance at 30 June 2006 (656) – (663) (1,319)
Carrying amounts
At 30 June 2006 581 5,422 1,271 7,274
At 31 December 2005 – 3,291 1,030 4,321
9. Reconciliation of movement in Other Reserves Retained Earnings
capital and reserves
Share Share Trans- Capital Reserve for Profit Total
capital premium lation redemption own shares and loss
account reserve reserve account
£’000 £’000 £’000 £’000 £’000 £’000 £’000
Balance at 1 January 2006 587 – 10 19 – 28,248 28,864
Profit for the period – – – – – 1,620 1,620
Net expense recognised directly in
equity (See Statement of Recognised
Income and Expense) – – (947) – – – (947)
Share based payments 68 68
Dividends to shareholders (937) (937)
B Shares redeemed – – 17 – (17) –
New shares issued 4 546 – – – 550
Own shares purchased – – – (308) – (308)
Balance at 30 June 2006 591 546 (937) 36 (308) 28,982 28,910
Balance at 1 January 2005 2,849 6,049 (1,077) 40,372 – 2,294 50,487
Impact of adoption of IAS32 and 39 (2,280) – – – 190 (2,090)
At 1 January 2005 as restated 569 6,049 (1,077) 40,372 – 2,484 48,397
Profit for the period – – – – – 3,378 3,378
Net expense recognised directly in
equity (See Statement of Recognised
Income and Expense) – – 833 – – (343) 490
Dividends to shareholders – – – – – (2,288) (2,288)
B Shares redeemed – – – 47 – (47) –
Balance at 30 June 2005 569 6,049 (244) 40,419 – 3,184 49,977
The reserve for own shares comprises the cost of the Company’s shares held by
the Group. At 30 June 2006 the number of shares held by the group through the
Share Ownership Trust was 156,000 (2005: nil). The market value of these shares
at 30 June 2006 is £321,000.
In 2005 the Company underwent a Capital reorganisation following which a total
of £27 million was returned to shareholders.
10. Acquisition of subsidiary
On 11 January 2006 the Group acquired the entire issued share capital of
Lumidrives Limited for a total consideration of £3million. The consideration
was satisfied in part by cash of £2.5million and the balance of £0.5million
satisfied by the issue of 223,578 Dialight plc shares. The ordinary shares were
issued at a price of £2.46 being the market price of the 1.89p ordinary shares
at the close of business immediately preceding completion. The subsidiary
contributed £0.2million to the group profit since acquisition.
The acquisition had the following effect on the Group’s assets and liabilities
(the fair value adjustments are considered provisional):
Acquisition amounts
£’000
Property, plant and equipment 39
Intangible assets (see note 8) 664
Inventories 383
Trade and other receivables 426
Cash and cash equivalents 77
Deferred tax liabilities 3
Trade and other payables (628)
Net identifiable assets and liabilities 964
Goodwill on acquisition (see note 8) 2,112
Consideration 3,076
Consideration satisfied by the issue of shares 550
Consideration satisfied by cash 2,526
Cash acquired (77)
Net cash outflow 2,449
The goodwill recognised on the acquisition is attributable mainly to the skills
and technical talent of the acquired businesses management and workforce.
11. Discontinued operations
In 2005 the Group sold its entire Solartron business segment. The Solartron
business was classified as “discontinued operations” in both the 2005 interim
and full year accounts.
The comparative income statement has been restated to show the profit from
discontinued operations separately on one line.
Profit attributable to the discontinued operations for the six months ended 30
June 2005 and year ended 31 December 2005 was as follows:
6 months ended 12 months ended
30 June 2005 31 December 2005
£’000 £’000
Revenue 32,501 39,023
Cost of sales (20,408) (24,639)
Gross Profit 12,093 14,384
Distribution costs (5,314) (6,381)
Administrative expenses (2,732) (3,637)
Operating profit 4,047 4,366
Net finance costs (101) (104)
Profit before tax 3,946 4,262
Income tax expense (1,530) (1,339)
Profit after tax but before gain on sale (net of tax) 2,416 2,923
Gain on sale of discontinued operations, net of tax – 22,022
Profit for the period 2,416 24,945
This information is provided by RNS
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