TIDMDIA
RNS Number : 0718W
Dialight PLC
30 July 2018
Dialight plc
("Dialight" or "the Group")
Half year results 2018
Dialight plc (LSE: DIA.L), the global leader in sustainable LED
lighting for industrial applications, announces its half year
results for the six months ended 30 June 2018.
H1 2018 H1 2017
GBPm GBPm
================================================ ======== ========
Revenue 80.1 92.7
Underlying(1) profit from operating activities 2.9 6.5
Underlying(1) profit before tax 2.8 6.4
Underlying basic EPS 6.4p 12.8p
Non underlying costs - (2.4)
Statutory profit from operating activities 2.9 4.1
Statutory profit before tax 2.8 4.0
Statutory EPS 6.4p 8.0p
Net cash 7.3 12.7
Key points
* Operational improvements; confidence in H2
* High Bay production commenced in our Mexico and
Malaysia facilities; reliance on manufacturing
partner reducing
* European, Australian Lighting revenues and orders
increased; US declined though good recovery expected
in H2 2018
Marty Rapp, Group Chief Executive, said:
"We have taken targeted actions to improve our operational
performance, reducing late orders significantly since the start of
the year. This improvement is primarily due to moving an increasing
proportion of our product assembly back in-house. On-time delivery
and cost performance of our internal assembly are both excellent. I
am now confident that as we move toward our traditionally heavy
fourth quarter we will be able to deliver our products on time and
in the quantities needed. As previously guided, our results for
2018 will be heavily weighted to H2 reflecting the continued
resolution of our operational issues.
Our market proposition remains compelling with the
sustainability benefits of reduced energy usage, lower carbon
emissions, reduced maintenance and improved safety offering real
value to our customers. We are now resuming a more aggressive
approach to delivering growth, as we transition from recovery to
growth. We remain excited by the Group's prospects for the
future."
Results presentation:
A presentation to analysts and investors will be held today at
09.00 BST at The City Centre, 80 Basinghall Street, London, EC2V
5AG, United Kingdom. The presentation and an audiocast will be made
available on the company's website, www.dialight.com.
Contacts:
Dialight Plc
Tel: +44 (0)203 058 3542
Marty Rapp - Group Chief Executive
Tel: +44 (0)203 058 3542
Fariyal Khanbabi - Group Finance Director
MHP Communications
Tel: +44 (0)20 3128 8100
Tim Rowntree
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,
Dubai and Brazil. www.dialight.com.
Notes:
1. Defined as excluding non-underlying items of GBPnil (H1 2017: GBP2.4m)
2. Constant currency impact is calculated by re-translating the
prior year numbers at the exchange rate prevailing in the current
year.
3. Order intake is the value of orders received in a given period.
4. 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
The most critical issue facing Dialight since the second half of
2017 has been late product deliveries due to the continued
inability of our manufacturing partner to adequately increase
production output. We have taken targeted actions to improve our
operational performance and these actions have produced significant
improvements. We are now confident in our ability to support the
normal Q4 spike in demand.
Our overall level of late orders has improved by 60% since the
start of the year. The movement of final assembly of an increasing
volume of products from our manufacturing partner back to our own
facilities has been a significant driver of this improvement. We
are currently producing approximately 37% of our total lighting
volume in our own facility in Mexico and we are now rapidly ramping
the volumes there. The current on time delivery for our High Bay
product line at our Mexico facility is 85%. On time delivery at our
manufacturing partner averaged 51% for the half year and was 55%
for the month of June. There is sufficient capacity available in
our facilities to move all remaining assembly operations from our
manufacturing partner if necessary to continue to drive our
operational performance to industry-leading levels.
The product requirements for the markets we serve result in a
low volume/high mix product portfolio. The variety demanded by our
customers and applications means that it is difficult to accurately
predict future demand to the part number level. By taking control
of the supply chain we will be able to fulfill component shortages
at our own facility. The industry wide shortages have continued and
are expected to last well into 2019, however our knowledge of the
market has enabled us to source our quantity requirements when
needed.
Our recovery actions have resulted in use of a hybrid model, in
which we can purchase assembled products from our manufacturing
partner or assemble products in our own facility. When we assemble
products in our own facility, we can purchase subassemblies from
our manufacturing partner or from other newly qualified suppliers.
Our newly qualified suppliers of subassemblies have adequate
capacity to support our entire purchasing requirements, and we are
now taking regular subassembly deliveries from our manufacturing
partner and our other suppliers. This model gives us significant
capacity and flexibility to scale our operations.
We have also recently initiated assembly of lighting products at
our facility in Penang, Malaysia. This facility has in recent years
been producing products for our Signals and Components business. We
have recently installed capacity to assemble lighting products for
our customers located in APAC and EMEA. We have limited space in
this facility, so we are considering relocation to a larger
facility nearby so that we can produce our entire regional lighting
requirements in addition to the existing Signals and Components
products. As in Ensenada, we are qualifying local sub-assembly
suppliers and will begin taking regular deliveries from these
suppliers within the coming months. There is adequate capacity at
these suppliers to support our current and future requirements.
The main premise of our move to contract manufacturing was to
achieve material cost savings and labour efficiencies. To date, we
have not seen sufficient evidence of these savings and
efficiencies. From a quality and cost perspective our own
facilities are significantly more competitive. Our own facility at
Ensenada is running at 83% on time delivery for lighting products.
The material cost savings that have been generated to date have
been as a result of the work of our internal procurement team. We
expect this will continue as we move production back to our own
facility. Our internal labour force in Ensenada are skilled in
complex assembly processes with cycle times on average 20% lower in
our own facility than at our contract manufacturer.
Business performance
Dialight has built up strong sales capabilities across our three
global regions. The first half of 2018 has seen the first benefit
in the European Lighting business after rebuilding the sales team
in 2017, delivering revenue growth of 24% at constant currency.
This was partly offset by a decline in the European wind business
due to one of our largest customers deferring their capital
projects. Dialight's Australian team continues to be successful in
driving growth and building capabilities in the region, producing
6% revenue growth in the first half at constant currency. This team
has also taken responsibility of building the Asia sales team which
is now in place but relatively new. Both of these regions operate
with a narrow product range that are held in inventory, therefore
were not as affected by the recent operational issues.
The US Lighting business has been most impacted with significant
delivery issues and extended lead times, resulting in a decline in
revenue of 15% at constant currency. The team has deferred bidding
on certain large capital projects which have short lead times due
to the extended delivery from our manufacturing partner. The US
also has 40% of its revenue from customers' maintenance budgets
which are supplied from inventory at our distribution channels. The
extended lead times have significantly reduced inventory within the
channel and hence impacted revenue. However this team is extremely
strong and with the operational issues easing, we expect to see a
good recovery in the second half of the year.
The Signals and Components business has had a strong first half
with revenue growth of 12% and 69% EBIT growth at constant
currency. This segment benefits from a strong distribution channel
with significant inventory. Our own facilities in Penang and
Ensenada producing these products have been running at 98% on time
delivery. Our strategy for this business is to build on its strong
legacy foundations and we have made modest select investments in
this business to update products where such investments will result
in increased revenue, protect existing revenue, or increase
margins. There are, however, challenges in this business: heavy
competition, customer consolidation, cyclical market trends, and
most recently the US imposed tariffs on Chinese electronic
products, including LEDs, which are potentially a major disruptive
force in the electronics segments.
Business fundamentals
Our operational challenges are not all behind us, but we have
recovered to a significant extent and are now resuming a more
aggressive approach to return to growth. The markets we serve
remain attractive, with conversion to LED technology being under
10%. Our extended operational difficulties have bruised our
customer relationships and market share but we are confident that
we can and will recover both.
Customers convert to LED lighting and buy Dialight's products
because doing so remains the most efficient way to drive down
energy usage and total cost of ownership of their lighting. We are
delivering the next generation of lighting solutions that not only
reduce energy consumption further but 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 delivering
attractive return on investment to our customers. Our market
proposition is compelling, with the sustainability benefits of
reduced energy usage, lower carbon emissions, reduced maintenance
and improved safety offering real value to our customers.
Within the industrial LED Lighting market, Dialight has
historically focused on specific niches where hazardous location
certifications are required. Within the last five years, Dialight
has expanded its focus to include applications where its products
can withstand extreme environments such as high heat, high
humidity, shock and vibration, dust, water and other challenges but
hazardous location certifications are not essential.
Dialight will begin to focus on broadening its range of product
offering to its existing customers, in sites where we are already
supplying lights for their hazardous locations. These types of
applications include warehouses, lighter duty assembly or
manufacturing applications, cold storage, distribution centres and
other industrial environments. We will initially focus this
expansion in geographic regions where we already have strong direct
sales resources. We are in the midst of developing our strategy to
address this expanded market, which would require a significant
increase in our capacity to develop new products.
The global annual LED lighting market is reported to be
approximately GBP50bn, with the largest share being residential at
39%, and the industrial lighting market representing 8% at GBP2bn.
Dialight currently serves in a GBP0.5bn market and has a 27% share
of this market. We have significant opportunities to grow in the
industrial lighting market by increasing our range of offerings to
our existing customer base.
In parallel with development of our product strategy to address
this expanded served market, we are developing plans for changes in
the rest of the business to enable and support successful delivery
of more significant growth, predominantly in our operational and
engineering footprint. The key theme of our expansion plans is
moving to a more global/regional hybrid structure in recognition
that we need the speed that comes with proximity to our end markets
and the fact that the industrial LED market has strong regional
differences versus being a truly global market.
Outlook
We have taken targeted actions to improve our operational
performance, reducing late orders significantly since the start of
the year. This improvement is primarily due to moving an increasing
proportion of our product assembly back in-house. On-time delivery
and cost performance of our internal assembly are both excellent. I
am now confident that as we move toward our traditionally heavy
fourth quarter we will be able to deliver our products on time and
in the quantities needed. As previously guided, our results for
2018 will be heavily weighted to H2 reflecting the continued
resolution of our operational issues.
Our market proposition remains compelling with the
sustainability benefits of reduced energy usage, lower carbon
emissions, reduced maintenance and improved safety offering real
value to our customers. We are now resuming a more aggressive
approach to delivering growth, as we transition from recovery to
growth. We remain excited by the Group's prospects for the
future.
FINANCIAL REVIEW
The first half of 2018 has been impacted by the corrective
actions taken to improve our operational challenges. The ability of
our manufacturing partner to ramp up production has been
insufficient since the inception of the relationship. There has
been considerable progress made on the smaller product lines that
were transferred from our own facility at the start of 2017.
However the product line most impacted is our High Bay line where
the level of late orders increased during the first half, with
production being solely at our manufacturing partner before we
began to move assembly of this product line to our Ensenada
facility. The transfer in June of a significant proportion of the
High Bay line back to our own facility in Ensenada has already
resulted in a 25% reduction in High Bay late orders. We will
continue to move further production of all product lines back to
our own facility as necessary until delivery times are back to a
normal level of service.
The extended lead times have impacted our revenue with Group
revenue being 14% behind H1 2017 at GBP80.1m and on a constant
currency basis it was 7% lower than H1 2017. The region most
impacted was the US which has a broad customer base and the
extended lead times have resulted in a number of large capital
orders not being bid due to the lead times at our manufacturing
partner.
The retention of our skilled production labour in advance of the
ramp in production of High Bay and not scaling down our Ensenada
facility despite low levels of lighting production has resulted in
additional costs. These actions coupled with continued use of air
freight to mitigate the extended lead times impacted the Group at a
gross margin level. Our gross margin reduced by 400 bps compared to
H1 2017, but was in line with the second half of 2017 when the
operational issues came to the forefront. During this period we
have had strong cost control discipline and have seen our operating
costs (excluding non-underlying) reduce from GBP29.7m in H1 2017 to
GBP25.4m in H1 2018.
The key drivers for the reduction in the EBIT on a constant
currency basis (excluding foreign exchange impact of GBP0.9m) are
as follows:
- (GBP1.8m) gross margin impact of the revenue reduction;
- (GBP3.5m) due to reduction in gross margin due to dual running
costs incurred for maintaining the Ensenada plant and additional
freight charges;
- offset by GBP2.6m operational savings.
Currency impact
Dialight reports its results in Sterling. Our major trading
currency is the US Dollar, which in H1 2018 comprised 79% of the
Group's revenue. The Group has both translational and transactional
currency exposure. Translational exposures arise on the
consolidation of overseas results into Sterling and this is the
major currency exposure. Transactional exposure is where the
currency of sales or purchases differ from the local functional
currency. We use natural hedging on revenue and purchases to
mitigate the majority of the currency risk.
The US dollar has weakened by 10% compared to the first half of
2017 which has been the main driver for the currency impact. The
average rate for the US Dollar against Sterling has moved from 1.26
in first half of 2017 to 1.38 in the first half of 2018. Based on
the current mix of currencies and expected level of activity, a 1%
movement in the US dollar relative to Sterling changes annual
revenue by GBP0.6m and has no impact on EBIT.
Lighting segment
H1 2018 H1 2017 Variance
Lighting GBPm GBPm
----------------- -------- -------- ---------
Revenue 59.3 72.4 (18%)
--------
Gross profit 22.0 30.6 (28%)
--------
Gross profit % 37% 42% -500bps
--------
Overheads (18.7) (23.1) 19%
----------------- -------- -------- ---------
Underlying EBIT 3.3 7.5 (56%)
================= ======== ======== =========
The Lighting segment represented 74% of the Group's revenue and
60% of the Group's underlying segmental operating profit. Revenues
were 18% lower (12% lower at constant currency) compared with the
prior year. The production delays adversely impacted the US region
where our teams deferred from bidding on capital projects. This was
partially offset with strong growth in Europe and in Australia.
Our order intake, i.e. the value of orders received in the year,
was also adversely impacted with a year on year decline of 10% at
constant currency. The European and APAC lighting business
delivered order growth of 22% and 24% (at constant currency)
respectively. The US lighting orders were significantly impacted
resulting in a decline of 18% (at constant currency).
Gross margin contracted by 500 bps to 37%. The major elements of
the decrease are:
- 220 bps reduction due to duplicate plant running costs as we
have maintained our facility in Ensenada pending the transfer of
High Bay production back from our manufacturing partner;
- 120 bps reduction due to retaining our skilled production
labour force in advance of production commencing in June 2018 at
our own facility;
- 110 bps reduction due to raw materials markup charged by our
manufacturing partner with no offsetting savings achieved in the
period; and
- 50 bps reduction due to continued use of air freight to mitigate the extended lead times.
As the volume of in house production increases the negative
impact of these additional costs will be mitigated.
Operating costs reduced by GBP4.4m compared to last year. This
was due to sales related costs flexing with the lower revenues,
strict cost control procedures, and a foreign exchange impact of
GBP1.7m.
The result of lower revenues and contraction in gross margin,
partially offset by lower costs, was that the overall underlying
operating profit in the Lighting segment reduced by 56% to
GBP3.3m.
Signals and components
H1 2017 H1 2017 Variance
Signals and Components GBPm GBPm
======================== ======== ======== =========
Revenue 20.8 20.3 +2%
--------
Gross profit 6.3 5.6 +13%
--------
Gross profit % 30% 28% +200bps
--------
Overheads (4.1) (4.0) (3%)
========================= ======== ======== =========
Underlying EBIT 2.2 1.6 +38%
========================= ======== ======== =========
Signals and Components is a high volume business operating
within highly competitive markets. Reported revenue increased by 2%
compared to the prior period. There remains significant competition
from low cost producers but margins improved by 200bps as a
continuous cost improvement programme mitigated the price erosion.
Overall there was an increase in underlying operating profit of
GBP0.6m.
Central overheads
Central overheads comprise of costs not directly attributable to
a segment and therefore not allocated to these segments. In H1 2018
they amounted to GBP2.6m in line with H1 2017.
Non-underlying costs
The Group incurs costs and earns income that is non-recurring 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 Group in prior periods, management examined
underlying performance, which removed the impact of non-underlying
costs and income. The table below presents the components of
non-underlying profit or loss recorded within cost of sales and
administrative expenses:
H1 2018 H1 2017
Non-underlying costs GBPm GBPm
====================================================== ========= =========
Production transfer costs recorded in administrative
expenses - (2.4)
====================================================== ========= =========
Total cash impact - (2.4)
====================================================== ========= =========
In the prior year, non-underlying costs related to the transfer
of lighting assembly to our manufacturing partner. The costs were
for set up costs, project management and dedicated engineering
time. There are no further transfer costs being incurred, all
accrued redundancy costs have been utilised in the period against
terminations related to the project.
Cash flow
The Group's net cash position decreased by GBP5.5m in the half
year from net cash of GBP12.8m at 31 December 2017 to net cash of
GBP7.3m at 30 June 2018.
The roll forward of net cash was as follows:
Cash flow GBPm
========================================= =======
Net cash at 31 December 2017 12.8
-------
EBITDA 5.1
-------
Net working capital excluding inventory 3.1
-------
Increase in inventory (9.0)
Capital expenditure (2.3)
-------
Taxes (1.2)
Provisions and other movements (1.2)
========================================= =======
Net cash at 30 June 2018 7.3
========================================= =======
The main driver in the reduction in cash is a result of an
increase in inventories. As previously announced we expected the
cash position to reduce as we built up raw material inventory prior
to the transfer. There may be more cash utilised if further
production has to be transferred from our manufacturing partner.
There was an improvement in debtors due to strong cash collection
across the Group. The cash generated from earning in the half year
were utilised to fund capital expenditure relating to some
production and testing equipment required for our own plant in
Mexico.
Banking
The Group has its banking relationships with HSBC Bank plc and
Wells Fargo. The Group has a revolving credit facility with HSBC of
GBP25m, with a further GBP25m "accordion" feature, and a five-year
term. The Group has no borrowings against the facility at the
balance sheet date and remains fully compliant with its covenant
requirements which ensures significant financial flexibility.
Capital management and dividend
The Board's policy is to maintain a strong capital base in order
to maintain customer, investor and creditor confidence and to
sustain future development of the business. The Board considers
consolidated total
equity as capital. At 30 June 2018 this equated to GBP79.9m (H1
2017: GBP78.9m).
The Board is not proposing any interim dividend payment for 2018
(2017: nil). The Group has a clear capital allocation discipline
and is committed to returning excess funds to shareholders via
future dividend or share repurchase.
Full year guidance for 2018
The Board continues to expect a H2 weighting to the Group's
trading performance for the year ending 31 December 2018. As a
result of the US tax legislation changes which have been effective
from 1 January 2018, we anticipate the effective tax rate for 2018
will be c25% before discrete tax items. We expect our capital
expenditure to be in the region of GBP7m for 2018.
Marty Rapp, Group Chief Executive
Fariyal Khanbabi, Group Finance Director
30 July 2018
CONDENSED CONSOLIDATED INCOME STATEMENT
For the period ended 30 June 2018 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
=================================== ==== ============= ============= ============
Note Total Total Total
GBP'm GBP'm GBP'm
=================================== ==== ============= ============= ============
Revenue 2 80.1 92.7 181.0
-------------
Cost of sales (51.8) (56.5) (114.3)
=================================== ==== ============= ============= ============
Gross profit 28.3 36.2 66.7
-------------
Distribution costs (15.0) (17.4) (34.0)
-------------
Administrative expenses (10.4) (14.7) (29.4)
=================================== ==== ============= ============= ============
Underlying profit from operating
activities * 2.9 6.5 9.7
-------------
Non-underlying administrative
expenses 3 - (2.4) (6.4)
=================================== ==== ============= ============= ============
Profit from operating activities 2 2.9 4.1 3.3
-------------
Financial income 4 - - -
-------------
Financial expense 4 (0.1) (0.1) (0.3)
=================================== ==== ============= ============= ============
Net financing expense 4 (0.1) (0.1)
=================================== ==== ============= ============= ============
Underlying profit before
tax * 2.8 6.4 9.4
-------------
Non-underlying administrative
expenses 3 - (2.4) (6.4)
----------------------------------- ---- ------------- ------------- ------------
Profit before tax 2.8 4.0 3.0
=================================== ==== ============= ============= ============
Income tax expense 5 (0.7) (1.4) (1.3)
=================================== ==== ============= ============= ============
Profit for the period 2.1 2.6 1.7
=================================== ==== ============= ============= ============
Profit for the period attributable
to:
=================================== ==== ============= ============= ============
Equity owners of the Company 2.0 2.3 1.3
-------------
Non-controlling Interests 0.1 0.3 0.4
=================================== ==== ============= ============= ============
Profit for the period 2.1 2.6 1.7
=================================== ==== ============= ============= ============
Earnings per share
-------------
Basic 6 6.4p 8.0p 4.8p
-------------
Diluted 6 6.2p 7.9p 4.8p
=================================== ==== ============= ============= ============
* 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 2018 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
=========================================== ============= ============= ============
Other comprehensive income
=========================================== ============= ============= ============
Exchange difference on translation
of foreign operations 1.2 (3.5) (5.6)
-------------
Income tax on exchange differences
on transactions of foreign operations (0.1) 1.3 0.6
-------------
Remeasurement of defined benefit liability 0.6 1.5 1.9
-------------
Income tax on remeasurement of defined
benefit liability (0.1) (0.5) (0.4)
=========================================== ============= ============= ============
Other comprehensive income for the
period, net of tax 1.6 (1.2) (3.5)
=========================================== ============= ============= ============
Profit for the period 2.1 2.6 1.7
=========================================== ============= ============= ============
Total comprehensive income/(expense)
for the period 3.7 1.4 (1.8)
=========================================== ============= ============= ============
Attributable to:
-------------
* Owners of the parent 3.6 1.1 (2.2)
-------------
* Non-controlling interest 0.1 0.3 0.4
=========================================== ============= ============= ============
Total comprehensive income for the
period 3.7 1.4 (1.8)
=========================================== ============= ============= ============
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 2018 (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 2018 0.6 1.4 10.4 2.2 61.2 75.8 0.3 76.1
------
Profit - - - - 2.0 2.0 0.1 2.1
Other comprehensive
income:
------ -------
Foreign currency
translation
differences,
net of taxes - - 1.1 - - 1.1 - 1.1
------ -------
Remeasurement
of defined
benefit liability,
net of taxes - - - - 0.5 0.5 - 0.5
---------------------- -------- -------- ----------- ----------- --------- ------ ------------ -------
Total other
comprehensive
income - - 1.1 - 0.5 1.6 - 1.6
====================== ======== ======== =========== =========== ========= ====== ============ =======
Total comprehensive
income for
the period - - 1.1 - 2.5 3.6 0.1 3.7
====================== ======== ======== =========== =========== ========= ====== ============ =======
Transactions
with owners,
recorded directly
in equity:
------ -------
Share-based
payments, net
of tax - - - - 0.1 0.1 - 0.1
====================== ======== ======== =========== =========== ========= ====== ============ =======
Total contributions
by and distributions
to owners - - - - 0.1 0.1 - 0.1
====================== ======== ======== =========== =========== ========= ====== ============ =======
Balance at
30 June 2018 0.6 1.4 11.5 2.2 63.8 79.5 0.4 79.9
====================== ======== ======== =========== =========== ========= ====== ============ =======
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 30 June 2018 (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:
------ -------
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
2017 0.6 1.4 15.4 2.2 57.6 77.2 (0.1) 77.1
------ -------
Loss - - - - 1.3 1.3 0.4 1.7
------ -------
Other comprehensive
income:
-------
Foreign currency
translation differences,
net of taxes - - (5.0) - - (5.0) - (5.0)
------ -------
Defined benefit
plan actuarial
losses, net of
taxes - - - - 1.5 1.5 - 1.5
========================== ======== ======== =========== =========== ========= ====== ============ =======
Total other comprehensive
income - - (5.0) - 1.5 (3.5) - (3.5)
========================== ======== ======== =========== =========== ========= ====== ============ =======
Total comprehensive
income for the
period - - (5.0) - 2.8 (2.2) 0.4 (1.8)
========================== ======== ======== =========== =========== ========= ====== ============ =======
Transactions with
owners, recorded
directly in equity:
------ -------
Share-based payments,
net of tax - - - - 0.8 0.8 - 0.8
========================== ======== ======== =========== =========== ========= ====== ============ =======
Total contributions
by and distributions
to owners - - - - 0.8 0.8 - 0.8
========================== ======== ======== =========== =========== ========= ====== ============ =======
Balance at 31 December
2017 0.6 1.4 10.4 2.2 61.2 75.8 0.3 76.1
========================== ======== ======== =========== =========== ========= ====== ============ =======
CONDENSED CONSOLIDATED STATEMENT OF TOTAL FINANCIAL POSITION
As at 30 June 2018 (unaudited)
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
============================== ============ ============ ===========
Assets
------------
Property, plant and equipment 13.7 15.4 13.9
------------
Intangible assets 14.6 15.2 13.9
------------
Deferred tax asset 5.5 4.7 5.3
------------
Employee Benefits 1.8 0.4 1.0
------------
Other Receivables 0.2 - 0.2
============================== ============ ============ ===========
Total non-current assets 35.8 35.7 34.3
============================== ============ ============ ===========
Inventories 33.9 26.2 24.6
------------
Trade and other receivables 28.4 32.0 34.3
------------
Cash and cash equivalents 7.3 12.7 12.8
============================== ============ ============ ===========
Total current assets 69.6 70.9 71.7
============================== ============ ============ ===========
Total assets 105.4 106.6 106.0
============================== ============ ============ ===========
Trade and other payables (23.9) (24.4) (26.9)
------------
Provisions (0.6) (2.0) (1.4)
------------
Tax liabilities (0.1) (0.3) (0.7)
============================== ============ ============ ===========
Total current liabilities (24.6) (26.7) (29.0)
============================== ============ ============ ===========
Employee benefits - - -
------------
Provisions (0.9) (1.0) (0.9)
============================== ============ ============ ===========
Total non-current liabilities (0.9) (1.0) (0.9)
============================== ============ ============ ===========
Total liabilities (25.5) (27.7) (29.9)
============================== ============ ============ ===========
Net assets 79.9 78.9 76.1
============================== ============ ============ ===========
Equity
------------
Issued share capital 0.6 0.6 0.6
------------
Merger reserve 1.4 1.4 1.4
------------
Other reserves 13.7 15.4 12.6
------------
Retained earnings 63.8 61.3 61.2
============================== ============ ============ ===========
79.5 78.7 75.8
------------
Non-controlling interests 0.4 0.2 0.3
============================== ============ ============ ===========
Total equity 79.9 78.9 76.1
============================== ============ ============ ===========
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the period ended 30 June 2018 (unaudited)
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
GBP'm GBP'm GBP'm
======================================== ============ ============ ============
Operating activities
------------
Profit for the period 2.1 2.6 1.7
------------
Adjustments for:
------------
Financial expense 0.1 0.1 0.3
------------
Income tax expense 0.7 1.4 1.3
------------
Share-based payments 0.1 0.4 0.8
------------
Depreciation of property, plant and
equipment 1.5 1.7 2.4
------------
Amortisation of intangible assets 0.7 0.9 1.5
------------
Impairment losses on intangible assets
and goodwill - - 1.2
------------
Impairment losses on tangible assets - - 0.9
======================================== ============ ============ ============
Operating cash flow before movements
in working capital 5.2 7.1 10.1
------------
(Increase)/decrease in inventories (9.0) 4.1 5.1
------------
Decrease in trade and other receivables 6.2 6.7 3.4
------------
Decrease in trade and other payables (3.1) (6.0) (2.6)
------------
Decrease in provisions (0.8) (1.8) (2.4)
------------
Pension contributions in excess of
the income statement charge (0.2) (0.2) (0.5)
======================================== ============ ============ ============
Cash generated from operations (1.7) 9.9 13.1
------------
Income taxes paid (1.2) (3.4) (4.3)
------------
Interest paid (0.1) (0.1) (0.3)
======================================== ============ ============ ============
Net cash from operating activities (3.0) 6.4 8.5
======================================== ============ ============ ============
Capital expenditure (1.1) (1.9) (2.6)
------------
Sale of fixed assets - 2.0 2.0
------------
Capitalised expenditure on development (1.2) (1.3) (2.3)
======================================== ============ ============ ============
Net cash used in investing activities (2.3) (1.2) (2.9)
======================================== ============ ============ ============
Financing activities
------------
Proceeds from issue of shares - - 0.1
======================================== ============ ============ ============
Net cash from financing activities - - 0.1
======================================== ============ ============ ============
Net (decrease)/increase in cash and
cash equivalents (5.3) 5.2 5.7
======================================== ============ ============ ============
Cash and cash equivalents at 1 January 12.8 8.0 8.0
------------
Effect of exchange rates on cash held (0.2) (0.5) (0.9)
======================================== ============ ============ ============
Cash and cash equivalents at end of
period 7.3 12.7 12.8
======================================== ============ ============ ============
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 June 2018 (unaudited)
1. Basis of preparation and principal accounting policies
Statement of compliance
The unaudited condensed financial statements for the six months
ended 30 June 2018 have been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting'
(IAS 34), and have been prepared on the basis of International
Financial Reporting Standards (IFRSs) and International Financial
Reporting Interpretations Committee (IFRIC) interpretations as
adopted by the European Union that are effective for the year
ending 31 December 2018. 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 unaudited condensed financial statements for the six months
ended 30 June 2018, which were approved by the Board on 30 July
2018, and the comparative information in relation to the half year
ended 30 June 2017, do not comprise statutory accounts for the
purpose of Section 434 of the Companies Act 2006, and should be
read in conjunction with the Annual Report for the year ended 31
December 2017. Those accounts have been reported upon by the
Group's auditor and delivered to the Registrar of Companies. The
report of the auditor was unqualified, did not include a reference
to any matters to which the auditors drew attention
by way of emphasis without qualifying their report and did not
contain statements under Section 498 (2) or (3) of the Companies
Act 2006.
Adoption of new and revised standards
The accounting policies adopted in the preparation of these
unaudited condensed financial statements are consistent with the
policies applied by the Group in its consolidated financial
statements for the year ended 31 December 2017. The following
accounting standards, interpretations and amendments have been
adopted by the Group in the current period:
IFRS 9 - Financial instruments
IFRS 15 - Revenue from contracts with customers and
clarifications to IFRS 15
Amendments to IAS 7: Disclosure initiative
Amendments to IAS 12: Recognition of deferred tax assets for
unrealised losses
Annual improvements to IFRS standards 2014-2016 cycle
IFRS 9 'Financial instruments' removes the multiple
classification and measurement models for financial assets required
by IAS 39 and introduces a model that has only two classification
categories: amortised cost and fair value. Classification is driven
by the business model for managing the financial assets and the
contractual cash flow characteristics of those assets. The primary
impact of IFRS 9 relates to provisioning for potential future
credit losses on financial assets.
IFRS 15 'Revenue from contracts with customers' and subsequent
amendments 'Clarifications to IFRS 15' set out the requirements for
recognising revenue and costs from contracts with customers. The
Group has concluded that IFRS 15 does not have any impact on the
timing and recognition of revenue, operating profit margin or net
assets.
There is no material impact on this interim financial report as
a result of adopting these new standards.
The following accounting standards, interpretations and
amendments that are applicable to the Group have been issued by the
IASB but had either not been adopted by the European Union or were
not yet effective in the European Union at 30 June 2018. The Group
is currently analysing the impact these standards would have on its
consolidated results and financial position.
IFRS 16 - Leases
Amendments to IFRS 2 - Classification and measurement of
share-based payment transactions
Amendments to IAS 19 - Plan amendment, curtailment or
settlement
Amendments to IAS 28 - Long-term interests in associates and
joint ventures
IFRIC 22 - Foreign currency transactions and advance
consideration
IFRIC 23 - Uncertainty over income tax treatments
Annual Improvements to IFRS standards 2015-2017 cycle
IFRS 16 'Leases' will primarily change lease accounting for
lessees. A single model will be applied by lessees to all leases
with the option not to recognise leases of small value or with
terms less than 12 months. It is expected that, as a result of this
standard, most operating leases will be included on the balance
sheet as an asset, together with the corresponding lease liability.
As the Group does not have any significant leases the impact is
unlikely to be material.
Estimates and judgements
In preparing these condensed financial statements, management
has made judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expense. Actual results may differ
from these estimates. 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 2017.
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.
Reporting segments
6 months ended 30 June 2018 Lighting GBP'm Signals and Components GBP'm Total GBP'm
Revenue 59.3 20.8 80.1
============================= ============== ============================ ===========
Gross Profit 22.0 6.3 28.3
============================= ============== ============================ ===========
Overhead costs (18.7) (4.1) (22.8)
============================= ============== ============================ ===========
Segment operating profit 3.3 2.2 5.5
-------------- ---------------------------- -----------
Unallocated expenses (2.6)
============================= ============== ============================ ===========
Underlying operating profit 2.9
-------------- ---------------------------- -----------
Non-underlying expenses -
============================ ============== ============================ ===========
Operating profit 2.9
-------------- ---------------------------- -----------
net financing expense (0.1)
============================= ============== ============================ ===========
Profit before tax 2.8
-------------- ---------------------------- -----------
Income tax expense (0.7)
============================= ============== ============================ ===========
Profit for the period 2.1
============================= ============== ============================ ===========
Other segmental data
============================== ============== ============================ ===========
Depreciation 1.1 0.4 1.5
-------------- ---------------------------- -----------
Amortisation 0.5 0.2 0.7
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
============================= =============== ============================ ===========
Other segmental data
============================= =============== ============================ ===========
Depreciation 1.3 0.4 1.7
Amortisation 0.8 0.1 0.9
============================= =============== ============================ ===========
Lighting Signals and Components Total
Year ended 31 December 2017 GBP'm GBP'm GBP'm
================================================= ======== ======================== ======
Revenue 137.5 43.5 181.0
================================================== ======== ======================== ======
Gross Profit 54.3 12.4 66.7
================================================== ======== ======================== ======
Overhead costs (43.1) (8.5) (51.6)
================================================== ======== ======================== ======
Segment operating profit 11.2 3.9 15.1
Unallocated expenses (5.4)
================================================== ======== ======================== ======
Underlying operating profit 9.7
Non-underlying expense (6.4)
================================================== ======== ======================== ======
Operating profit 3.3
Net financing expenses (0.3)
================================================== ======== ======================== ======
Profit before tax 3.0
Income tax expense (1.3)
================================================== ======== ======================== ======
Profit after Tax 1.7
================================================== ======== ======================== ======
Other segmental data
================================================== ======== ======================== ======
Depreciation 1.8 0.6 2.4
Amortisation 1.1 0.4 1.5
Impairment losses on intangible asset write-down 1.1 0.1 1.2
Impairment losses on tangible asset write-down 0.9 - 0.9
================================================== ======== ======================== ======
Geographical segments
The Lighting, Signals and Components segments are managed on a
worldwide basis, but operate in three principal geographic areas,
North America, EMEA 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
2018 2017 2017
GBP'm GBP'm GBP'm
===================== ======== ======== ============
North America 58.3 69.9 136.0
--------
EMEA 10.3 10.3 21.2
--------
Rest of World 11.5 12.5 23.8
===================== ======== ======== ============
Consolidated revenue 80.1 92.7 181.0
===================== ======== ======== ============
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 Group in prior periods, management examined
underlying performance, which removed the impact of non-underlying
costs and income.
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
2018 2017 2017
GBP'm GBP'm GBP'm
================================================ ========== ========== ============
Intangible asset impairment - - (1.2)
----------
Tangible asset impairment and disposals - - (0.9)
----------
Production transfer and start up - (2.4) (4.6)
----------
Employee severance costs - - 0.3
================================================ ========== ========== ============
Non-underlying costs recorded in administrative
expenses - (2.4) (6.4)
================================================ ========== ========== ============
In the prior year, non-underlying costs related to the transfer
of lighting assembly to our manufacturing partner. The costs were
for set up costs, project management and dedicated engineering
time. There are no further transfer costs being incurred, all
accrued redundancy costs have been utilised in the period against
terminations related to the project.
4. Net financing expense
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
GBP'm GBP'm GBP'm
========================================== ========== ========== ============
Net interest on net defined benefit
liability - - (0.2)
----------
Interest expense on financial liabilities (0.1) (0.1) (0.1)
========================================== ========== ========== ============
Net financing (expense) / income (0.1) (0.1) (0.3)
========================================== ========== ========== ============
5. Income tax expense
The tax charge of GBP0.7m for the half year to 30 June 2018
reflects the anticipated effective tax rate of 25.0% for the year
ending 31 December 2018. The effective tax rate is higher than the
current UK tax rate of 19.0% due to the level of Group profits in
the higher tax rate jurisdiction which range from effective tax
rates of 23.0% to 30.0%. The effective tax rate charge for the
period ended 30 June 2017 was 35.3% and for the year ended 31
December 2017 was 43.0%.
6. Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 30 June 2018 was
based on a profit for the period of GBP2.1m (2017: GBP2.6m) and a
weighted average number of ordinary shares outstanding during the
six months ended 30 June 2018 of 32,521,179 (2017: 32,511,298).
Weighted average number of ordinary shares
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Number '000 Number Number
'000 '000
=================================== ============ ======== ============
Weighted average number of shares 32,521 32,511 32,510
------------
Dilutive effect of share options 616 589 505
=================================== ============ ======== ============
Diluted weighted average number of
shares 33,137 33,100 33,015
=================================== ============ ======== ============
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 12 months
ended ended ended
30 June 30 June 31 December
2018 2017 2017
Per share Per share Per share
============================= ========== ========== ============
Basic earnings 6.4p 8.0p 4.8p
----------
Underlying basic earnings* 6.4p 12.8p 17.9p
============================= ========== ========== ============
Diluted earnings 6.2p 7.9p 4.8p
----------
Underlying diluted earnings* 6.2p 12.5p 17.6p
============================= ========== ========== ============
* 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 2017. The Directors have not declared an interim
dividend for 2018 (2017: 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 2018, 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
2018 2017 2017
======================= ======== ======== ============
Average for the period
--------
US dollar 1.38 1.26 1.29
--------
Canadian Dollar 1.76 1.68 1.67
--------
Euro 1.14 1.16 1.14
--------
Mexican Peso 26.19 24.42 24.33
======================= ======== ======== ============
30 June 30 June 31 December
2018 2017 2017
============= ======= ======= ===========
Spot rate
-------
US dollar 1.32 1.30 1.35
-------
Canadian 1.76 1.69 1.69
-------
Euro 1.13 1.14 1.13
-------
Mexican Peso 26.38 23.07 26.55
============= ======= ======= ===========
10. Related party transactions
There have been no changes in the nature of related party
transactions to those described in the 2017 Annual Report that
could have a material effect on the financial position or
performance of the Group in the period to 30 June 2018.
11. Principal risks and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group for the next six months of 2018 remain as
listed on pages 34 to 37 of the Annual Report for the year ended
31st December 2017 (which can be found at www.dialight.com). We
have expanded the "Supply chain management" risk, described below
to include the risks associated with the procurement planning
process and the inability to source key raw materials and
components required to manufacture our products. A summary of the
principal risks and uncertainties is set out below:
-- Production capacity - Dialight needs to ensure that it has
sufficient production capacity to fulfill customer orders in a
timely manner and to be scalable to support growth. Insufficient
capacity results in an inability to fulfill orders
-- Supply chain management - The procurement planning process is
dependent on the accuracy of sales forecast to ensure adequacy of
component supply. The inability to source key raw materials and
components required for the manufacture of our products could
impact our ability to manufacture products and satisfy customer
orders. Inaccuracy in forecasting could also lead to higher
inventory obsolescence.
-- The procurement planning process is dependent on the accuracy
of sales forecast to ensure adequacy of component supply.
Inaccuracy in forecasting could lead to higher inventory
obsolescence
-- IT systems - The Group uses IT systems to operate and control
its businesses: any disruption would lead to an adverse impact on
the business
-- Political conditions - The Group's main manufacturing plant
is in Mexico and its main market is in North America. Proposed
import tariffs could impact the Group. "Brexit" has introduced
uncertainty to the level of tariffs in goods imported from
Europe
-- Succession planning and staff caliber - The Groups
performance is dependent on attracting and retaining high quality
of staff
-- Intellectual property - Theft or violation of intellectual
property or third parties taking legal action for infringements
will have an adverse impact on the Group
-- Market trend and competition - The Group must be able to
identify customer demands and ensure its product portfolio match
their requirements
-- Product development strategy - The Group needs to ensure it
can deliver new products to the market in a timely manner
-- Product recall - The Group gives a ten year warranty on its Lighting products
-- Foreign exchange - This is the most significant treasury risk
and in times of currency volatility it can have a material impact
on the performance of the Group.
The identification of risks and opportunities, the development
of action plans to manage the risks and maximise the opportunities,
and the continual monitoring of progress against agreed key
performance indicators (KPIs) are integral parts of the business
process and core activities throughout the Group.
These will continue to be evaluated, monitored and managed
through the remainder of 2018.
Directors 'responsibilities
The Interim Report complies with the Disclosure and Transparency
Rules (DTR) of the United Kingdom's Financial Conduct Authority in
respect of the requirement to produce a half-yearly financial
report. The Interim Management Report is the responsibility of, and
has been approved by, the directors.
We confirm that to the best of our knowledge:
-- the condensed set of financial statements has been prepared
in accordance with IAS 34;
-- the Interim Management Report includes a fair review of the
important events during the first six months and description of the
principal risks and uncertainties for the remaining six months of
the year, as required by DTR 4.2.7R;
-- the Interim Management Report includes a fair review of
disclosure of related party transactions and changes therein, as
required by DTR 4.2.8R; and
-- the directors have permitted the auditor to undertake
whatever inspections it considers to be appropriate for the purpose
of enabling the auditor to conduct its review
On behalf of the Board
Martin L Rapp
Chief Executive Officer
Fariyal Khanbabi
Group Finance Director
The directors are required to prepare financial statements for
the Group in accordance with International Financial Reporting
Standards (IFRS). International Accounting Standard 34 (IAS 34),
defines the minimum content of an interim financial report,
including disclosures, and identifies the accounting recognition
and measurement principles that should be applied to an interim
financial report.
Directors are also required to:
-- select suitable accounting policies and then apply them
consistently;
-- present information, including accounting policies, in a
manner that provides relevant, reliable, comparable and
understandable information; and
-- provide additional disclosures when compliance with the
specific requirements in IFRS is insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Parent
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the Parent Company and enable them
to ensure that its financial statements comply with the Companies
Act 2006. They have a general responsibility for taking such steps
as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
The directors are also responsible for the maintenance and
integrity of the corporate and financial information included on
the Company's website.
Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
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 2018 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 2018 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
30 July 2018
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR EAKXXAFAPEFF
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July 30, 2018 02:00 ET (06:00 GMT)
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