Densitron Technologies plc
Unaudited Interim Report
For the Six months ended 30th June 2008
Highlights
* Orders booked in the period �9.9m (2007: �8.4m) an increase of 17.9% on
the same period in 2007.
* An increase in the orderbook of �1.6m since 31st December 2007 from �7.4m
to �9.0m.
* Major contract wins in the UK and Germany.
* Two new distributors signed in the UK.
* A representative appointed in Brazil.
* A number of new product offerings introduced in the period.
Financial Highlights on continuing operations
6 months to 6 months to
30th June 2008 30th June 2007
Continuing Continuing
Unaudited Unaudited
�m �m
Revenue 8.29 7.00
Profit from operations 0.16 0.13
Profit/(loss) before 0.08 (0.02)
taxation
Earnings/(loss) per share 0.01p (0.07)p
Orderbook 9.00 6.70
For further enquiries:
Tim Pearson, Group Finance Director
Densitron Technologies plc Tel: 0207 648 4200
John Wakefield / Simon Moynagh
Blue Oar Securities Plc Tel: 0117 933 0020
Chairman's Statement
This is my first statement as Chairman, following Ralph Baber's decision to
step down at the Annual General Meeting and it is with some pleasure that I can
announce that the Group has performed ahead of its internal budgets and ahead
of the results achieved for the same period in 2007. The profit before tax is �
80,000 compared with a loss of �18,000 for the same period in 2007.
The emphasis of the Group over the last two years has been to reduce debt to a
level whereby the business can sustain it, divest of loss making businesses and
focus on growing the remaining displays business. The Group has achieved on all
fronts and the displays business, which is discussed in more detail below, has
made some significant progress and has opportunities to grow further.
In total Group revenues have increased from �7.0m in 2007 to �8.3m in 2008 and
gross profit has increased from �2.2m to �2.6m. In the same period the
orderbook has continued to grow and now stands at �9.0m compared with �6.7m at
30th June 2007. It should be noted that part of these increases have been due
to the weakening of the pound against the Euro, Taiwanese dollar and Japanese
Yen. If the results for 2008 had been converted using similar exchange rates as
2007 the Group revenues would have been �7.9m and the gross profit �2.5m.
Administrative expenses have increased from �2.2m in 2007 to �2.5m in 2008.
Converting the administrative expenses incurred in 2008 at the rates used in
2007 the administrative expenses would have been �2.4m. Administrative expenses
continue to be tightly monitored and the increase reflects the planned
investment made in additional personnel and product development. The impact on
the movement in exchange rates on the profit from operations has been
immaterial.
The structure of the Group's borrowings have now been aligned to its operations
with the emphasis far more on trade finance. During the 6 months to 30th June
2008 the remainder of the loan from AB Bronsstadet was repaid along with the
redemption fee and this has resulted in a 48% reduction in the cost of
borrowing.
Operational review
The Group's operations are primarily the design, development, marketing and
selling of electronic displays, the electronics that drive them and the
plastics that house them.
European business - The European business has grown significantly in the 6
months compared with the same period in 2007. Orders were �6.0m compared with �
4.6m in 2007 a growth of 28%. Sales were �4.5m compared with �3.4m in 2007 a
growth of 32%. Gross profit was �1.4m compared with �1.2m in 2007 a growth of
17%. The margin percentage has reduced in the period but was ahead of the
budgeted percentage and reflected the mix of sales made.
During the first six months of the year significant orders have been won in
both the UK and Germany. In the UK an order worth �1.03m was received from a
long standing customer in the hygiene industry for a complete product solution
including the display, motor, PCB and plastic housing. In Germany a
multi-million euro contract was received from a leading industrial
telecommunications company for one of the company's new ranges of OLED
displays. The contract is worth some Euro600k per annum with the first two years
already scheduled for delivery and could have a life span of 7 - 8 years.
The distribution network, which is key to winning business in locations where
Densitron does not have a presence, has been further developed with the
appointment of two further distributors in the UK. The decision to recruit a
dedicated member of staff to manage the relationships and promote Densitron's
products is proving to be vital. In addition further investment has been made
in the period strengthening the engineering facility in the UK in order to make
it a centre of excellence for all European business.
US business - The US business suffered during 2007 as a result of a controller,
which was key in a large part of its installed business, becoming end of life.
This resulted in a considerable amount of this business being re-designed and
re-tendered. Consequently the results for the first 6 months of 2008 are in
line with those achieved in 2007. Orders were �3.4m compared with �3.0m in 2007
a growth of 13%. Sales in 2008 were �3.0m, the same as in 2007 and gross profit
was �0.8m, the same as in 2007.
During the first 6 months of 2008 a great deal of work has continued to be done
to recover the business affected by the end of life issue. In addition work has
been done to create a range of touch-screen displays and a representative has
been appointed in Brazil to promote the Company's products.
Asian business - The Asian business is made up of Densitron Asia, which
provides logistics to the Group in order to source product in the key Taiwanese
and Chinese markets, and Densitron Corporation of Japan which sells Densitron's
products into the Japanese market. In the 6 months to 30th June 2008 orders
were �0.5m compared with �0.8m in 2007 a fall of 37.5%, it should be noted that
some of the orders won in 2007 were at extremely low margin. Sales were �0.8m
compared with �0.5m in 2007 an increase of 60%. Gross profit was �0.3m compared
with �0.2m in 2007, an increase of 50%.
Densitron Asia continues to provide an extremely valuable service to the Group,
having people on the ground means that the subsidiaries around the world can
react to opportunities and resolve issues quickly and effectively. Densitron
Corporation of Japan continues to perform ahead of internal budgets and the
results achieved in 2007, in what is a highly competitive market.
Evervision Electronics Corporation
Evervision is the Group's 24.8% investment in a Taiwanese display manufacturing
company.
Evervision has performed reasonably well in the 6 months to 30th June 2008
exceeding its budgeted operating profit and showing continuing improvement in
production yields in those areas where they have been previously deficient.
Cash continues to be strong despite considerable investment in production plant
and machinery in the 6 months. We are continuing to build on the relationship
that we have built up with the management of Evervision over the last two
years, attending all board meetings and having separate meetings with the
Chairman. We continue to see this as the most effective way of obtaining a
return from this investment.
Land at Blackheath
The land is a 1.25 acre strip of land in Blackheath, south east London, for
which the Board is seeking to gain planning permission for residential housing.
The first half of 2008 has been spent working to ensure that the planning
application, when it is submitted, is as comprehensive as it can possibly be.
Surveys have been carried out and architects plans have been drawn up. It will
be important to ensure that the application is made at the most appropriate
time and we are working with a Chartered Surveyor to ensure that we are in a
position to do this. As in previous Chairman's Statements I would caution
Shareholders that we believe that planning permission will take between 2 and 3
years to achieve.
Outlook
The marketplace in which the Company operates remains competitive but the work
that has been done and the investment that has been made to differentiate the
Company from its competitors has been successful and gives reason for cautious
optimism. The orderbook continues to grow and the opportunities remain
undiminished. Your Board is continuing to work to realize returns on the
investment in Evervision and the land at Blackheath and consider the approach
currently being taken for them both is the correct approach and we will keep
Shareholders informed of any significant developments.
Jan Holmstrom
4th September 2008
Unaudited Condensed Consolidated Income statement
For the six months ended 30th June 2008
6 months to 6 months to Year to
31st
30th June 30th June December
2008 2007 2007
�000 �000 Audited
�000
Continuing operations
Revenue 8,289 6,996 14,043
Cost of sales (5,717) (4,767) (9,727)
Gross profit 2,572 2,229 4,316
Other operating income 59 124 1,024
Distribution costs (19) (15) (30)
Administrative expenses (2,455) (2,209) (4,198)
Profit from operations 157 129 1,112
Financial income 26 2 96
Financial expenses (103) (149) (390)
Profit/(loss) before tax 80 (18) 818
Income tax expense (63) (15) (161)
Profit/(loss) for the period from 17 (33) 657
continuing
Operations
Discontinued operations
Profit on disposal and loss for the - 414 437
period on discontinued operations,
net of tax
Profit for the period 17 381 1,094
Attributable to:
Equity holders of the parent 4 366 1,081
Minority interests 13 15 13
17 381 1,094
Basic earnings per share
Earnings per share from continuing 0.01p 0.57p 1.67p
and discontinued operations
Earnings/(loss) per share on 0.01p (0.07)p 0.99p
continuing operations
Diluted earnings per share
Earnings per share from continuing 0.01p 0.55p 1.63p
and discontinued operations
Earnings/(loss) per share on 0.01p (0.07)p 0.97p
continuing operations
Unaudited Condensed Statement of recognised income and expense
For the six months to 30th June 2008
6 months to 6 months Year to
to 31st
30th June
30th June December
2008
2007 2007
�000
�000 Audited
�000
Foreign exchange adjustments (72) (12) (17)
Fair value adjustment of financial - - (508)
assets
Income and expense directly recognised (72) (12) (525)
in equity
Profit for the financial period 17 381 1,094
Total recognised income and expense for (55) 369 569
the period
Attributable to:
Equity holders of the parent (68) 354 556
Minority interests 13 15 13
(55) 369 569
Unaudited Condensed Consolidated Balance Sheet
As at 30th June 2008
30th June 30th June 31st
2008 2007 December
�000 �000 2007
Audited
�000
Non current assets
Property, plant and equipment 211 134 208
Goodwill 143 143 143
Financial assets 6,331 7,711 6,589
Deferred tax assets 23 44 44
6,708 8,032 6,984
Current assets
Inventories 799 614 641
Trade and other receivables 3,959 3,257 2,457
Financial assets 589 384 765
Income tax recoverable 60 122 56
Cash and cash equivalents 1,446 1,447 1,397
6,853 5,824 5,316
Non current assets classified as held - 218 -
for sale
Total assets 13,561 14,074 12,300
Current liabilities
Borrowings 3,374 4,144 2,861
Trade and other payables 2,607 2,632 1,863
Current tax payable 3 38 72
Provisions - 11 -
5,984 6,825 4,796
Non current liabilities
Borrowings 271 211 94
Provisions 283 260 328
Deferred tax liabilities 8 17 7
562 488 429
Total liabilities 6,546 7,313 5,225
7,015 6,761 7,075
Equity
Share Capital 3,483 3,233 3,483
Share premium account - 21,204 -
Retained earnings 3,953 (17,603) 3,838
Available for sale reserve (648) - (648)
Special reserve 367 - 478
Translation reserve (200) (123) (128)
Equity attributable to shareholders of 6,955 6,711 7,023
Densitron
Minority interests 60 50 52
Total equity 7,015 6,761 7,075
Unaudited Condensed Consolidated Cash flow Statement
For the 6 months ended 30th June 2008
6 months to 6 months to Year to
31st
30th June 30th June
December
2008 2007
2007
�000 �000
Audited
�000
Cash flows from operating activities
Profit/(loss) before taxation 80 (18) 818
Loss for the period from discontinued - (66) (46)
activities
Adjustments for:
Depreciation 23 29 43
Profit on disposal of plant, property - - (848)
and equipment
Loss on write off of investment - - 12
Net finance expense 77 147 294
Exchange adjustments (69) 6 (279)
111 98 (6)
Change in inventories (139) (14) 89
Change in trade and other receivables (1,431) (205) 672
Change in trade and other payables 664 (130) (187)
Change in provisions 5 (64) (7)
(790) (315) 561
Income tax paid (110) 37 (17)
Net cash (used in)/from operating (900) (278) 544
activities
Cash flows from investing activities
Interest received 26 2 66
Proceeds from sale of plant, property - - 1,016
and equipment
Disposal of discontinued operation 434 843 933
Acquisition of plant, property and (22) (18) (55)
equipment
438 827 1,960
Cash flows from financing activities
Proceeds from issue of share capital - - 250
Inception of new loans 250 - -
Repayment of borrowings (394) (243) (1,587)
Interest paid (132) (149) (380)
Payment of finance leases (10) (11) (21)
Change in trade finance creditor 154 15 (196)
Change in letters of credit 80 (66) 95
Dividends paid to minorities (10) (17) (13)
Net cash used in financing activities (62) (471) (1,852)
Net (decrease)/increase in cash and (524) 78 652
cash equivalents
Cash and cash equivalents at 1st 872 192 192
January
Effect of exchange rate fluctuation on 49 1 28
cash held
Cash and cash equivalents at the end of 397 271 872
the period
Notes to the Unaudited Condensed Financial Statements
For the six months ended 30th June 2008
1. General information
Densitron Technologies plc is a public limited company ("the Company")
incorporated in the United Kingdom under the Companies Act 1985 (registration
number 1962726).
The Company is domiciled in the United Kingdom and its registered address is
5th Floor, 145 Cannon Street, London, EC4N 5BP. The Company's Ordinary Shares
are traded on the Alternative Investment Market ("AIM"). The Group's principal
activities are the design, development and delivery of electronic display and
display related technologies.
2. Basis of preparation
This unaudited consolidated interim financial information has been prepared
using the recognition and measurement principles of International Accounting
Standards, International Financial Reporting Standards and Interpretations
adopted for use in the European Union collectively EU IFRSs). The principal
accounting policies used in preparing the interim results are those it expects
to apply in its financial statement for the year ended 31 December 2008 and are
unchanged from those disclosed in the group's Annual Report for the year ended
31 December 2007.
The financial information for the six months ended 30 June 2008 and 30 June
2007 is unreviewed and unaudited and does not constitute the group's statutory
financial statements for those periods. The comparative financial information
for the full year ended 31 December 2007 has, however, been derived from the
audited statutory financial statement for that period. A copy of those
statutory financial statements has been delivered to the Registrar of
Companies. The auditors' report on those accounts was unqualified, did not
include references to any matters to which the auditors drew attention by way
of emphasis without qualifying their report and did not contain a statement
under section 237(2)-(3) of the Companies Act 1985.
The financial information in the Interim Report is presented in Sterling and
all values are rounded to the nearest thousand pounds (�'000) except when
otherwise indicated.
3. Revenue
6 months to 6 months to Year to
31st
30th June 30th June
December
2008 2007
2007
Unaudited Unaudited
Audited
�000 �000
�000
Revenue by location of reporting entity
Europe 4,503 3,378 6,658
USA 3,006 2,965 5,994
Asia 780 653 1,391
8,289 6,996 14,043
Gross profit by location of reporting
entity
Europe 1,428 1,167 2,230
USA 802 802 1,605
Asia 342 260 481
2,572 2,229 4,316
4. Segmental analysis
Continuing Discontinued Eliminations Head Total
office
Displays Gaming
division division
6 months 6 months to 6 months to 6 months 6 months
to to to
30th June 30th June
30th June 30th June 30th June
2008 2008
2008 2008 2008
Unaudited Unaudited
Unaudited Unaudited Unaudited
�000 �000
�000 �000 �000
Revenue
Total 10,447 - - - 10,447
Intercompany (2,158) - - - (2,158)
External 8,289 - - - 8,289
Profit/(loss) before
tax
Continuing 371 - - (291) 80
operations
Discontinued - - - - -
operations
Total 371 - - (291) 80
6 months 6 months to 6 months to 6 months 6 months
to to to
30th June 30th June
30th June 30th June 30th June
2007 2007
2007 2007 2007
Unaudited Unaudited
Unaudited Unaudited Unaudited
�000 �000
�000 �000 �000
Revenue
Total 8,111 244 (244) - 8,111
Intercompany (1,115) (182) 182 - (1,115)
External 6,996 62 (62) - 6,996
Profit/(loss) before
tax
Continuing 384 - - (402) (18)
operations
Discontinued - 414 - - 414
operations
Total 384 414 - (402) 396
Year to Year to 31st Year to 31st Year to Year to
31st 31st 31st
December December
December December December
2007 2007
2007 2007 2007
Audited Audited
Audited Audited Audited
�000 �000
�000 �000 �000
Revenue
Total 16,695 244 (244) - 16,695
Intercompany (2,652) (182) 182 - (2,652)
External 14,043 62 (62) - 14,043
Profit/(loss) before
tax
Continuing 522 - - 296 818
operations
Discontinued - 437 - - 437
operations
Total 522 437 296 1,255
5. Taxation
Taxation for the 6 months ended 30th June 2008 has been calculated by applying
the estimated tax rate for the current financial year ending 31st December
2008.
6. Dividend
No dividend is to be paid in the period (2007: Nil).
7. Earnings per share
6 months to 6 months to Year to
31st
30th June 30th June
December
2008 2007
2007
Unaudited Unaudited
Audited
�000 �000
�000
Profit attributable to ordinary
shareholders
Continuing operations 4 (48) 644
Discontinued operations - 414 437
Profit attributable to ordinary 4 366 1,081
shareholders
Weighted average number of ordinary
shares
Issued at 1 January 69,669,106 64,669,106 64,669,106
Effect of shares issued on 21st - - 150,685
December 2007
Weighted average number of ordinary 69,669,106 64,669,106 64,819,791
shares at
30th June 2008
Dilutive effect of warrants - 1,488,764 1,375,734
Diluted weighted average number of 69,669,106 66,157,870 66,195,525
ordinary shares at 30th June 2008
8. Related party transactions
Loan from Bronsst�det AB - On 9th June 2008 the Company repaid the balance of a
loan outstanding from Bronsst�det AB, a company owned by the Company's largest
shareholder, Peter Gyllenhammar, together with a 2% redemption fee.
9. Copies of Interim report
The Interim report is available to view and download from the Company's website
at www.densitron.com. If shareholders would like a hardcopy of the interim
report they should contact the Company Secretary, Tim Pearson.
END
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