25th Apr 2007 09:23
DENSITRON TECHNOLOGIES PLC ("Densitron" or the "Company") PRELIMINARY FIGURES FOR THE YEAR ENDED 31st DECEMBER 2006 Company Highlights 2006 2005 ‚£ millions ‚£ millions Revenue 20.3 19.6 Operating loss (0.8) (1.0) Loss before taxation (0.3) (1.0) Loss per share (0.56)p (2.19)p Gearing 62% 41% Order Book (continuing operations) 5.1m 5.9m
> The Public Information Displays Division sold for a total of ‚£1 million.
> The Gaming Division sold in January 2007.
> A further ‚£291,000 received in respect of the disposal of Hitech Electronics Corporation.
> Increase in turnover from ‚£19.6 million to ‚£20.3 million.
> Reduction in administrative expenses to ‚£7.0million from ‚£7.3 million.
CHAIRMAN'S STATEMENT
The year to 31 December 2006 has seen the Group undergo further changes and rationalisations as the Board seeks to create maximum value for Shareholders. I reported in my statement in last year's Annual Report that the operating businesses had been reorganised under a divisional structure in order "to bring greater clarity, visibility and above all accountability". This strategy has been successful in that it enabled the senior management of each division to focus on their specific performance and results. It also had the effect of highlighting a number of issues within the divisions that has ultimately resulted in the Board taking the decision to sell two of the operating businesses. This now leaves the Group with a single operating division and two assets.
Assets
VBestElectronics Co Ltd - VBest, as many Shareholders will know, is a high volume LCD and LCM manufacturer with Headquarters in Taiwanand factories in both Taiwanand mainland China. Densitron owns 24.48% of the share capital in VBest. Turnover is currently in the region of ‚£40m and management expects this to grow significantly in 2007. In addition, net assets are in excess of ‚£24m. VBest remains a significant investment for the Group and the Directors are committed to looking at ways of maximizing the value of this investment. Your Board considers that the value represented by this investment on the Company's balance sheet of ‚£6.8m is reasonable.
BlackheathLand - The Company continues to own a sports ground of approximately 5.5 acres at Blackheath in the London Borough of Greenwich. I am pleased to report that the Company has successfully resisted the claim by the Old Addeyans Football Club (OAFC) to take possession of the land. The trustees of the OAFC had claimed rights by adverse possession. I reported last year that the advice that the Company had received was that its case was sound and this was vindicated when the OAFC withdrew its claim the week before the case came to Court in December 2006. The OAFC settled with a contribution towards the Company's legal costs of ‚£48,650. Negotiations continue with the Local Authority and others over the terms of a proposed land swap and when there are further developments Shareholders will be informed.
Disposals
DensitronPublic Information Displays - The public information displays division (Densitron Ferrograph Limited) had been centred on providing information displays for the Bus sector for several years. The Board recognised that it needed to move into the Rail sector and to that end recruited an experienced sales professional in that market place during 2005. During 2006 in-roads were made into the Rail sector but market research carried out suggested that the market for information displays in the Rail and Bus sectors was far smaller than had been previously perceived. In order to generate significant returns from the division the Group would have needed to expand into other markets or geographically. The Board investigated this possibility but concluded that a return on the investment would only be made in the long term and was exceedingly uncertain. Consequently it was decided that disposal would be the preferred option giving a return on the investment already made. The business was sold on 31 December 2006 to Trueform Engineering Limited for cash.
DensitronGaming- The gaming division had required significant investment over a number of years but the market has been growing and the Computer Boards developed by Densitron Gaming had been very well received by the major manufacturers of gaming machines. As reported in the Annual Report last year a substantial order had been won from a leading Russian manufacturer for delivery during 2006. Due to legislation issues in Russia little of this order was delivered in the year and further business expected to be won in Russia was delayed. Lead times in this business can be in excess of 12 months and as the Board did not see sufficient evidence that the business was going to deliver a return in the short term and in order to stem the ongoing losses, the Board took the decision to sell the business. The business was sold on 31 January 2007 for the value of its net operating assets plus goodwill of ‚£500,000 and a royalty based on the level of turnover for the following 5 years.
Future Strategy
The remaining Displays Division has traditionally been the core business within Densitron generating around ‚¾ of the overall annual turnover. In 2006 the division generated sales of ‚£15.4 million and an operating profit before group charges of approximately ‚£800,000. Until the move to a Divisional structure it had been perceived as a business that did not offer the same opportunity for growth as the Public Information Displays and Gaming divisions. Following the reorganization to a Divisional structure it became evident that the Displays division was a well organized, well run, profitable and growing business. Consequently your Board is committed to focusing on the Displays division and growing it further, both through organic growth and by strategic acquisition.
Outlook- The Board is confident that the decisions to sell the two loss making divisions will enable a more focused approach for the Group. The Displays business offers significant opportunity to grow organically in the long term as markets which are currently being addressed become more developed. Business at good margins remains the key driver and areas of potential cost savings have been identified and are being progressed. Organic growth together with a plan to make certain strategic acquisitions means that the remaining business is in a strong position to capitalize on its strengths and the outlook is one of cautious optimism.
I would like to take this opportunity to thank the directors and staff at Densitron for their continuing commitment and efforts particularly during a period of change for the Company. I would also like to thank our Shareholders for their ongoing support.
Ralph BaberInterim Chairman25 April 2007
Consolidated profit and loss account
For the year ended 31st December 2006
2006 2006 2006 2005 2005 2005 Continuing Discontinued Total Continuing Discontinued Total ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Turnover 15,441 4,873 20,314 19,606 1,221 20,827 Cost of sales (10,807) (3,346) (14,153) (13,572) (538) (14,110) Gross profit 4,634 1,527 6,161 6,034 683 6,717 Distribution (54) (4) (58) (72) - (72) costs Administrative (4,525) (2,443) (6,968) (7,275) (534) (7,809) expenses Other 52 50 102 319 10 329 operating income Operating 107 (870) (763) (994) 159 (835) (loss)/profit Share of - - - 44 - 44 associates' operating profit Profit on - 748 748 - 1,623 1,623 sales of subsidiaries (Loss)/profit 107 (122) (15) (950) 1,782 832 on ordinary activities before interest and taxation Interest 53 - 53 47 - 47 receivable and similar income Interest (245) (79) (324) (373) (1) (374) payable and similar charges (Loss)/profit (85) (201) (286) (1,276) 1,781 505 on ordinary activities before taxation Tax on (loss)/ (66) - (66) (102) (39) (141) profit on ordinary activities (Loss)/profit (151) (201) (352) (1,378) 1,742 364 on ordinary activities after taxation Minority (11) - (11) (38) (87) (125) interests Retained (loss)/profit for the financial year (162) (201) (363) (1,416) 1,655 239 Basic and diluted (loss) /earnings per share (0.25)p (0.31)p (0.56)p (2.19)p 2.56p 0.37p
Consolidated statement of total recognised gains and losses
For the year ended 31st December 2006
2006 2005 Total Total ‚£000 ‚£000 Group (loss)/profit for the financial year (363) 201 Associated undertakings' profit for the financial year - 38 Foreign exchange adjustments (111) 212 Total recognised gains and losses for the year (474) 451
Consolidated and parent company balance sheets
As at 31st December 2006 The Group The Company 2006 2005 2006 2005 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Fixed assets Intangible assets 160 184 - - Tangible assets 364 388 293 305 Investments 6,917 6,917 7,957 9,102 7,441 7,489 8,250 9,407 Current assets Stocks 931 1,311 - - Debtors - due after more than one year 651 540 - - Debtors - due within one year 4,198 4,150 544 1,545 Total debtors 4,849 4,690 544 1,545 Cash at bank and in hand 1,292 2,382 11 11 7,072 8,383 555 1,556 Creditors: amounts falling due within one (6,021) (8,037) (2,739) (3,101) year Net current assets/(liabilities) 1,051 346 (2,184) (1,545) Total assets less current liabilities 8,492 7,835 6,066 7,862 Creditors: amounts falling due after more (1,741) (609) (102) (400) than one year Provisions for liabilities (325) (325) (325) (325) Net assets 6,426 6,901 5,639 7,137 Capital and reserves Called up share capital 3,233 3,233 3,233 3,233 Share premium account 21,204 21,204 21,204 21,204 Revaluation reserve - - 117 117 Profit and loss account (18,063) (17,589) (18,915) (17,417) Total equity shareholders' funds 6,374 6,848 5,639 7,137 Minority interests 52 53 - - 6,426 6,901 5,639 7,137
Consolidated cash flow statement
For the year ended 31st December 2006
2006 2005 ‚£000 ‚£000 Net cash outflow from operating activities (953) (1,748) Returns on investment and servicing of finance Interest received 53 46 Interest paid (284) (351) Interest element of finance lease payments (2) (7) Dividends paid to minority interests (11) (33) (244) (345) Taxation paid UK tax paid - - Overseas tax paid (146) (369) (146) (369) Capital expenditure and financial investment Payments to acquire tangible fixed assets (19) (86) Receipts from the sale of tangible fixed assets 2 - (17) (86) Acquisitions and disposals Purchase of shares in subsidiary undertakings - (76) Sale of shares in subsidiary undertaking 291 4,059 291 3,983 Financing Capital element of finance lease payments (25) (30) Decrease in advances from factors - (2) Increase in advances from Invoice Discounting (225) 788 Increase in letters of credit (161) 15 Repayments of bank loans (470) (476) New bank loans 1,500 247 Net cash inflow from financing 619 542 (Decrease)/increase in cash (450) 1,977 NOTES
Reconciliation of operating loss to net cash outflow from operating activities
2006 2005 ‚£000 ‚£000 Operating loss (763) (835)
Depreciation and impairment of tangible fixed assets 79 172
Amortisation and impairment of intangible assets 12 25
Decrease in stocks 193 332 Increase in debtors (154) (288) Decrease in creditors (374) (668) Decrease in provisions for liabilities - (207) Currency adjustments 54 (279) Net cash outflow from operating activities (953) (1,748)
Reconciliation of net cash flow to movement in net debt
2006 2005 ‚£000 ‚£000 (Decrease)/increase in cash (450) 1,977
Cash outflow from decrease in debt and lease finance (619) (542)
Increase in net debt and lease finance (1,069) 1,435 Inception of finance leases (59) - Disposal of subsidiary undertaking - (648) Foreign exchange movements 15 44 (Increase)/decrease in net debt (1,113) 831 Net debt at 1st January (2,855) (3,686) Net debt at 31st December (3,968) (2,855) Analysis of net debt 1st Inception Foreign exchange 31st January Cash Of movements December 2006 Flow finance 2006 Leases ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Cash at bank and in 2,382 (967) - (123) 1,292hand Bank overdraft (2,552) 517 - 102 (1,933) Net cash/(overdraft) (170) (450) - (21) (641) Loans (1,019) (1,030) - 26 (2,023) Finance leases (9) 25 (59) - (43) Advances from Invoice (788) 225 - - (563) Discounting Letters of credit (869) 161 - 10 (698) Borrowings (2,685) (619) (59) 36 (3,327) Net debt (2,855) (1,069) (59) 15 (3,968) Saleof businessThe cash flow effect of the sale of Densitron Ferrograph Limited is shownbelow: 2006 ‚£000 Net assets disposed of Fixed assets 19 Stock 85 Debtors 879 Creditors (440) 543 Profit on disposal 457 1,000 Satisfied by: Short term debt 700
Amounts due in more than one year 300
1,000
The business sold during the year absorbed ‚£518,000 from the group's net operating cash flows, paid ‚£24,000 in respect of net returns on investments and servicing of finance and paid ‚£4,000 in respect of capital expenditure.
TURNOVER
Analysis of turnover and gross profit by class of business
2006 2005 Turnover Gross Turnover Gross profit profit ‚£000 ‚£000 ‚£000 ‚£000 Display related products 15,442 4,634 15,325 4,885 Gaming Boards 1,650 286 1,436 289 Human machine interfaces - - 1,123 380 Public information displays 3,222 1,241 2,943 1,163 20,314 6,161 20,827 6,717
BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share has been calculated on the Group loss attributable to the ordinary shareholders on ordinary activities after taxation and minority interest of ‚£363,000 (2005: profit ‚£239,000) and the average number of ordinary shares in issue during the year being 64,669,106 (2005: 64,669,106).
There are no share options in existence at the end of either financial year so the diluted earnings per share is the same as the basic earnings per share for both years.
STATUTORY INFORMATION
The financial information set out above does not constitute the Company's statutory accounts within the meaning of section 240 of the Companies Act 1985. The 2006 figures are based on unaudited accounts for the year ended 31 December 2006. The auditors do not expect to issue a qualified report on the statutory accounts which will be finalised on the basis of the financial information presented by the directors in the preliminary announcement and which will be delivered shortly to the Registrar of Companies.
The 2005 comparatives are derived from the statutory accounts for 2005 which have been delivered to the Registrar of Companies and received an unqualified audit report and did not contain a statement under the Companies Act 1985, s237 (2) or (3).
Densitron Technologies plc, 5th Floor, 145 Cannon Street, London, EC4N 5BP
Telephone 020 7648 4200
For further details please contact:
Tim Pearson, Group Finance Director Densitron Technologies plc Tel: 0207 648 4200 John Wakefield, Director Blue Oar Securities Plc Tel: 0117 933 0020
DENSITRON TECHNOLOGIES PLCRelated Shares:
DSN.L