21st Jun 2006 07:00
Embargoed Release: 07:00hrs Wednesday 21st June 2006 DENSITRON TECHNOLOGIES PLC ("Densitron" or the "Company") PRELIMINARY FIGURES FOR THE YEAR ENDED 31st DECEMBER 2005 Company Highlights 2005 2004 Continuing Continuing ‚£ millions ‚£ millions Revenue 19.6 19.1 Operating loss (1.0) (0.4) Loss before taxation (1.3) (0.4) Loss per share (2.19)p (1.08)p Gearing 41% 104% Order Book 9.1 7.5 > Hitech Electronics Corporation sold in the year generating a book profit of ‚£1.6m.> Substantially all of the minority interests eliminated in the year.> Significant reduction in net debt.> Reduction in administrative expenses to ‚£7.3million from ‚£7.4 million.> Company restructured to a divisional basis.> Significant increase in order book to ‚£9.1million from ‚£7.5 millionCHAIRMAN'S STATEMENTIn the year to 31 December 2005, the Group has undergone some significantchanges to bring the business to a stronger operational basis. During the yearwe disposed of our interest in Hitech Electronics Limited and have reclassifiedour holding in VBest Electronics Co Ltd as an investment. Along with thesechanges we have introduced a divisional structure to our remaining operatingbusinesses. The result of these changes has been to bring far greater clarity,visibility and above all accountability. This will in the long term lead tobetter results for your Company.We continue to invest in the business to attain profitability. The directorshave identified the need to increase our borrowing facilities and we arepleased to announce that, on 20th June 2006, we have agreed terms with theCompany's largest shareholder, Fƒ¶rvaltnings AB Bronsstƒ¤det, for the provisionof a loan of ‚£1.5 million, in order to provide additional working capital forthe Group.ResultsSales in the continuing business for 2005 were ‚£19.6m (2004: ‚£19.1m) anincrease of 2.6%, but lower gross margins on continuing activities haveresulted in an increased net loss of ‚£1.0m (2004: ‚£0.4m). The profit on thesale of Hitech Electronics Limited has enabled the Group to report a retainedprofit of ‚£239,000 (2005: ‚£5,000).TradingTrading in the first five months of 2006 has been better than forecast in ourinternal budgets. Across the Group, order intake is up at ‚£10.1m (2005: ‚£9.5m)and sales in the same period have increased to ‚£9.0m (2005: ‚£7.6m). The DisplaySolutions Division is performing well particularly in the US. The GamingDivision continues to show promise and further product and marketing investmentwill be made to grow this business to profitability. Densitron Ferrograph hashad some success in re-entering the rail market but overall has disappointed interms of business won for shipment in the current year. Actions are in processto mitigate this situation.Gross profit margins achieved during the first five months of 2006 are in linewith the average for 2005 and improved compared with the second half result forthat year.In 2005 the Company implemented a number of actions to reduce costs at its headoffice. These activities included reducing the number of employees andrelocation to smaller premises. The annual value of these savings is expectedto be approximately ‚£400,000.Blackheath LandThe Board is currently in negotiation with the Local Authority and others overthe terms of a proposed land swap which will enable the Company to acquire astake in a site that has been identified for residential use. However, I wouldcaution that, as with any negotiation, the outcome can not be predicted eitherin terms of timing or value.Shareholders should note that the Company is in the process of taking legalaction to remove the Old Addeyans Football Club (OAFC) from the land. The OAFC,whose trustees are Mr. Clifford Hardcastle OBE (a former Director of theCompany), Mr. Raymond Kirk and Mr. James Pollard, are claiming rights byadverse possession on behalf of OAFC. The Directors, after taking legal advice,have concluded that the Company's case is sound and will take all necessaryaction to safeguard the Company's asset.VBest Electronic Co LtdPrevious management significantly over paid for this investment. The investmenthas now been written down to reflect the net assets of Vbest Electronics CoLimited (Vbest). Your board views the investment as a long term holdingposition.The local management decided to de-list from the Taiwan Emerging MarketExchange and implemented a number of management, process and accounting changesto improve the long term prospects of the Group. 2005 was therefore a year ofconsolidation.CashThe Group had a net cash outflow of ‚£1.7m in 2005 (2004: ‚£0.4m). Net debtreduced to ‚£2.9m as at 31st December 2005 (31st December 2004: ‚£3.7m)reflecting the proceeds from the sale of Hitech Electronics Limited offset byoperating cash consumption.As previously stated, the Company has entered into a loan agreement withFƒ¶rvaltnings AB Bronsstƒ¤det to provide additional facilities for the Group. Theloan will attract an interest rate of 10% per annum in the first year, risingto 13% per annum on the first anniversary of the loan. In addition,Fƒ¶rvaltnings AB Bronsstƒ¤det has been granted warrants to subscribe to 5 millionnew ordinary shares at 5p per share. The warrants may be exercised any time inthe next two years.The loan is for a two year term and is secured by a first charge on theinvestment that the Company has in VBest Electronics Co Ltd and a second chargeon all the other assets of the Company.In view of the overall support that the Group has received from Fƒ¶rvaltnings ABBronsstƒ¤det, this company will also have the right to nominate anon-executive director to the Board. As and when a new non-executive directoris appointed, further details will be announced.The directors of Densitron, having consulted with the Company's nominatedadviser, Rowan Dartington, consider that the terms of the transaction are fairand reasonable insofar as the Company's shareholders are concerned.DividendThe Company does not propose to pay a dividend for 2005 (2004: nil).OutlookClearly our objective is to increase sales but our main focus is to ensure thatwe win business on good margins. This may mean that in the short term we willnot see a dramatic rise in turnover but our profitability should start toimprove. All the divisional managing directors understand that they need toachieve individually and collectively the net profit targeted.The outlook for the Group continues to be cautiously optimistic; DensitronDisplay Solutions Division is winning good orders for the future whilst theinvestment in Densitron Gaming Division is producing encouraging results interms of increased orders, prospects and interest from the market.I would like to thank the directors and staff at Densitron for their continuedefforts and commitment over the past year and to thank our shareholders, inparticular Mr. Peter Gyllenhammar who was instrumental in putting theFƒ¶rvaltnings AB Bronsstƒ¤det loan in place, for their ongoing support.Ralph BaberChairman20 June 2006CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST DECEMBER 2005 2005 2005 2005 2004 2004 2004 Continuing Discontinued Total Continuing Discontinued Total ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Restated ‚£000 TURNOVER 19,606 1,221 20,827 19,124 6,961 26,085 Cost of sales (13,572) (538) (14,110) (12,104) (3,057) (15,161) GROSS PROFIT 6,034 683 6,717 7,020 3,904 10,924 Distribution costs (72) - (72) (104) (34) (138) Administrative (7,275) (534) (7,809) (7,373) (2,270) (9,643)expenses Other operating 319 10 329 77 151 228income OPERATING (LOSS)/ (994) 159 (835) (380) 1,751 1,371PROFIT Share of 44 - 44 372 - 372associates' operating profit Profit on disposal - - - 94 - 94of shares in associate Profit/(loss) on - 1,623 1,623 - (28) (28)sales of subsidiaries (LOSS)/PROFIT ON (950) 1,782 832 86 1,723 1,809ORDINARY ACTIVITIES BEFORE INTEREST AND TAXATION Interest receivable 47 - 47 32 1 33and similar income Interest payable (373) (1) (374) (504) (11) (515)and similar charges (LOSS)/PROFIT ON (1,276) 1,781 505 (386) 1,713 1,327ORDINARY ACTIVITIES BEFORE TAXATION Tax on (loss)/ (102) (39) (141) (246) (276) (522)profit on ordinary activities (LOSS)/PROFIT ON (1,378) 1,742 364 (632) 1,437 805ORDINARY ACTIVITIES AFTER TAXATION Minority interests (38) (87) (125) (68) (732) (800)- equity RETAINED (LOSS)/ (1,416) 1,655 239 (700) 705 5PROFIT FOR THE FINANCIAL YEAR Basic and diluted (2.19)p 2.56p 0.37p (1.08)p 1.09p 0.01p(loss)/earnings per share CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFOR THE YEAR ENDED 31ST DECEMBER 2005 2005 2004 Total Total ‚£000 Restated ‚£000 Group profit/(loss) for the financial year 201 (140) Associated undertakings' profit for the 38 145financial year Dilution of shareholding in associate - (8) Foreign exchange adjustments 212 (226) Total recognised gains and losses for the 451 (229)year CONSOLIDATED AND PARENT COMPANY BALANCE SHEETSAS AT 31ST DECEMBER 2005 The Group The Company 2005 2004 2005 2004 ‚£'000 Restated ‚£'000 ‚£'000 ‚£'000 FIXED ASSETS Intangible assets 184 178 - - Tangible assets 388 1,904 305 390 Investments 6,917 6,448 9,102 9,089 7,489 8,530 9,407 9,479 CURRENT ASSETS Stocks 1,311 4,318 - - Debtors - due after more than one year 540 657 - - Debtors - due within one year 4,150 5,337 1,545 7,593 Total debtors 4,690 5,994 1,545 7,593 Cash at bank and in hand 2,382 2,448 11 11 8,383 12,760 1,556 7,604 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE (8,037) (10,193) (3,101) (3,179)YEAR NET CURRENT ASSETS/(LIABILITIES) 346 2,567 (1,545) 4,425 TOTAL ASSETS LESS CURRENT LIABILITIES 7,835 11,097 7,862 13,904 CREDITORS: AMOUNTS FALLING DUE AFTER MORE (609) (865) (400) (869)THAN ONE YEAR PROVISIONS FOR LIABILITIES AND CHARGES (325) (532) (325) (530) Net assets excluding pension liabilities 6,901 9,700 7,137 12,505 Pension liabilities - (277) - - Net assets including pension liabilities 6,901 9,423 7,137 12,505 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 - 132 117 117 Profit and loss account (17,589) (18,040) (17,417) (12,049) TOTAL EQUITY SHAREHOLDERS' FUNDS 6,848 6,529 7,137 12,505 MINORITY INTERESTS - Equity 53 2,894 - - 6,901 9,423 7,137 12,505 Consolidated cash flow statementFOR THE YEAR ENDED 31ST DECEMBER 2005 2005 2004 ‚£000 ‚£000 NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,748) (355) DIVIDENDS RECEIVED FROM ASSOCIATED UNDERTAKINGS - 96 RETURNS ON INVESTMENT AND SERVICING OF FINANCE Interest received 46 33 Interest paid (351) (430) Interest element of finance lease payments (7) (12) Dividends paid to minority interests (33) (794) (345) (1,203) TAXATION PAID UK tax paid - - Overseas tax paid (369) (156) (369) (156) CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire tangible fixed assets (86) (248) Receipts from the sale of tangible fixed assets - 6 (86) (242) ACQUISITIONS AND DISPOSALS Purchase of shares in subsidiary undertakings (76) - Sale of shares in subsidiary undertaking 4,059 6 Purchase of shares in associated undertaking - (4) Sale of shares in associated undertaking - 204 3,983 206 FINANCING Share issues: rights issue - 304 Share issues: expenses - (282) Capital element of finance lease payments (30) (33) Decrease in advances from factors (2) (2) Increase in advances from Invoice Discounting 788 - Increase in letters of credit 15 47 Repayments of bank loans (476) (445) New bank loans 247 - NET CASH INFLOW/(OUTFLOW) FROM FINANCING 542 (411) INCREASE/(DECREASE) IN CASH 1,977 (2,065)NOTESRECONCILIATION OF OPERATING LOSS TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES 2005 2004 Restated ‚£000 ‚£000 Operating (loss)/profit (835) 1,371 Depreciation and impairment of tangible fixed assets 172 278 Amortisation and impairment of intangible assets 25 30 Loss on sale of fixed assets - 48 Decrease/(increase) in stocks 332 (1,550) Increase in debtors (288) (169) Decrease in creditors (668) (613) (Decrease)/increase in provisions for liabilities and (207) 182charges Currency adjustments (279) 68 NET CASH OUTFLOW FROM OPERATING ACTIVITIES (1,748) (355)RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 2005 2004 Restated ‚£000 ‚£000 Increase/(decrease) in cash 1,977 (2,065) Cash (outflow)/inflow from (decrease)/increase in debt and (542) 433lease finance Decrease/(increase) in net debt and lease finance 1,435 (1,632) Disposal of subsidiary undertaking (648) - Foreign exchange movements 44 (14) Decrease/(increase) in net debt 831 (1,646) Net debt at 1st January (3,686) (2,040) NET DEBT AT 31ST DECEMBER (2,855) (3,686)ANALYSIS OF NET DEBT 1st Cash Disposal Foreign 31st of exchange January Flow subsidiary movements December 2005 ‚£000 ‚£000 ‚£000 2005 ‚£000 ‚£000 Cash at bank and in hand 2,448 610 (790) 114 2,382 Bank overdraft (3,997) 1,367 142 (64) (2,552) NET CASH/(OVERDRAFT) (1,549) 1,977 (648) 50 (170) Loans (1,248) 229 - - (1,019) Finance leases (39) 30 - - (9) Advances from factors (2) 2 - - - Advances from Invoice (788) - - (788)Discounting Letters of credit (848) (15) - (6) (869) BORROWINGS (2,137) (542) - (6) (2,685) NET DEBT (3,686) 1,435 (648) 44 (2,855)PRIOR PERIOD ADJUSTMENTSThe Group has changed its accounting policy relating to pensions to take intoaccount the provisions of FRS 17. This has resulted in a reduction at 31stDecember 2004 in cash at bank and in hand and provisions of ‚£117,000 and ‚£418,000 and an increase in minority interests and pension liabilities of ‚£26,000 and ‚£277,000 respectively. For the year ended 31st December 2004 it hasresulted in a decrease in administrative expenses of ‚£5,000 and an increase inminority interests of ‚£3,000. There has been no impact on the year to 31stDecember 2005 as the defined benefit pension scheme was in a subsidiarydisposed of during the year.TURNOVERAnalysis of turnover and gross profit by class of business 2005 2004 Turnover Gross Turnover Gross profit profit ‚£000 ‚£000 ‚£000 ‚£000 Analysis of turnover and gross profit by class of business Display related products 15,325 4,885 13,873 6,168 Computer products 1,436 289 2,901 1,451 Human machine interfaces 1,123 380 5,076 1,912 Public information displays 2,943 1,163 3,115 1,086 Electro-mechanical products - - 1,120 307 20,827 6,717 26,085 10,924BASIC AND DILUTED EARNINGS PER SHAREBasic earnings per share has been calculated on the Group profit attributableto the ordinary shareholders on ordinary activities after taxation and minorityinterest of ‚£239,000 (2004: ‚£5,000) and the average number of ordinary sharesin issue during the year being 64,669,106 (2004: 64,669,106).There are no share options in existence as at the end of either financial yearso the diluted earnings per share is the same as the basic earnings per sharefor both years.STATUTORY INFORMATIONThe preliminary announcement is not the Company's statutory accounts but isderived from those accounts. The accounts have been prepared under accountingpolicies consistent with those in the 2004 accounts except that the Company haschanged its accounting policy regarding pensions in order to adopt theprovisions of FRS17 and has, consequently, restated the results for 2004 totake account of this change. The statutory accounts for the year ended 31stDecember 2004 have been delivered to the Registrar of Companies and received anaudit report which was unqualified and did not contain statements under S237(2)or (3) of the Companies Act 1985. The statutory accounts for the year ended2005 have been audited and received an unqualified opinion but have not yetbeen filed with the Registrar of Companies.Copies of the Annual Report will be despatched shortly to all shareholderscurrently on the Register.Densitron Technologies plc, 5th Floor, 145 Cannon Street, London, EC4N 5BPTelephone 020 7648 4200For further details please contact:Rob Smith - Interim CEO Telephone: 020 7648 4200Densitron Technologies plcAndrew Tan - Account Director Telephone: 020 7245 1100Hansard CommunicationsENDDENSITRON TECHNOLOGIES PLCRelated Shares:
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