31st Aug 2006 17:20
Densitron Technologies PLC31 August 2006 DENSITRON TECHNOLOGIES PLC INTERIM REPORT FOR THE SIX MONTHS ENDED 30TH JUNE 2006 OPERATIONAL HIGHLIGHTS The strategy of dividing the Group into three divisions has enabled all parts ofthe business to make progress and improve trading in the first half of 2006. • Turnover on continuing business increased by 15% on first half of 2005 and 2% on second half of 2005. • Significant increase in order book from 1 January 2006 from £9.1m to £10.4m at 30th June 2006. • Operating loss on continuing activities reduced by 76% against the same period of 2005 from £0.9m to £0.2m. • Administrative expenses on continuing operations reduced by 8% against the same period of 2005 from £3.8m to £3.5m. Financial highlights on continuing operations 6 months to 6 months to 30th June 2006 30th June 2005 Continuing Continuing Unaudited Unaudited £m £mRevenue 10.6 9.2Operating loss (0.2) (0.9)Loss before taxation (0.3) (1.0)Loss per share (0.64)p (1.60)pOrder book 10.4 9.8 Chairman's Statement The first half of 2006 has shown a considerable improvement on the same periodin 2005 on continuing business with progress being made in all divisions. TheGroup made an operating loss of £207,000 in the first half of 2006 compared witha loss of £857,000 in the first half of 2005. New orders booked were £11.9m compared with £11.5m in the first half of 2005 and£9.7m in the second half of 2005. The order book has increased by £1.3m in thefirst half of 2006 and stood at £10.4m at 30th June 2006. Densitron Display Solutions Sales in the period on continuing operations have increased by 19% compared tothe same period in 2005, but have fallen by 7% compared to the second half of2005. Densitron Display Solutions continues to perform well both in terms of ordersbooked and shipments made. The focus of the division remains the same, targetingbusiness with good margins where the expertise of the Division's engineers canadd value. The changes made to the sales teams in France and Germany during 2005are showing an improvement on the orders and sales of 2005 and the US continuesto perform well. Densitron Gaming Sales in the period under review have improved by 48% compared with the sameperiod in 2005 and 9% compared to the second half of 2005. Our Gaming division has launched three new products this year. These are beingreviewed by our customers. The initial feed back has been positive with somemajor operators in the gaming market having conducted factory visits. The leadtime to orders is frustratingly long as our boards have to be designed into newgames, however, once this has been achieved we anticipate the demand to bestrong. A record number of development kits have been shipped to customers in the firsthalf and they have been extremely well received. The strengthening of the salesteam that has taken place in 2006 is now beginning to yield results, although,shipments to the important Russian market continue to be behind where they wereoriginally expected to be but they are beginning to show signs of improvement.The delay in the legislative process in Russia has delayed both sales againstorders already received and new orders being placed. The Directors remainconfident that once the legislation is in place Densitron Gaming will be in aposition to capitalise on it. Densitron Ferrograph Sales in the period have decreased by 7% compared to the same period in 2005 buthave increased by 67% compared to the second half of 2005. The Bus Sectorbusiness remains cyclical but as the level of business in the Rail Sectorincreases it is anticipated that the large swings in business conducted in thefirst and second halves of a year will reduce. During 2005 the majority of the business conducted by Densitron Ferrograph wasin the Bus Sector where the Division remains a market leader. The decision wastaken to try and penetrate the Rail Sector and to that end an experienced salesexecutive was recruited. By the end of 2005 a small order had been won toprovide concourse passenger information signs for Gatwick Railway Station, thesedisplays have now been successfully installed and a further order has beenreceived to provide signs for Birmingham New Street Station. A number of furtheropportunities exist in the Rail Sector and these will continue to be pursued inthe second half of 2006. VBest Electronics Co Ltd VBest Electronics Co Ltd is the Group's investment in Taiwan. I reported in theAnnual Report that 2005 had been a year of consolidation for VBest. The actionsdescribed in the Annual Report that were taken by the VBest management during2005 are showing some encouraging signs during the first half of 2006. Blackheath Land There is no new information to report regarding the land held at Blackheath.Negotiations remain ongoing with the Local Authority and others over theproposed land swap. The Directors are continuing with the Company's legal actionagainst the Trustees of the Old Addeyans Football Club regarding their claim ofadverse possession over the land and remain confident that the Company's case issound. Outlook The market place remains competitive and this is to be expected, the Directorsare confident that the trading strategies of each of the divisions is sound andplaces them in a position to take advantage of opportunities as they presentthemselves. The Board remains convinced that the market capitalisation of the Group does notreflect the value of the underlying assets of the business and is continuing totake steps to improve returns from its operating activities in order torecognise these asset values. The Directors will continue with the strategy ofdisposing of non-core assets providing the realisable value is at an acceptablelevel. Ralph BaberInterim Chairman31 August 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT For the six months ended 30th June 2006 6 months to 6 months to 6 months to 6 months to Year to 30th June 30th June 30th June 30th June 31st December 2006 2005 2005 2005 2005 Total Continuing Discontinued Total Total Unaudited Unaudited Unaudited Unaudited Audited £000 £000 £000 £000 £000TURNOVER 10,601 9,195 1,221 10,416 20,827Cost of sales (7,331) (6,229) (538) (6,767) (14,110)GROSS PROFIT 3,270 2,966 683 3,649 6,717Distribution costs (34) (56) - (56) (72)Administrative expenses (3,487) (3,776) (534) (4,310) (7,809)Other operating income 44 9 10 19 329OPERATING (LOSS)/PROFIT (207) (857) 159 (698) (835)Share of associates' operating profit - 44 - 44 44Profit on sale of subsidiary - 1,608 - 1,608 1,623(LOSS)/PROFIT ON ORDINARY ACTIVITIESBEFORE INTEREST (207) 795 159 954 832Interest receivable and similar income 28 26 - 26 47Interest payable and similar charges (134) (189) (1) (190) (374)(LOSS)/PROFIT ON ORDINARY ACTIVITIESBEFORE TAXATION (313) 632 158 790 505Tax on (loss)/profit on ordinary (95) (28) (39) (67) (141)activities(LOSS)/PROFIT ON ORDINARY ACTIVITIES AFTERTAXATION (408) 604 119 723 364Minority interests (5) (29) (87) (116) (125)(LOSS)/PROFIT FOR THE FINANCIAL PERIOD (413) 575 32 607 239Basic and diluted (loss)/earnings pershare (0.64)p 0.89p 0.05p 0.94p 0.37p STATEMENT OF RECOGNISED GAINS AND LOSSES For the six months to 30th June 2006 6 months to 6 months to Year to 30th June 30th June 31st December 2006 2005 2005 Total Total Total Unaudited Unaudited Audited £000 £000 £000(Loss)/profit for the period (413) 569 201Associated undertakings' profit for thefinancial period - 38 38Foreign exchange adjustments (43) 230 212 (456) 837 451 SUMMARISED CONSOLIDATED BALANCE SHEET As at 30th June 2006 30th June 30th June 31st December 2006 2005 2005 Unaudited Unaudited Audited £000 £000 £000FIXED ASSETSIntangible assets 172 197 184Tangible assets 410 486 388Investments 6,917 6,917 6,917 7,499 7,600 7,489CURRENT ASSETSStocks 1,329 1,505 1,311Debtors - due in more than one year 392 567 540Debtors - due in less than one year 3,939 3,489 4,150 4,331 4,056 4,690Cash at bank and in hand 1,729 2,158 2,382 7,389 7,719 8,383 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (6,225) (7,050) (8,037) NET CURRENT ASSETS 1,164 669 346 TOTAL ASSETS LESS CURRENT LIABILITIES 8,663 8,269 7,835 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (1,888) (623) (609) PROVISIONS FOR LIABILITIES AND CHARGES (325) (432) (325) NET ASSETS 6,450 7,214 6,901 CAPITAL AND RESERVES (EQUITY SHAREHOLDERS' FUNDS) 6,392 7,171 6,848MINORITY INTERESTS 58 43 53 6,450 7,214 6,901 SUMMARISED CONSOLIDATED CASH FLOW STATEMENT For the 6 months ended 30th June 2006 Six months to Six months to Year to 30th June 30th June 31st December 2006 2005 2005 Notes Unaudited Unaudited Audited £000 £000 £000Net cash inflow/(outflow) from operating activities a 95 (1,312) (1,748)Returns on investment and servicing of finance (109) (221) (345)Tax paid (74) (334) (369)Capital expenditure and financial investment (69) (74) (86)Acquisitions and disposals 47 3,987 3,983Financing b 862 (443) 542Increase in cash b,c 752 1,603 1,977 NOTES TO THE CONSOLIDATED CASH FLOW For the six months ended 30th June 2006 a. Reconciliation of operating loss to net cash inflow/(outflow) from operatingactivities Six months to Six months to Year to 30th June 30th June 31st December 2006 2005 2005 Unaudited Unaudited Audited £000 £000 £000Operating loss (207) (698) (835)Depreciation and impairment of tangible fixed assets 37 79 172Amortisation and impairment of intangible fixed assets 12 12 25(Increase)/decrease in stock (56) 115 332Decrease/(increase) in debtors 225 281 (288)Increase/(decrease) in creditors 7 (829) (668)Increase/(decrease) in provisions for liabilities and charges - 18 (207)Currency adjustment 77 (290) (279) 95 (1,312) (1,748) b. Reconciliation of net cash flow to movement in net debt Six months to Six months to Year to 30th June 30th June 31st December 2006 2005 2005 Unaudited Unaudited Audited £000 £000 £000Change in cash 752 1,603 1,977Cash (inflow)/outflow from (increase)/decrease in debt andlease financing (862) 443 (542)Change in net debt from cash flows (110) 2,046 1,435Disposal of subsidiary - (765) (648)Exchange movements (66) (18) 44Change in net debt (176) 1,263 831Opening net debt (2,855) (3,569) (3,686)Closing net debt (3,031) (2,306) (2,855) c. Analysis of net debt 1st January Cash Exchange 30th June Flow movements 2006 £000 £000 £000 £000Cash at bank and in hand 2,382 (616) (37) 1,729Bank overdraft (2,552) 1,368 (31) (1,215)NET CASH (170) 752 (68) 514Loans (1,019) (1,254) 8 (2,265)Finance leases (9) (43) - (52)Advances from invoice discounting (788) 264 - (524)Letters of credit (869) 171 (6) (704)BORROWINGS (2,685) (862) 2 (3,545)NET DEBT (2,855) (110) (66) (3,031) NOTES TO THE INTERIM STATEMENT For the six months ended 30th June 2006 1. Basis of preparation This interim report was approved by the Board on 31st August 2006. The interimfinancial information has not been audited and does not constitute statutoryaccounts within the meaning of Section 240 of the Companies Act 1985. It hasbeen prepared using accounting policies that are consistent with those adoptedin the statutory accounts for the year ended 31st December 2005. The results for the year ended 31st December 2005 are taken from the fullaccounts on which the Group's Auditors made an unqualified report which did notcontain statements under s.237 (2) or (3) of the Companies Act 1985, and whichhave been delivered to the Registrar of Companies. 2. Taxation The charge to taxation is an estimate based on the anticipated effective rate oftax for the year ended 31st December 2006. 3. Earnings per share Six months Six months Year to to to 31st 30th June 30th June December 2006 2005 2005 Unaudited Unaudited Audited £000 £000 £000These have been calculated on (losses)/profits of: (413) 607 239The weighted average number of shares used was: Basic and diluted 64,669,106 64,669,106 64,669,106 4. Segmental analysis Turnover by class of businessDisplay solutions 7,949 6,819 15,325Gaming 899 608 1,436Public information displays 1,753 1,893 2,943Human machine interfaces - 1,096 1,123 10,601 10,416 20,827 Gross profit by class of businessDisplay solutions 2,359 2,372 4,885Gaming 228 142 289Public information displays 683 764 1,163Human machine interfaces - 371 380 3,270 3,649 6,717 5. Copies of Interim report The Interim report is available to view and download from the Companies websiteat www.densitron.com. If shareholders would like a hardcopy of the interimreport they should contact the Company Secretary, Tim Pearson, on 0207 648 4200. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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