30th Sep 2005 15:23
Immediate release: 30 September 2005 DENSITRON TECHNOLOGIES PLC ("Densitron" or the "Group") ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTH PERIOD TO 30 JUNE 2005 HighlightsThe Group has continued with its strategy of concentrating on its core productsand disposing of non core assets. Trading in the first half has proveddifficult but orders in the core business have grown and some importantcontracts have been signed with major Customers. * Significant investment made in product development and marketing. * New order intake on continuing business increased by ‚£2m over second half of 2004. * Significant new orders deliverable in 2006. * Hitech sold in the half generating a book profit of ‚£1.6m. A further share is due in 2006 based on Hitech's 2005 net profit. * Substantially all of the minority interests eliminated in the period. * Earnings per share 0.94p (0.22p loss per share in second half of 2004). Financial highlights on continuing operations 6 months to 6 months to 30th June 2005 30th June 2004 Continuing Continuing Unaudited Unaudited ‚£m ‚£m Revenue 9.2 10.4 Operating loss (0.9) (0.3) Profit before taxation 0.6 - Earnings/(loss) per share 0.89p (0.19)p Order book 9.8 7.9 Chairman's StatementThe first half of 2005 has been a particularly challenging period for the Groupwith a number of changes to the Board, the sale of Hitech ElectronicsCorporation and ongoing trading issues.The Group's continuing operations made an operating loss in the first half of2005 amounting to ‚£857,000 contrasting with a loss in the first half of 2004 of‚£257,000 and profit in the second half of 2004 of ‚£255,000. The increasedoperating losses are attributable to the fall off in Densitron Gaming Computershipments.New orders booked by the continuing operations amounted to ‚£11.5m compared with‚£8.1m in the first half of 2004 and ‚£9.5m in the second half of 2004. The orderbook for continuing operations has grown by ‚£2.3m in the first half of theyear. However, the margins on these orders have been significantly less than2004.Management StructureIn April Phil Lawler resigned as Executive Chairman and Director of the Companyalong with Steve Wells and Colin Bonsey. I joined the Board as the interimChairman on 24th May 2005 and Richard Lane was appointed, as non-executiveDirector, on 1st July 2005. It is my intention to refocus management'sattention to the scope and requirements of a smaller company whereentrepreneurial flair in marketing and technology are paramount and strict cashmanagement and accountability with fast execution are critical.Densitron will in future be organised on a divisional basis covering the threeproduct groups of Densitron Display Solutions, Densitron Gaming (previouslyknow as Display Computers) and Ferrograph Public Information Displays. Eachdivision will be led by a Managing Director who will be responsible for allaspects of the business. The divisional managing directors will report to theChief Executive Officer who will be responsible for the overall development ofthe Group. I am in the final stages of appointing a CEO and am pleased toconfirm that there is a rich talent pool within Densitron from whom thedivisional managing directors will be appointed.Densitron GamingThe Densitron Gaming division benefited from the sale of legacy products to acustomer in Japan in 2004. 2005 has suffered from the late introduction of newproducts. The lack of an effective Head for this business has hindered thedevelopment of this exciting product group. This represents a significantmissed opportunity. As a result of this sales have reduced by 66% compared withthe same period in 2004 and 45% on the second half of 2004.The appointment of a new Managing Director will allow this business to attainits obvious potential. A new product, DPX116, has been developed using a newfast track process and will be released in the second half of 2005. Thisproduct is significantly more advanced than any other product aimed at thismarket and has received a favourable reception from potential customers.Densitron Display SolutionsThe Densitron Display Solutions business has become de-focussed in the recentpast. The UK has concentrated on providing complete solutions for customers;other locations have pursued different strategies ranging from distribution ofbranded displays to the sale of customised displays to niche markets. The newMD for this division will be charged with rationalising strategy to focus onbusiness where Densitron can excel and deliver long term margin improvement.Sales in the period have increased by 3% compared with the same period in 2004but have fallen by 8% in comparison with the second half of 2004. As a resultof the sale of Hitech Electronics Corporation the margin percentage achievedhas fallen from 44% for 2004 to 35%.Ferrograph Public Information DisplaysSales for the period are up on the first half of 2004 by 2% and up on thesecond half of 2004 by 50%. This business is cyclical and 2005 will be nodifferent.We remain a leader in the Bus Sector but have seen a contraction in the CallCentre sector. A number of marketing initiatives have been carried out but weare unlikely to see a return on these this year. The rail sector has continuedto be a difficult sector for Ferrograph to penetrate but to that end we haverecruited an experienced sales manager from a competitor with a wealth ofexperience in the industry.Although much progress has been made with this business there is still asignificant gap to be bridged before it attains profitability. The new ManagingDirector for Ferrrograph will be charged with developing top line growth, atgood margins, through offering excellent products, service and delivery.VBest Electronics LtdAs announced in the 2004 Annual Report we are treating the investment in andour relationship with VBest separately. VBest has continued to struggle withachieving the quality required for displays in the West and has experiencedconsiderable yield problems that have impacted on deliveries to Densitron. Thishas resulted in considerable stock write offs at VBest and consequentlyDensitron's share of VBest's profits in the first half of 2005 has beenminimal. During the first half of 2005 VBest changed its senior management andthe new management is far more focussed on trying to improve the quality ofproduct manufactured. Due to the ongoing problems within manufacturing it isunlikely that VBest will proceed to a full Taiwanese Stock Exchange listing inthe near future.Hitech Electronics CorporationDensitron announced on 22 March 2005 the sale of its share in Hitech ElectonicsCorporation to Beijer Electronics AB for an initial payment of ‚£4.1m with afurther payment of 22.5% of 2005 net profit due in 2006. This generated a bookprofit of ‚£1.6m. Hitech remains as a valued supplier to the Group under anexclusive agreement to sell Hitech Liquid Crystal Displays in Europe, Japan andNorth and South America. The funds generated by the sale have enabled the Groupto reduce its borrowings and provide funds for development of new products.OutlookMarket conditions remain challenging but the order book has improved. The newfocus and the continued investment in marketing and technology will form thebasis to bring the Company back to operating profitability. The Companybenefits from a strong asset base in its Balance Sheet and the Board is mindfulof its obligation to maximise value for shareholders.Ralph BaberChairman30 September 2005 CONSOLIDATED PROFIT AND LOSS ACCOUNTfor the six months ended 30 June 2005 6 months 6 months 6 months 6 months Year to to to to to 31 30 June 30 June 30 June 30 June December 2005 2005 2005 2004 2004 Continuing Discontinued Total Unaudited Unaudited Total Total Unaudited Unaudited ‚£'000 ‚£'000 Audited ‚£'000 ‚£'000 ‚£'000 TURNOVER 9,195 1,221 10,416 13,588 26,085 Cost of sales (6,229) (538) (6,767) (7,862) (15,161) GROSS PROFIT 2,966 683 3,649 5,726 10,924 Distribution costs (56) - (56) (58) (138) Administrative (3,776) (534) (4,310) (5,092) (9,648)expenses Other operating 9 10 19 52 228income GROUP OPERATING (LOSS)/PROFIT (857) 159 698 628 1,366 Share of associates' operating profit 44 - 44 409 372 Profit on disposal of shares in associate - - - 96 94 44 - 44 505 466 Profit/(loss) on sale of subsidiary 1,608 - 1,608 - (28) PROFIT ON ORDINARY ACTIVITIES BEFORE INTEREST 795 159 954 1,133 1,804 Interest receivable and similar income 26 - 26 1 33 Interest payable and similar charges (189) (1) (190) (218) (515) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 632 158 790 916 1,322 Tax on profit on ordinary activities (28) (39) (67) (349) (522) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 604 119 723 567 800 Minority interests (29) (87) (116) (427) (797)- equity PROFIT FOR THE FINANCIAL PERIOD 575 32 607 140 3 Basic and diluted earnings per share 0.89p 0.05p 0.94p 0.22p 0.00p STATEMENT OF RECOGNISED GAINS AND LOSSESfor the 6 months ended 30 June 2005 6 months to 6 months Year to 31 30 June to 30 June 2005 2004 December Unaudited Unaudited 2004 Audited ‚£000 ‚£000 ‚£000 Profit/(loss) for the period 569 (147) (142) Associated undertakings' profit for 38 287 145the financial period Dilution of shareholding in - - (8)associate Foreign exchange adjustments 230 (109) (226) 837 31 (231) SUMMARISED CONSOLIDATED BALANCE SHEETas at 30 June 2005 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited ‚£000 ‚£000 ‚£000 FIXED ASSETS Intangible assets 197 191 178 Tangible assets 486 1,859 1,904 Investments 6,917 6,784 6,448 7,600 8,834 8,530 CURRENT ASSETS Stocks 1,505 3,618 4,318 Debtors - due in more than one year 567 451 657 Debtors - due in less than one year 3,489 6,977 5,337 4,056 7,428 5,994 Cash at bank and in hand 2,158 2,846 2,565 7,719 13,892 12,877 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR (7,050) (10,943) (10,193) NET CURRENT ASSETS 669 2,949 2,684 TOTAL ASSETS LESS CURRENT LIABILITIES 8,269 11,783 11,214 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR (623) (1,156) (865) PROVISIONS FOR LIABILITIES AND CHARGES (432) (1,023) (950) NET ASSETS 7,214 9,604 9,399 CAPITAL AND RESERVES (EQUITY SHAREHOLDERS' FUNDS) 7,171 6,707 6,466 EQUITY MINORITY INTERESTS 43 2,897 2,933 7,214 9,604 9,399 SUMMARISED CONSOLIDATED CASH FLOW STATEMENTfor the six months ended 30 June 2005 Notes 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited ‚£'000 ‚£'000 ‚£'000 Net cash outflow from a (1,312) (1,372) (355)operating activities Dividends received from associated undertakings - - 96 Returns on investment and servicing of finance (221) (670) (1,203) Tax paid (334) (197) (156) Capital expenditure and financial investment (74) (18) (242) Acquisitions and disposals 3,987 208 206 Financing b (443) 280 (411) Increase/(decrease) in cash b,c 1,603 (1,769) (2,065) NOTES TO THE CONSOLIDATED CASH FLOW for the 6 months ended 30 June 2005 A. RECONCILIATION OF OPERATING (LOSS)/PROFIT TO NET CASH OUTFLOW FROMOPERATING ACTIVITIES 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited ‚£000 ‚£000 ‚£000 Operating (loss)/profit (698) 628 1,366 Depreciation and impairment of tangible fixed assets 79 148 278 Amortisation and impairment of 12 13 30intangible assets Loss on sale of fixed assets - - 48 Loss on disposal and impairment of - 36 -investments Decrease/(Increase) in stock 115 (842) (1,550) Decrease/(Increase) in debtors 281 (1,226) (169) Decrease in creditors (829) (460) (613) Increase in provisions for 18 260 187liabilities and charges Currency adjustments (290) 71 68 Net cash outflow from operating (1,312) (1,372) (355)activities B. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited ‚£'000 ‚£'000 ‚£'000 Change in cash 1,603 (1,769) (2,065) Cash outflow/(inflow) from decrease /(increase) in debt and lease financing 443 (280) 433 Change in net debt from cash flows 2,046 (2,049) (1,632) Disposal of subsidiary (765) - - Exchange movements (18) (47) (14) Change in net debt 1,263 (2,096) (1,646) Opening net debt (3,569) (1,923) (1,923) Closing net debt (2,306) (4,019) (3,569) C. ANALYSIS OF NET DEBT 1 Cash Disposal Exchange 30 June January movements Flow of 2005 2005 Subsidiary ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Cash at bank and in hand 2,565 596 (907) (96) 2,158 Bank overdraft (3,997) 1,007 142 77 (2,771) NET CASH (1,432) 1,603 (765) (19) (613) Loans (1,248) 213 - - (1,035) Finance leases (39) 18 - - (21) Advances from factors (2) 2 - - - Letter of credit and 1 Bills of exchange (848) 210 - (637) BORROWINGS (2,137) 443 - 1 (1,693) NET DEBT (3,569) 2,046 (765) (18) (2,306) NOTES 1. Basis of preparation This interim report was approved by the Board on 30 September 2005. Theinterim financial information has not been audited and does not constitutestatutory accounts within the meaning of Section 240 of the Companies Act 1985.It has been prepared using accounting policies that are consistent with thoseadopted in the statutory accounts for the year ended 31st December 2004. The results for the year ended 31st December 2004 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 rateof tax for the year ended 31st December 2005. 3. Earnings per Share 6 months to 6 months to Year to 30 June 30 June 31 December 2005 2004 2004 Unaudited Unaudited Audited ‚£000 ‚£000 ‚£000 These have been calculated on 607 140 3profits of: The 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 business Display related products 6,752 6,533 13,873 Computer products 608 1,792 2,901 Human machine interfaces 1,096 2,759 5,076 Public information displays 1,893 1,849 3,115 Electro-mechanical products 67 655 1,120 10,416 13,588 26,085 Gross profit by class of business Display related products 2,348 2,917 6,168 Computer products 142 936 1,451 Human machine interfaces 371 1,067 1,912 Public information displays 764 555 1,086 Electro-mechanical products 24 251 307 3,649 5,726 10,924 For further information please contact:Rob SmithDensitron Technologies plc020 7648 4200Chris Roberts/Andrew TanHansard Communications020 7245 1100ENDDENSITRON TECHNOLOGIES PLCRelated Shares:
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