5th Sep 2008 07:00
Densitron Technologies plc Unaudited Interim Report For the Six months ended 30th June 2008 Highlights¢â€" Orders booked in the period ‚£9.9m (2007: ‚£8.4m) an increase of 17.9% on the same period in 2007. ¢â€" An increase in the orderbook of ‚£1.6m since 31st December 2007 from ‚£7.4m to ‚£9.0m. ¢â€" Major contract wins in the UK and Germany. ¢â€" Two new distributors signed in the UK. ¢â€" A representative appointed in Brazil. ¢â€" 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 6.70For 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 ¢â€š¬600k 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) 657continuing Operations Discontinued operations Profit on disposal and loss for the - 414 437period 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 1.67pand discontinued operations Earnings/(loss) per share on 0.01p (0.07)p 0.99pcontinuing 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 0.97pcontinuing 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 569the 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 7,023Densitron 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) 544activities Cash flows from investing activities Interest received 26 2 66 Proceeds from sale of plant, property - - 1,016and 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 652cash equivalents Cash and cash equivalents at 1st 872 192 192January Effect of exchange rate fluctuation on 49 1 28cash held Cash and cash equivalents at the end of 397 271 872the 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 andall values are rounded to the nearest thousand pounds (‚£'000) except whenotherwise 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 14,043Gross 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 4,3164. 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) 80operations 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 - - 414operations 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 818operations Discontinued - 437 - - 437operations Total 522 437 296 1,2555. 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 1,081shareholders 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 - - 150,685December 2007 Weighted average number of ordinary 69,669,106 64,669,106 64,819,791shares 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 66,195,525ordinary shares at 30th June 2008
8. Related party transactions
Loan from Bronsstƒ¤det AB - On 9th June 2008 the Company repaid the balance of a loan outstanding from Bronsstƒ¤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.
vendorRelated Shares:
DSN.L