Preliminary Results

1st May 2009 07:00

DENSITRON TECHNOLOGIES PLCPRELIMINARY UNAUDITED RESULTS FOR THE YEAR ENDED 31st DECEMBER 2008

Densitron Technologies plc (“Densitron” or the “Company” or the “Group”), the designer and developer of electronic displays, announces its preliminary unaudited results for the year ended 31st December 2008.
Highlights
·; Revenue on continuing operations increased by 31% from £14.0m to £18.3m.
·; Profit from continuing operations increased by 67% from £0.3m in 2007 to £0.5m in 2008. *
·; All subsidiaries now providing a return to the Group.
·; Orders booked in the year increased by 16% from £16.3m to £18.9m.
·; Order Book at 31st December 2008 was £8.0m an increase of £0.6m on the previous year.
						2008		2007
								Restated
						£millions		£millions *
Revenue						18.3		14.0
Profit from operations						0.5		0.3
Basic earnings per share						0.25p		(0.31)p
Gearing						24%		22%
Order Book						8.0		7.4
* For illustrative purposes the 2007 results have been adjusted here to eliminate the profit on the disposal of part of the land at Blackheath (£848,000), the profit for the period on discontinued operations (£437,000) and the impairment of Evervision (£508,000) in order to give comparable results. The actual reported profit before tax on continuing operations in the income statement for 2007 was £0.3m

 

 

Jan G Holmstrom, Chairman of Densitron, commented:

"Densitron, as a group, has developed a great deal in the past few years and 2008 is the first full year of trading following several years of reorganisation, restructuring and investment. We are pleased that the Company has delivered good results for the year with increased revenues across all subsidiaries of the Group. 

Whilst we recognise the current difficult in trading conditions, we have entered 2009 with a strong order book and pipeline of opportunities which places us in a good position to weather the current economic downturn. We will continue to develop our own range of products while further expanding the existing third party product portfolio. We shall also be looking to develop and expand the distribution network and will look to open up offices in strategic locations, when the time is right, to work alongside the currently appointed distributors."

- End -

Enquiries:

Densitron  Grahame Falconer / Tim Pearson Tel: 0207 648 4200

HansonWesthouse  Tim Metcalfe / Martin Davison/Christine Zhang  Tel: 020 7601 6100

  

Chairman's Statement

2008 was the first full year of trading following several years of reorganisation, restructuring and investment. I am delighted to report the progress that has been made is in line with internal targets that were set at the end of 2007 and I believe that we now have a firm platform to build upon further.

Displays division

The Displays business has grown considerably during the past year. Orders booked during 2008 were £18.9m compared with £16.3m in 2007, an increase of 16%. Sales increased by 31% to £18.3m from £14.0m and gross profit increased by 28% to £5.5m from £4.3m. The profit from operations, excluding profit made on the sale of the land at Blackheath in 2007 has increased by 67% to £0.5m from £0.3m in 2007.

The Board recognises that 2009 will be a difficult year for all businesses mainly as a result of the global economic downturn but considering the level of the orderbook at 31st December 2008 and the pipeline of business that the Group is currently working on, we remain cautiously optimistic that this will enable the business to weather the difficult economic conditions this year.

Movements in exchange

During 2008 the pound has considerably depreciated in value against the US dollar and the Euro. Clearly this has had an impact on the business. Movements in exchange rates affect the Group in two ways:

• translation - business in the overseas subsidiaries is conducted in local currency and then for reporting purposes converted into UK sterling. As the value of UK sterling has depreciated in the year against the other main currencies in which the Group operates the income and expenses of those operations have increased in UK sterling terms. All subsidiaries have been profitable in the year. Therefore the profit for the year has been enhanced as a result of the depreciation in the value of UK sterling.

• transaction - purchases from suppliers in the far east are made in US Dollars. For the UK in particular this has made them more expensive during the year. However, a large proportion of sales carried out by the UK business are done in US dollars, effectively hedging the risk of movements in exchange rates. While this has not had a positive impact on the results for the year the negative impact has been minimised.

Banking arrangements

The Group has always maintained close links with its primary bankers and following the recent problems experienced by a number of banks throughout the world, the Board considers that maintaining these links is now even more important. The executive directors hold regular meetings with the Group's main bank, Barclays Bank PLC, to keep them up to date on current trading and future developments to ensure that the level of funding meets the requirements of the Group.

Evervision Electronics Co. Ltd (Evervision)

Evervision is the Group's major investment in a display manufacturing company with its Head Office in Taiwan and factories in both Taiwan and mainland China.

During the year the management of Evervision continued to rationalise the business by moving a large part of its manufacturing capabilities to its factory in Kunshan, China, a factory which it fully owns. Despite recording a modest loss for the year Evervision has continued to generate a significant level of cash and at the end of 2008 approximately £13.5m of Evervisions assets were represented by cash. Together with the fact that Evervision carries no debt this means that it is in a strong position to weather the inevitable difficulties that manufacturers are seeing as a result of the worldwide recession.

The Board considers that the carrying value of Evervision on the Balance Sheet at £6.2m is reasonable.

Land at Blackheath

Another asset fully owned by the Group is a piece of land totalling approximately 1.25 acres in Blackheath in South East London for which the Board is intending to obtain planning permission for residential development to enable the Company to realise the value to its full potential.

As has previously been reported the land is subject to a Metropolitan Open Land Order which currently prohibits development. The Board has employed an Agent to manage the planning process and during the year outline plans have been drawn up and a number of surveys have been completed to ensure that the application will have the best chance of success. Planning consultants have now been appointed and will manage the application process itself.

The Board remains hopeful that it will be able to obtain re-designation of the land and will advise shareholders when there are any significant developments.

Outlook and strategy

The long term outlook of the business remains encouraging despite the current worldwide economic difficulties. The market for displays continues to grow and the Group has worked hard to ensure that it can offer an increasing range of products and solutions to an increasing range and geographical spread of customers. 2009 will be a difficult year for many businesses but I remain cautiously confident that Densitron is well placed to meet with the challenges that will inevitably arise and to capitalise on opportunities as they present themselves. The strategy for the business continues to be organic growth and strategic acquisitions should they arise.

The Board continues to work to provide an acceptable return on the investment in Evervision. 

We believe that a patient approach is the one most likely to succeed in the re-designation of the remaining unsold land at Blackheath. 

Finally, I would like to thank the directors and staff at Densitron for their continuing commitment to the Company and to the Shareholders for their continuing support.

Jan G Holmstrom

Chairman

  

Densitron Technologies plc Unaudited Consolidated income statement For the year ended 31 December 2008
							2008		2007
									Restated
							£000		£000
	Continuing operations
	Revenue						18,287		14,043
	Cost of sales						(12,783)		(9,727)
	Gross profit						5,504		4,316
	Other operating income						281		1,024
	Distribution costs						(49)		(30)
	Administrative expenses						(5,268)		(4,198)
	Administrative expenses – impairment of financial asset						-		(508)
	Total administrative expenses						(5,268)		(4,706)
	Profit from operations						468		604
	Financial income						43		96
	Financial expenses						(194)		(390)
	Profit before tax						317		310
	Income tax expenses						(123)		(161)
	Profit after tax for the period						194		149
	Discontinued operations
	Profit for the period from discontinued operations						-		437
	Profit for the period						194		586
	Attributable to:
	Equity holders of the parent						175		573
	Minority interests						19		13
							194		586
	Basic earnings per share
	Earnings per share from continuing and discontinued operations						0.25p		0.88p
	Earnings per share on continuing operations						0.25p		0.21p
	Diluted earnings per share
	Earnings per share from continuing and discontinued operations						0.25p		0.87p
	Earnings per share on continuing operations						0.25p		0.21p

Densitron Technologies plc Unaudited Consolidated Statement of Recognised Income and Expense For the year ended 31 December 2008
						2008		2007
								Restated
						£000		£000
Foreign currency translation differences for foreign operations						509		(17)
Income and expense directly recognised in equity						509		(17)
Profit/(loss) for the period						194		586
Total recognised income and expense for the period						703		569
Attributable to:
Equity holders of the Company						684		556
Minority interest						19		13
Total recognised income and expense for the period						703		569
The prior year adjustment referred to in note 7 does not affect the net total recognised income or expense in 2007.

Densitron Technologies plc Unaudited Consolidated Balance Sheet At 31 December 2008
							2008		2007
									Restated
							£000		£000
	Non current assets
	Property, plant and equipment						246		208
	Goodwill						143		143
	Financial assets						6,393		6,589
	Deferred tax assets						60		44
							6,842		6,984
	Current assets
	Inventories						1,432		641
	Trade and other receivables						5,296		2,457
	Financial assets						495		765
	Income tax recoverable						76		56
	Cash and cash equivalents						1,812		1,397
							9,111		5,316
	Total assets						15,953		12,300
	Current liabilities
	Short term borrowings and overdrafts						3,362		2,861
	Trade and other payables						4,194		1,863
	Current tax payable						55		72
	Provisions						84		-
							7,695		4,796
	Non current liabilities
	Borrowings						312		94
	Provisions						188		328
	Deferred tax liabilities						5		7
							505		429
	Total liabilities						8,200		5,225
							7,753		7,075
	Equity
	Share Capital						3,483		3,483
	Retained earnings						3,428		3,190
	Special reserve						390		478
	Translation reserve						381		(128)
	Equity attributable to shareholders of Densitron						7,682		7,023
	Minority interests						71		52
	Total equity						7,753		7,075

Densitron Technologies plc Unaudited Consolidated Statement Cash Flow Statement For the year ended 31 December 2008
							2008		2007
									Restated
							£000		£000
	Cash flows from operating activities
	Profit/(loss) before taxation						317		310
	Loss for the period of discontinued operations						-		(46)
	Adjustments for:
	Depreciation						51		43
	Impairment of financial asset						-		508
	Profit on disposal of fixed assets						-		(848)
	Loss on write off of investment						-		12
	Net finance expense						151		294
	Effect of exchange rate fluctuations						(119)		(279)
							400		(6)
	Change in financial assets						(102)		-
	Change in inventories						(600)		89
	Change in trade and other receivables						(2,153)		672
	Change in trade and other payables						1,858		(187)
	Change in provisions						34		(7)
							(563)		561
	Income tax paid						(187)		(17)
	Net cash from operating activities						(750)		544
	Cash flows from investing activities
	Interest received						43		66
	Proceeds from sale of property, plant and equipment						17		1,016
	Disposal of discontinued operation						568		933
	Acquisition of property, plant and equipment						(68)		(55)
	Net cash generated from investing activities						560		1,960
	Cash flows from financing activities
	Proceeds from issue of share capital						-		250
	Purchase of own shares						(25)		-
	Inception of new loans						345		-
	Repayment of borrowings						(693)		(1,587)
	Interest paid						(196)		(380)
	Payment of finance lease liabilities						(21)		(21)
	Change in invoice discounting creditor						354		(196)
	Change in letters of credit						131		95
	Dividend paid to minorities						(17)		(13)
	Net cash used in financing activities						(122)		(1,852)
	Net decrease in cash and cash equivalents						(312)		652
	Cash and cash equivalents at 1st January						872		192
	Effect of exchange rate fluctuations on cash held						642		28
	Cash and cash equivalents at 31st December						1,202		872

 

Densitron Technologies plc Notes to the Consolidated Financial Statements  For the year ended 31 December 2008

1. Basis of preparation The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union (Adopted IFRSs) and with those parts of the Companies Act 1985 applicable to companies preparing their accounts under Adopted IFRSs.  The accounting policies applied are consistent with those set out in the financial statements of Densitron Technologies plc for the year ended 31st December 2007. The financial information in the announcement is unaudited and does not constitute the company's statutory accounts for the years ended 31st December 2008 or 2007. The financial information for the year ended 31st December 2007 is derived from the statutory accounts for that year, which were prepared under UK GAAP, which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 1985, s 237(2) or (3). The statutory accounts for the year ended 31st December 2008, prepared in accordance with IFRSs as adopted by the EU, will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the Registrar of Companies following the company's annual general meeting.

2. Other income
							2008		2007
							£000		£000
	Net gain on sale of property, plant and equipment						-		848
	Exchange gains						97		81
	Commissions receivable						11		3
	Royalties receivable						101		85
	Rent receivable						6		7
	Deferred consideration receivable						63		-
	Other						3		-
							281		1,024
3. Financial income and expense
							2008		2007
							£000		£000
	Financial income
	Bank deposit interest						9		31
	Interest on deferred consideration						34		65
							43		96
	Financial expenses
	Bank borrowings						146		168
	Hire purchase and finance leases						2		2
	Invoice discounting charge						21		28
	Other loan interest payable						25		192
							194		390

4. Business and geographical segments
The Group manages its business by reporting by business segment and by geographical location of the business segment. The business segments that the Group has operated in are displays and gaming boards. Following the disposal of its gaming board division the group manages its remaining displays business on a geographical basis.   Inter-segment transfer pricing is based on the level of work carried out and the risk encountered by each party in order to make a third party sale.
Business segments     Continuing Displays division   Discontinued Gaming Division   Eliminations   Head Office   Total     £000   £000   £000   £000   £000 2008                     Revenue                     External   18,287   -   -   -   18,287 Intercompany   5,193   -   -   -   5,193 Total   23,480   -   -   -   23,480                       Profit/(loss) before tax                     Continuing operations   683   -   -   (366)   317 Discontinued operations   -   -   -   -   - Total   683   -   -   (366)   317                       Balance Sheet                     Assets   5,243   -   -   10,710   15,953 Liabilities   (5,574)   -   -   (2,626)   (8,200) Net assets   (331)   -   -   8,084   7,753                       Other                     Capital expenditure  - Property, plant and equipment     73     -     -     -     73 Depreciation   33   -   -   18   51                       2007                     Revenue                     External   14,043   62   (62)   -   14,043 Intercompany   2,652   182   (182)   -   2,652 Total   16,695   244   (244)   -   16,695                       Profit/(loss) before tax                     Continuing operations   14   -   -   296   310 Discontinued operations   -   437   -   -   437 Total   14   437   -   296   747                       Balance Sheet                     Assets   2,588   -   -   9,712   12,300 Liabilities   (3,137)   -   -   (2,088)   (5,225) Net assets   (549)   -   -   7,624   7,075                       Other                     Capital expenditure  - Property, plant and equipment     64     -     -     -     64 Depreciation   8   -   -   35   43

The Group’s secondary reporting format for reporting segmental information is by geographical location.

		External revenue by location of customers				Total assets by location of asset				Capital expenditure by location of assets
		2008		2007		2008		2007		2008		2007
		£000		£000		£000		£000		£000		£000
Total operations
UK		3,085		2,813		782		248		18		3
Europe		5,661		3,469		640		517		11		4
USA		7,181		5,625		1,347		1,098		44		57
Asia		2,153		1,970		4,984		5,212		-		-
Rest of the world		207		166		-		-		-		-
		18,287		14,043		7,753		7,075		73		64

5. Tax expense
								2008			2007
								£000			£000
Current tax expense
UK corporation tax and income tax of overseas operations on profits for the year								116			53
Unrecoverable withholding tax								-			117
Adjustments for (over)/under provision in prior periods								12			(30)
								128			140
Deferred tax expense
Origination and reversal of temporary differences								(5)			21
Total tax charge								123			161
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:
								2008			2007
								£000			£000
Profit before tax								317			310
Expected tax charge based on the standard rate of corporation tax in the UK of 30% (2007: 30%)								95			93
Losses carried forward								62			86
Disallowed expenses								16			154
Non taxable income								(7)			13
Movement in unprovided deferred tax assets								7			12
Utilisation of tax losses brought forward								(51)			(287)
Adjustments for overseas rate								(11)			3
Adjustments to prior years tax charge								12			(30)
Unrecoverable withholding written off								-			117
								123			161

6. Earnings per share
	The calculation of basic earnings per share at 31 December 2008 was based on the profit attributable to ordinary shareholders of £175,000 (2007: £573,000) and a weighted average number of ordinary shares outstanding of 69,574,585 (2007: 64,819,791).
							2008		2007
									Restated
							£000		£000
	Profit attributable to ordinary shareholders
	Continuing operations						175		136
	Discontinued operations						-		437
	Profit attributable to ordinary shareholders						175		573
							2008		2007
							£000		£000
	Weighted average number of ordinary shares
	Issued ordinary shares at 1st January						69,669,106		64,669,106
	Effect of purchase of Treasury shares on 23 October 2008						(94,521)		-
	Effect of shares issued on 21 December 2007						-		150,685
	Weighted average number of ordinary shares at 31 December 2008						69,574,585		64,819,791
	Dilutive effect of warrants						-		1,375,734
	Diluted weighted average number of ordinary shares at 31 December 2008						69,574,585		66,195,525

7. Prior year adjustment

The results for 2007 have been restated to reflect further guidance that has been received on the accounting treatment of changes in the fair value of the Group's financial asset, Evervision. In the accounts for 2007 the change in value of £508,000 was compared with the value of Evervision at the date of transition to IFRS. This movement was considered to be neither significant nor prolonged and as such the movement was recognised through the statement of recognised income and expenses. Further clarification on this point suggests it would be more appropriate to compare the total change in fair value against the original cost of the asset and consequently the Directors have taken the decision to amend the results for 2007. Any further impairments in the fair value of Evervision will be recognised through the income statement. Any future increases above the current value would be recognised in the available for sale reserve.

The impact of the adjustment is to recognise a £508,000 impairment in the value of Evervision through the income statement in 2007 rather than through the statement of recognised income and expense. The balance on the available for sale reserve at 1st January 2007 of £140,000 has been eliminated and the recognition of the losses is now included as deduction from retained earnings.

The effect on basic earnings per share in 2007 is a reduction of 0.79p per share and on diluted earnings per share a reduction of 0.78p per share.

 

ENDFR FGGFDVGLGLZM

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