Dialight Regulatory News (DIA)

13 Mar 2006 07:01

Dialight PLC13 March 2006 Date: Embargoed until 07:00 am Monday 13 March 2006 Contacts: Roy Burton - Group Chief Executive Cathy Buckley - Finance Director Dialight PLC Tel: 01480 447490 Alistair Mackinnon-Musson Philip Dennis Hudson Sandler Tel: 020 7796 4133 Email: dialight@hspr.com DIALIGHT PLC PRELIMINARY RESULTS Dialight Plc, the UK based leader in Applied LED Technology, announces itspreliminary results for the year ended 31 December 2005. Highlights O Disposal of Solartron business for £72m in aggregate O Return of £46.5m to shareholders (£90m since 2003) O Name changed to Dialight plc Continuing Businesses O Strong increase in profits in second half as a result of increased orders and sales O Profit before tax and exceptional items increased 4% to £4.5m O Basic EPS increased 12% to 10.1p O Good cash generation O Strong year-end balance sheet O Increased order intake in 2006 O Lumidrives acquisition in January 2006 Harry Tee, Chairman, said "The disposal of the Solartron businesses and thereturn of capital to shareholders was the final step of the Board's strategy ofrepositioning the Group. The Company is now focussed on the emerging solidstate lighting market with high growth potential and with a new name and newmanagement." Roy Burton, Group Chief Executive, said "Dialight is well positioned to grow asthe application of solid state lighting technology expands. The acquisition ofLumidrives, early in 2006, enhances our position in this emerging sector". 2005 was a successful year for the Company culminating in the execution of theBoard's strategy of creating a focussed growth company. The disposal of theSolartron businesses in two separate transactions to Emerson and Ametek forgross proceeds in aggregate of £72.1m (after cash adjustment) marked thesuccessful completion of the Board's strategy to exit the electronic measurementsector. This strategy, which began with the sale of Weston in 2003 and wascompleted with the Solartron disposals, realised aggregate proceeds of over£125m in cash, a premium of 40% over the market capitalisation of the wholeGroup prior to the Weston transaction. Following shareholder approval at the September EGM, the Board returned £46.5mto shareholders, which, taken with the return of £42.6m in 2003 following theWeston disposal, makes a total return to shareholders from the disposal strategyof almost £90m. The profit on disposals during the year of £22m (after tax of £9m) is shown asan exceptional item. Financial Results These are the first full year results to be prepared under InternationalFinancial Reporting Standards (IFRS). All comparative information has beenrestated although the change has had a limited impact on the reported numbers. Overall Group turnover for the year to 31 December 2005 was £95.2m withSolartron contributing for only part of the year (2004: £118.9m). Group profitbefore interest and tax was £39.3m (2004: £12.5m) including the profits beforetax on disposals of £31m. EPS was 92.2 pence per share (2004: 27.4 pence pershare). Profit before tax and exceptional items was £8.7m (2004: £12.5m) which included£4.5m (2004: £4.3m) from the continuing businesses. Basic earnings per sharefrom the continuing businesses were 10.1 pence per share showing a 12% increaseover last year. Operating cash flow in the year was £7.6m (2004: £15.5m). In addition cash fromdisposals, net of tax and expenses, amounted to £60.4m. Following the return of£46.5m to shareholders and the £7.4m contribution to pension funds, the net cashbalance at the year-end was £9.8m (2004: £6.8m). Dividend In the Circular dated 6 September 2005 the Board announced that the dividendpolicy going forward would be designed to reflect the new profile and growthpotential of the continuing Group. We expect the Group to continue to have goodcash generation and a strong balance sheet. However the dividend requiresrebasing to reflect the disposals and return of capital to shareholders. Ouraim is to pursue a progressive dividend policy which is linked to theperformance of the Group and the cash requirements of a growing business. TheBoard is therefore recommending a final dividend of 3 pence per share andexpects the future pattern of dividend payments to follow past practice. Thefull year dividend is 6.4 pence. The dividend will be paid on 12 May 2006 toshareholders on the register at 24 March 2006. Board Changes Sir Alan Cockshaw has retired from the Board having chaired the Group since July1997. The Board would like to thank Sir Alan for his contribution and wisecounsel and leadership, particularly in the past few years of substantivechange. We wish Sir Alan well in his retirement. The Board would also like to pay tribute to Alf Vaisey, who retired from theboard following the completion of the Solartron disposal, for the nine years hespent with the Group as Finance Director. Alf made an enormous contribution tothe Group and was a vital member of the executive team culminating in the keyrole he played in the successful disposals of the Solartron businesses. On the retirement of Sir Alan Cockshaw, Harry Tee was appointed Chairman and RoyBurton and Cathy Buckley joined the Board in October as Group Chief Executiveand Group Finance Director respectively. Our People The Group has been through many changes over the past few years in response toever changing market conditions and the repositioning of the Group. Our staffhave had to cope with many challenges as a result. The Board wishes to paytribute to all those who worked with the Group over this period many of whomleft the Group as a result of the disposals completed by the Group. The loyalty,commitment and endeavour shown by everyone cannot be overstated and our thanksgo to all of them. Operating Review (Continuing Operations) On a continuing operations basis revenue increased from £55.3m to £56.1m andProfit Before Tax improved from £4.3m to £4.5m. There was a strong improvementin sales and profits in the second half when compared to the first half (revenue£30.3m (£25.8m), PBT £3.1m (£1.4m)). These increases were largely driven by thestrong uptick in orders in the second half of last year. On a proforma basis the profit before tax for the continuing operations is £5.4mcompared with the reported profit of £4.5m. This reflects the reduction tocorporate overhead costs, following the disposal of the Solartron businesses.The increase to the Profit of £0.9m assumes that the disposal of Solartron hadtaken place at the start of the year. 2005 2004Continuing BusinessSales £56.1m £55.3mProfit before tax £4.5m £4.3m For the first time we will be reporting Dialight's business in two segments:- • Components comprising indication products and electromagnetic components. • Signals/Illumination which includes Traffic and Rail Signals, Obstruction Lights and the new Solid State Lighting products of the Group. The reason for this segmentation is the different growth characteristics andcustomer profiles of the two segments. Components 2005 2004Sales £26.6m £27.2mContribution* £13.3m £14.7m *Contribution is defined as sales less material, direct labour costs andcommissions. Performance in this segment was adversely affected by the performance of a majorOEM customer for electromagnetic devices who experienced a significant slowdownin 2005 due to factory relocation. Without this slowdown, the segment would haveshown growth over 2004. Volumes with this customer are now back to historicallevels. In addition early in 2006, two major utility orders have been securedfor customers in the USA totalling over £1.5 million, adding new business tonormal run rates. It is expected that a majority of this new business will beshipped in 2006. A major piece of the Components Segment is sales of Dialight LED indicatorproducts to US based Distributors. Dialight tracks the success of this businessthrough Distributor Point of Sales data, which grew by over 5% in 2005 over2004, although Dialight sales to those distributors were slightly affected bysome destocking throughout 2005. For many years Dialight has held a preferred vendor position with the world'smajor electronic OEMs. These relationships continue and our position expands asour salespeople and engineers design Dialight's products into the new programsof these OEMs. In the latter part of 2005 we were awarded a contract to supply LED indicatorsin a wing mirror application for a major Japanese automotive manufacturer. Itis expected that shipments will start in the middle of 2006. Dialight willcontinue to pursue other niche automotive applications where we can bring valueto our customers. Over time we expect the Components Segment to show steady growth based uponDialight's unique position with major worldwide OEMs and large distributors. Signals/Illumination 2005 2004Sales £29.6m £28.0mContribution * £9.9m £9.2m *Contribution is defined as sales less material, direct labour costs andcommissions. High Brightness LEDs have been used in coloured signaling applications for someyears. They contribute major energy savings when compared with conventionallight sources and they have a lifetime stretching to tens of thousands of hours.For applications such as Traffic Lights, Rail Signals and similar devices, thereis a very compelling value proposition. LEDs, being semiconductor devices, alsolend themselves to digital control and can be very versatile in Architecturaland Entertainment Lighting applications, where sophisticated coloured lightingeffects are needed. It is only in recent times that white LEDs have becomeavailable with enough power and at a cost to make white lighting applicationsviable. During the year, this segment posted 5% sales growth in spite of the US TrafficMarket being essentially flat and 2004 sales benefiting from a major one-offcontract with FAA. The US Traffic Light segment of this market has becomerelatively constant so it is essential that we focus our efforts on those areaswhich will drive strong growth for the Company. For some years, Dialight has been a major supplier to the US traffic lightmarket. Many of the major city and state retrofits have already been completedand the market is over 50% adopted. Dialight's channels to market are wellestablished and it is expected that sales of traffic lights and relative marketshares in this geography will remain stable however, in Europe and Asia thesituation is quite different. The European adoption of LED traffic lights isless than 5% and European authorities at this point have been relatively slow toadopt LED technology. It is clear that, at some stage, adoption will occur andover the past few years we have been expanding our customer and geographicalbase in preparation for the rapid growth of this market. In 2005 Dialight soldto traffic customers in almost every West European country and a number of EastEuropean countries also. In 2005 this business grew by close to 20%. In spite of this growth, 2005 is best characterised as a year of preparation forthe European traffic business. Our European operations have spent their timedeveloping products for the new German OCIT and Dutch Astrin II specificationsas well as introducing a new high brightness signal for multi-countryapplication - all these products being based on the new Eclipse platform. Wehave forged new relationships with traffic systems OEMs throughout Europe andare particularly pleased at the progress we have made in developing products forseveral groups within the Siemens traffic organizations throughout Europe. 2006 should be a year of more adoption by the European customers and furtherpenetration by Dialight into this market. In order to better fulfil thisanticipated demand, manufacturing is being concentrated in our Newmarket andMexico facilities. This will improve operational performance while maintaininga marketing and engineering presence in Munich. The benefits of thisreorganisation will begin to be realised in the second half of the current year,although costs will be incurred in the first half. Similarly, the Asian market has not adopted LED technology to any great degree.We will address opportunities as they arise and look to drive Dialight's highbrightness traffic lights into this market. Rail signals logically follow traffic signals as a commercially compellingapplication for Dialight's products. In 2005, our US Operations completed aretrofit of wayside signals for New York City Transit Authority. This involvedover 50,000 signals; all designed and built to stringent safety standards. Railtransport however, is not as densely developed in the USA as it is in Europe.In the 2nd half of 2005 Dialight secured a contract with the Danish railauthorities for the supply of rail signals. Multiple discussions are takingplace with other rail authorities throughout Europe regarding the specificationand supply of LED rail signals and Dialight's products are in qualification withthe Russian Rail authorities. Whilst the normal caution of the rail industrymay make this market slower to take off than traffic signals, we believe thereis good growth potential for Dialight in this European segment. Red warning lights adorn broadcast towers, wind towers and tall buildings nearairports and these lights are there to give warning to aircraft. In 2002Dialight produced the first FAA qualified LED version of these lights. Sincethat time, we have developed the market for these products and have sold over44,000 LED Beacons and Sidelights. We believe there are over 600,000 left tochange to LED as the market is still in the early stages of adoption. Thisbusiness grew over 25% in 2005 on top of strong growth in 2004. We have anextensive customer base on both sides of the Atlantic and expect to see ourobstruction lighting business develop as we drive further LED usage in thismarket. The value proposition is quite simple; a Dialight LED Beacon uses40watts of electricity versus over 1200 watts used by a conventionally litBeacon. In addition to this, Dialight warrants its products for 5 years thusavoiding the cost of climbing to the top of a tall tower or building just tochange a light bulb. To enhance the adoption of these products, for 2006 we have launched versionswhich are qualified for hazardous locations. Our obstruction lights can now beused in oil and petrochemical establishments, offshore platforms and anywhereaviation warning is needed. As energy costs rise, not only do LED applications become more important, butnew sources of energy also become more important -in particular wind energy.This is a big plus for LED Obstruction Lights as each Wind Tower over a certainsize has to be lit. The end objective for LED technology is to replace conventional white lightsources for illumination. It is only in recent times that LEDs have beensufficiently effective to see any of this happen. White LEDs, whilst moreenergy efficient today than incandescent and halogen sources and approaching theefficiency of fluorescent lights are still too expensive for general lighting.There are however niche applications where long life, maintenance and safetymake white LEDs a viable proposition. One example of this is in Lighting for Hazardous Locations. Dialight hasdeveloped the first white LED light qualified to a UL Class 1 Division 2 ratingfor use in areas where explosive vapours may be present. Conventional lightfixtures for this type of application have to be designed especially for thistype of use and tend to be bulky and expensive. For LEDs, Dialight has developedthe concept of "inherent safety" and combined with a 5 year life this makes avery compelling value proposition for operators of petrochemical plants,refineries and offshore platforms. The potential installed market for this typeof device is in excess of £100m and Dialight expects to see good growth over anumber of years from this and other "industrial lighting" applications. LEDs and coloured LEDs in particular are finding application today inArchitectural, Entertainment and Theatre Lighting. Dialight has developedSpectramix, a proprietary colour mixing protocol along with a number of uniquecolour mixing light engine technologies. The acquisition of Lumidrives, a UKbased manufacturer of LED based lights and modules for the EuropeanArchitectural Lighting market will give Dialight a strong position in thissector in Europe Founded in late 2001, Lumidrives has grown its revenues profitably to over £3min 2005. The acquisition has integrated well into Dialight and is making goodprogress. The prospect for the coming year is for continued growth in Europewith existing product types and with the added potential of Dialight developedproducts being introduced into Europe through the Lumidrives' sales channels. Inaddition to European sales, Dialight is in the process of introducing Lumidrivesproducts to the North American market. There is potential for both OEM productsand the introduction of light modules- optics, drivers and light engines-to theDialight Distribution channel. The addition of Lumidrives to Dialight is a very important step bringingproducts, channel, customers and a UK Management Team that has demonstrated theability to grow profitably in the Solid State Lighting market. Dialight can look forward with confidence to the coming years, as markets areenabled by new technology. The challenge is to grasp the opportunities early asthey reach viability. We are well positioned to take advantage of the growing Signals and Solid StateLighting markets. Dialight has good channel access in the USA and Europe and isdeveloping a presence through its partners in Asia. Our technical expertise isstrong, having more experience with high brightness LEDs than almost any othercompany in the world. Operationally we have excellent capability with our lowcost ISO 9000 registered operation in Ensenada, Mexico and the purchasing volumeto drive best prices for our component parts. There are many small niche players emerging in this exciting new market butDialight has the position, the expertise and perhaps most importantly the sizeto seize the multiple opportunities which will emerge and maintain a strongmarket position. Outlook As outlined in the previous statements, the Group is now focused on one businessspecialising in applied LED technology and in particular Solid State Lighting. The order intake for the Components Segment for the current year to date showsan underlying growth in its run rate, supported by the previously mentionedlarge Electromagnetic components orders. Demand for Signals/Illumination products is expected to show growth driven byincrease in European Traffic Light demand. The benefits of the reorganisationof European manufacturing operations will start to produce results in the secondhalf of the current year. Growth will be further enhanced by the introduction of new products in HazardousLocation Lighting and the exploitation of the Lumidrives acquisition on aworldwide basis. Consequently, the Board is confident that the continuing operations will showprogress in the current year. Harry TeeChairman Roy BurtonChief Executive CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2005 2005 2004 Note Continuing Discontinued Total Continuing Discontinued Total operations operations operations operations £'000 £'000 £'000 £'000 £'000 £'000 Revenue 1 56129 39023 95152 55268 63584 118852Cost of sales (41432) (24639) (66071) (39359) (39489) (78848) Gross profit 14697 14384 29081 15909 24095 40004 Distribution expenses (4485) (6381) (10866) (4883) (10878) (15761)Administrative expenses (6266) (3637) (9903) (6571) (4957) (11528)Operating profit 1 3946 4366 8312 4455 8260 12715Financial income 2201 198 2399 1388 358 1746Financial expense (1691) (302) (1993) (1544) (391) (1935) Net financing costs 510 (104) 406 (156) (33) (189) Profit before tax 4456 4262 8718 4299 8227 12526 Income tax expense 2 (1403) (1339) (2742) (1588) (2702) (4290) Profit after tax but 3053 2923 5976 2711 5525 8236before gain ondiscontinued operationGain on sale of - 22022 22022 - - -discontinued operations,net of tax Profit for the year 3053 24945 27998 2711 5525 8236attributable to equityholders of the parent Basic earnings per share 3 10.1p 82.1p 92.2p 9.0p 18.4p 27.4p Diluted earnings per 3 10.1p 82.1p 92.2p 8.9p 18.2p 27.1pshare CONSOLIDATED BALANCE SHEETAs at 31 December 2005 2005 2004 £'000 £'000AssetsProperty, plant and equipment 5983 11463Intangible assets 4321 19254Deferred tax assets 2405 2619 Total non-current assets 12709 33336 Inventories 6742 15404Trade and other receivables 16685 25363Cash and cash equivalents 9829 6819 Total current assets 33256 47586 Total assets 45965 80922 Liabilities Current liabilitiesInterest-bearing loans and borrowings (2213) (51)Trade and other payables (7477) (16644)Tax liabilities (3364) (977) Total current liabilities (13054) (17672) Non-current liabilitiesEmployee benefits (3104) (11030)Provisions (890) (1667)Deferred tax liabilities (53) (66) Total non-current liabilities (4047) (12763) Total liabilities (17101) (30435) Net assets 28864 50487 EquityIssued share capital 587 2849Share premium - 6049Other reserves 29 39295Retained earnings 28248 2294 Total equity 28864 50487 CONSOLIDATED CASH FLOW STATEMENTfor the year ended 31 December 2005 Note 2005 2004 £'000 £'000 Operating activities Profit for the year 27998 8236Adjustments for:Financial income (2399) (1746)Financial expense 1993 1935Income tax expense 2742 4290Gain on disposal of discontinued operations (net of tax) (22022) -Depreciation of property, plant and equipment 1423 2606Amortisation of intangible assets 567 387 Operating cash flow before movements in working capital 10302 15708Decrease in inventories 1017 238Increase in trade and other receivables (3115) (1076)(Decrease)/Increase in trade and other payables (168) 734Decrease in pension liabilities (418) (80) Cash generated from operations 7618 15524Income taxes paid on profit on ordinary activities (2777) (3583)Income tax paid on gain on disposals (5237) -Interest paid (1986) (1935) Net cash from operating activities (2382) 10006 Investing activities Interest received 2399 1746Disposal of discontinued operations 65689 -Capital expenditure (2228) (1299)Expenditure on development (1505) (2129)Sale of tangible fixed assets 44 13Net cash generated/(used in) investing activities 64399 (1669) Financing activities Dividends paid (3341) (3135)Proceeds from the issue of shares 2089 74Transfer to "Restricted Cash" 5 (4000) -Special contributions to pension funds (7374) -Preference shares redeemed (67) (267)Return to shareholders following disposal of businesses (46524) -Net cash used in financing activities (59217) (3328)Net increase in cash and cash equivalents 2800 5009Cash and cash equivalents at 1 January 6768 1968Effect of exchange rates on cash held 261 (209)Cash and cash equivalents at 31 December 5 9829 6768 Consolidated statement of recognised income and expenseFor the year ended 31 December 2005 2005 2004 £'000 £'000Exchange difference on translation of foreign operations 1100 (1077)Exchange realised on disposal of businesses (13) -Actuarial losses on defined benefit pension schemes (1266) (1194)Tax on items taken directly in equity 424 340 Net expense recognised directly in equity 245 (1931)Profit for the period 27998 8236 Total recognised income and expense for the period attributable to 28243 6305equity holders of the parent Effect of change in accounting policyImpact of adoption of IAS32 and 39 (net of tax) to - retained earnings: Cash flow hedges 190- share capital: Reclassification of preference shares (2280)Attributable to members (2090) Notes to the consolidated financial statementsfor the year ended 31 December 2005 The consolidated financial statements of the Company for the year ended 31December 2005 comprise the Company and its subsidiaries (together referred to asthe "Group"). Statement of compliance The consolidated financial statements have been prepared and approved by thedirectors in accordance with International Financial Reporting Standards asadopted by the EU ("Adopted IFRSs"). The Company has elected to present itsparent company financial statements in accordance with UK GAAP. An explanationof how the transition to Adopted IFRSs has affected the reported financialposition, financial performance and cash flows of the Group is provided in therestatement of the 2004 audited accounts issued on 12 September 2005. In preparing these Financial Statements, the Group has applied the mandatoryexemptions and certain of the optional exemptions from full retrospectiveapplication of Adopted IFRS. • Business combinations-Business combinations that took place prior to 1 January 2004 have not been restated • Employee benefits-All cumulative actuarial gains and losses on defined benefit plans have been recognised in equity at 1 January 2004 • Cumulative translation differences-Cumulative translation differences for all foreign operations have been set to zero at 1 January 2004 • IFRS 2 is only applied to share awards made after 7 November 2002 that have not vested at 1 January 2005 In addition the Group has chosen to adopt the exemption delaying theimplementation of IAS 32 Financial Instruments: Disclosure and Presentation, andIAS 39 Financial Instruments: Recognition and Measurement. The standardrequires derivatives which are held off balance sheet to be recognised in thebalance sheet in full at fair value. In accordance with IFRS 1 theimplementation has been applied first in the year ended 31 December 2005. IAS 19 (Revised) has been adopted in advance of the effective date of 1 January2006. The following Adopted IFRS was available for early application but has not beenapplied by the Group in these financial statements: • IFRS 7 Financial instruments: Disclosure applicable for years commencing on or after 1 January 2007. The application of IFRS 7 in 2005 would not have affected the balance sheet or income statement as the standard is concerned only with disclosure. Basis of preparation The financial statements have been prepared on the historical cost basis exceptfor the revaluation of certain financial instruments which have been accountedfor in accordance with IAS 32 and IAS 39 from 1 January 2005. The financial information contained in this preliminary announcement does notconstitute the Company's statutory accounts for the years ended 31 December 2005and 2004. Statutory accounts for 2004, which were prepared under UK GAAP, havebeen delivered to the registrar of companies, and those for 2005, prepared underInternational Financial Reporting Standards as adopted by the EU, will bedelivered in due course. The auditors have reported on these accounts, theirreports were unqualified and did not contain statements under section 237 (2) or(3) of the Companies Act 1985. Full financial statements for the year ended 31December 2005, will shortly be posted to share holders, and after adoption atthe Annual General Meeting on 9 May 2006 will be delivered to the registrar. 1. Segment reporting The primary format used for segmental reporting is by business segment as thisreflects the internal management structure and reporting of the Group. Intragroup trading is determined as an arm's length basis. Business segments The Group comprises the following business segments: - • Components comprising the indication business and electromagnetic components. • Signals/Illumination which includes Traffic and Rail Signals, Obstruction Lights and the new Solid State Lighting products. The business segment, Solartron, was sold during 2005 and is shown asdiscontinued operations below. All revenue relates to the sale of goods. The 2004 segment results and assetsand liability allocations have been restated for the continuing operationsbetween Components and Signals/Illumination to reflect the reporting structureof the Group going forward. The contribution shown below for the continuingoperations represents sales less direct costs incurred by each business segment. Business segments 2005 Components Signals/ Discontinued Illumination Operations Total £'000 £'000 £'000 £'000Revenue 26564 29565 39023 95152 Contribution 13313 9902 4366 27581 Unallocated expenses from continuing (19269)operations Operating profit from continuing 3946operations Operating profit from discontinued 4366operations Operating profit 8312 Net financing income 406 Profit before tax and sale of 8718discontinued operations 2004 Components Signals/ Illumination Discontinued Operations Total £'000 £'000 £'000 £'000Revenue 27236 28032 63584 118852 Contribution 14717 9227 8260 32204 Unallocated expenses from (19489)continuing operations Operating profit from continuing 4455operations Operating profit from discontinued 8260operations Operating profit 12715 Net financing costs (189) Profit before tax 12526 Other Information Components Signals/ Discontinued2005 Illumination Operations Total £'000 £'000 £'000 £'000Capital Additions 458 839 931 2228 Depreciation and amortisation 941 1017 32 1990 Balance Sheet - Assets 2005 Components Signals/ Illumination Total £'000 £'000 £'000Segment assets 11937 17376 29313 Unallocated assets 16652 Consolidated total assets 45965 Balance Sheet - Liabilities 2005 Components Signals/ Illumination Total £'000 £'000 £'000Segment liabilities (2892) (4307) (7199) Unallocated liabilities (9902) Consolidated total liabilities (17101) Balance Sheet - Assets 2004 Components Signals/ Illumination Discontinued Operations Total £'000 £'000 £'000 £'000Segment assets 13195 15404 45950 74549 Unallocated assets 6373 Consolidated total assets 80922 Balance Sheet - 2004Liabilities Components Signals/ Discontinued Illumination Operations Total £'000 £'000 £'000 £'000Segment liabilities (8359) (3103) (14080) (25542) Unallocated liabilities (4893) Consolidated total (30435)liabilities Geographical segments The Components and Signals/Illumination segments are managed on a worldwidebasis, but operate in three principal geographic areas, UK, Europe and NorthAmerica. The following table provides an analysis of the Group's sales bygeographical market, irrespective of the origin of the goods. All revenuerelates to the sale of goods. Sales revenue by geographical market Continuing Discontinued Total Operations Operations 2005 2004 2005 2004 2005 2004 £'000 £'000 £'000 £'000 £'000 £'000North America 35201 35653 7630 10308 42831 45961UK 7523 6449 8276 16558 15799 23007Rest of Europe 7435 6376 13242 23074 20677 29450Rest of world 5970 6790 9875 13644 15845 20434 56129 55268 39023 63584 95152 118852 Continuing operations Segmental assets Capital expenditure 2005 2004 2005 2004 £'000 £'000 £'000 £'000North America 23996 20986 1016 470UK 15412 7986 198 87Rest of Europe 6557 6000 83 102 45965 34972 1297 659 2. Income tax expense Recognised in the income statement 2005 2004 £'000 £'000Current tax expenseCurrent year 2335 3678Adjustment for prior years (308) (360) 2027 3318Deferred tax expenseOrigination and reversal of temporary differences 616 765Adjustment for prior years 99 207 Total income tax expense in income statement 2742 4290 Reconciliation of effective tax rate 2005 2005 2004 2004 % £'000 % £'000Profit after gain on disposals before tax 39702 12526 Gain on disposals (30984) - Profit before tax 8718 12526 Income tax using the UK corporation tax rate of 30.0 2615 30.0 375830% Effect of tax rates in foreign jurisdictions 4.1 354 2.1 263 Non-deductible expenses 0.4 40 0.7 88 Unrecognised losses 3.5 302 2.6 334 Deduction for gain on share options (4.1) (360) - Over provision in prior years. (2.4) (209) (1.2) (153) 31.5 2742 34.2 4290 Deferred tax recognised directly in equity 2005 2004 £'000 £'000Relating to pension accounting 424 340 The tax charge arising from the disposals of the Solartron businesses has beenestimated at £8,962,000. 3. Earnings per share Basic earnings per share The calculation of basic earnings per share at 31 December 2005 was based on theprofit for the year of £27,998,000 (2004: £8,236,000) and a weighted averagenumber of ordinary shares outstanding during the year ended 31 December 2005 of30,369,000 (2004:30,091,000). Diluted earnings per share The calculation of diluted earnings per share at 31 December 2005 was based onprofit for the year of £27,998,000 (2004:£8,236,000) and a weighted averagenumber of ordinary shares outstanding during the year ended 31 December 2005 of30,371,000 (2004:30,339,000) calculated as follows: - Weighted average number of ordinary shares (diluted) 2005 2004 '000 '000Weighted average number of ordinary shares 30369 30091Effect of share options on issue 2 248Weighted average number of ordinary shares (diluted) 30371 30339 Earnings per share for continuing and discontinued operations 2005 2004 Pence PenceContinuing operations 10.1 9.0Discontinued operations 9.6 18.4Gain (net of tax) from the disposal of operations 72.5 - 92.2 27.4 Basic Earnings per share for continuing and discontinued operations Earnings per share for continuing and discontinued operations has beencalculated using the same figures as the basic earnings per share except thatthe profit for the period used in the calculation is the profit relating tocontinuing operations of £3,053,000(2004:£2,711,000) and the one relating todiscontinued operations of £2,923,000(2004:£5,525,000). The calculation of theearnings per share from the gain of discontinued operations is calculated usingthe weighted average number of shares shown above and the gain after tax on thedisposals of £22,022,000 (2004: £nil). 4. Dividends The following dividends were paid in the year: 2005 2004 £'000 £'0003.4p (2004: 3.4p) per ordinary share 1053 10237.6p (2004: 6.9p) per ordinary share 2288 2075 3341 3098 After the balance sheet date the following dividends were proposed by theDirectors. The dividends have not been provided for and there are nocorporation tax consequences. 2005 2004 £'000 £'000Final proposed dividend3.0p per ordinary share 9377.6p per ordinary share 2288 5. Cash and cash equivalents 2005 2004 £'000 £'000Total Bank balances 13829 6819Less: Restricted cash (4000) -Cash and cash equivalents 9829 6819 As part of the Capital Reduction approval, the Court required certain cash to beset aside into a separate bank account 'Creditors Account' for the protection ofactual, prospective or contingent liabilities of the Company. As at 31 December 2005 the balance on the Creditors Account was £4,000,000.This "Restricted Cash" is required principally to pay the outstanding tax duefrom the 2005 disposal of businesses and is included in Trade and otherreceivables. 6. Events after the balance sheet On 11 January 2006 the Company completed the acquisition of the entire issuedshare capital of Lumidrives Limited for a total consideration of £3 million.The consideration was satisfied in part by cash of £2.45 million and the balanceof £0.55million satisfied by the issue of 223578 Dialight plc ordinary shares.The ordinary shares were issued at a price of £2.46 being the market price ofthe 1.89p ordinary shares at the close of business on the day immediatelypreceding completion. Due to the recent timing of the acquisition the assessment of the fair values tobe attributed to goodwill and any intangible assets has not yet been completed. - ENDS - This information is provided by RNS The company news service from the London Stock Exchange