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20 Dec 2013 07:00
Densitron Technologies plc
(the "Company" or the "Group")
TRADING UPDATE
Trading Update
In August 2013 the Company announced that it expected to achieve an operating profit ahead of that achieved in 2012. This expectation was based on production orders for business that at that time was in its pre-production phase. However, several of these projects have not converted into mass production as quickly as anticipated. As a consequence of this there is a substantial profit shortfall in the UK as against previous management expectations.
While it is still expected that the Group will remain profitable at an operating level exceptional costs relating to the settlement of the lease dispute in Newcastle are such that the Company will report a loss for the current year.
Operational improvements in the second half were insufficient to offset the loss incurred as a result of the Newcastle claim and the net loss for the period is expected to widen against the position described at the half year.
Business in the US and Japan has been in line with or better than our expectations albeit that the contribution from Japan will be affected by the fall in the yen exchange rate against the US dollar.
Outlook
The pipeline of potential business in the UK is substantial and growing and we have a number of new products but it has been very difficult to close orders. In particular, the Company has billed for development work on projects for major companies which the Directors expect will produce significant business in the future but the projects themselves have then been much slower to progress than expected. Management believe that some of these orders will be placed during 2014.
The property in Newcastle is currently being marketed and this has generated an encouraging level of interest in taking the property on.
Jan Holmstrom, Chairman, commented:
"2013 has been a difficult year for the Company. Challenging UK market conditions were compounded by costs of the settlement in relation to the property in Newcastle. Nevertheless the underlying business remains profitable operationally and with a strong pipeline we are optimistic for 2014."
Enquiries:
Densitron Technologies plc
Grahame Falconer / Tim Pearson
Tel: 0207 648 4200
Westhouse Securities Limited
Martin Davison
Tel: 020 7601 6100
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