Light shining brightly for re-focussed Dialight
The remodelled LED light pioneer Dialight plc reported strong sales over the past eight months in its first set of annual results since it put its new strategy in place.
The group completed a two-year long refashioning of itself in 2005. It exited the electronic measurement sector by selling its Solartron business for £72m, replaced the stodgy Roxboro Group plc moniker with Dialight, and returned £46.5m to shareholders (taking the total handed back since 2003 to £90m).
Chairman Harry Tree said "the company is now focussed on the emerging solid state lighting market with high growth potential and with a new name and new management."
On a continuing operations basis, revenue increased just 1.4% to £56.1m for the year while pre-tax improved £0.2m to £4.5m. The company said there was a strong improvement in sales to £30.3m and profits to £3.1m in the second half compared to the first half of £25.8m and £1.4m. The profit on disposals during the year of £22m (after tax £9m) was treated as an exceptional item.
The market liked the result and bid the share price up 4% to 285p, close to the top of its range over the past year. The new strategy has already been endorsed by the steady rise in the share price over the past two years.
But clearly the full year of operations in 2006 with management focussed exclusively on the new strategy without the distractions of shedding non-strategic assets will be a key test.
New acquisition in Jan '06
Since the year end Dialight has acquired Lumidrives, a UK-based manufacturer of LED based lights and modules for the European architectural lighting market. Roy Burton (pictured), Group Chief Executive, said that "the addition of Lumidrives … is a very important step bringing products, channel, customers and a UK management team that has demonstrated the ability to grow profitably in the solid state lighting market".
For the first time Dialight's reported business results in two segments: components, comprising indication products and electromagnetic components, and signals/ illumination, which includes traffic and rail signals, obstruction lights and the Group's new solid state lighting products.
Component sales were £26.6m, which delivered a contribution, after material and direct labour costs, of £13.3m. Signals/illumination delivered higher revenue of £29.6m and a lower contribution £9.9m.
Mr Burton said the order intake for the components segment for 2006 so far shows an underlying growth in its run rate, supported by two major US utility orders worth over £1.5 million.
Double digit growth seen for LED lighting
The demand for signals/ illumination products is expected to show growth driven by increase in European traffic light demand, he said. "The benefits of the reorganisation of European manufacturing operations will start to produce results in the second half of the current year."
"Growth will be further enhanced by the introduction of new products in hazardous location lighting and the exploitation of the Lumidrives acquisition on a worldwide basis".
The company sees better medium term growth prospects - independent market research suggests it'll be in double digits - in the signals/illumination sector, where high brightness LEDs will begin replacing conventional white light sources.
Mr Burton said that it is only in recent times that LEDs have been sufficiently effective to see this happen. "White LEDs, whilst more energy efficient today than incandescent and halogen sources and approaching the efficiency of fluorescent lights are still too expensive for general lighting. There are however niche applications where long life, maintenance and safety make white LEDs a viable proposition".
LEDs and coloured LEDs in particular are finding application in architectural, entertainment and theatre lighting. Dialight has developed Spectramix, a proprietary colour mixing protocol along with a number of unique colour mixing light engine technologies.
13th March, 2006
