Dialight
plc
("Dialight" or the
"Group")
Unaudited interim results
for the 6-month period ended 30 September 2024
Dialight plc (LSE: DIA.L), a
global leader in sustainable LED lighting for industrial
applications, announces its interim results for the 6-month period
ended 30 September 2024.
|
Financial summary
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
|
Revenue
|
90.3
|
91.0
|
|
Underlying profit/(loss) from
operating activities*
|
0.9
|
(2.5)
|
|
Loss from operating
activities
|
(19.3)
|
(4.5)
|
|
Loss before tax for the
period
|
(20.8)
|
(6.6)
|
|
Loss after tax for the
period
|
(18.2)
|
(5.2)
|
|
Statutory loss per share - basic
and diluted
|
(45.8)
cents
|
(15.8)
cents
|
|
Net bank debt - excluding IFRS 16
lease liabilities
|
(15.4)
|
(27.3)
|
*Underlying profit/(loss) from operating activities is reconciled in note
1 below.
Key points for the 6-month period ended 30 September
2024
· Revenue broadly unchanged from comparable 6-month
period.
· Underlying operating profit from operating activities
improved to US $0.9m (6-month period to 30 September 2023: loss of
US $2.5m) reflecting stronger gross margins and strong control of
operating costs.
· Non-underlying costs of US $25.4m charged during the period;
US $22.3m reflects costs of Sanmina litigation; including a US
$19.5m provision recognised at 30 September 2024 in relation to the
Board's best estimate of the settlement of damages. Additional
charge of US $3.1m recognised relating to transformation
project.
· Positive net cash flows of US $5.6m generated from underlying
operating activities after tax and interest with a further US $5.2m
cash inflow from the gain on disposal of the Traffic business; net
bank debt reduced to US $15.4m (31 March 2024: US
$16.4m).
· Good
progress achieved in executing the transformation plan with focus
on streamlining the Group, accelerating growth, and improving
profitability.
Commenting on the results, Steve Blair, CEO,
said:
"The current state of the economies
in which we operate provides a cautious outlook for capital
expenditures across various sectors. High underlying inflation and
ongoing labour shortages are major constraints, causing delays in
project timelines and deferring investment decisions. The
petrochemical industry, in particular, faces additional uncertainty
due to fluctuating demand and unpredictable energy prices. There is
added hesitation and increased uncertainty following the recent US
election as businesses anticipate potential policy changes, further
delaying capital commitments. However, the relentless focus by
management on executing the Transformation Plan is beginning to
show positive results and provides a solid foundation to achieve
our medium-term ambitions. With this background, the Board is
confident that further progress will be made in the second half of
the year."
Contacts
Dialight plc
Tel: +44 (0)203 058
3542
Steve Blair - Group Chief
Executive
Neil Johnson - Chairman
About Dialight:
Dialight (LSE: DIA.L) is a global
leader in sustainable LED lighting for industrial
applications. Dialight's
LED products are providing the next generation of lighting
solutions that deliver reduced energy consumption and create a
safer working environment. Our products are specifically designed
to provide superior operational performance, reliability, and
durability, reducing energy consumption and ongoing maintenance,
and achieving a rapid return on investment. The company is
headquartered in the UK, with operations in the USA, UK, Mexico,
Malaysia, Singapore, Australia, Germany, and Dubai. To find out
more about Dialight, visit www.dialight.com.
Registered company number:
02486024
Notes
1.
Underlying profit/(loss) from operating activities is reconciled as
follow:
|
|
6-month period ended 30
September 2024
US $m
(unaudited)
|
6-month
period ended 30 September 2023
US
$m
(unaudited)
|
|
Underlying profit/(loss) from
operating activities
|
0.9
|
(2.5)
|
|
Non-underlying costs
|
(25.4)
|
(2.0)
|
|
Gain on disposal of
business
|
5.2
|
-
|
|
Loss from operating activities
|
(19.3)
|
(4.5)
|
2. Net bank
debt excludes lease liabilities recognised under IFRS
16.
3.
Cautionary Statement: This announcement contains certain
statements, statistics and projections that are or may be
forward-looking. The accuracy and completeness of all such
statements, including, without limitation, statements regarding the
future financial position, strategy, projected costs, plans and
objectives for the management of future operations of Dialight PLC
and its subsidiaries are not warranted or guaranteed. These
statements typically contain words such as 'intends', 'expects',
'anticipated', 'estimates and words of similar import. By their
nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will
occur in the future. Although Dialight plc believes that the
expectations will prove to be correct. There are a number of
factors, many of which are beyond the control of Dialight PLC,
which could cause actual results and developments to differ
materially from those expressed or implied by such forward-looking
statements. This announcement contains inside information on
Dialight PLC.
CHIEF EXECUTIVE OFFICER
REVIEW
Group revenues for the 6-months
ended 30 September 2024 were US $90.3m, which was broadly unchanged
from the comparable period last year. A reduction of 2.1%, US
$1.4m, was reported in the Lighting segment with business
continuing to be impacted by challenging market conditions as
capital projects were deferred. This was partly offset by increased
revenues of 3.1%, US $0.7m, in Signals & Components. Demand
continues to remain soft with overall Group orders down 7.0% versus
the 6-month comparable period and Lighting orders down 11%.
Lighting orders have decreased in all regions.
Group gross margins for the
6-month period increased to 33.0% from 30.8% in the comparable
period, with improvements in material costs and operational
efficiencies offsetting increased labour rates and lower fixed
overhead absorption.
We continue to maintain our strong
focus on cost control, which led to a reduction in underlying
selling, general and administrative
(SG&A) costs of US $1.6m.
This combination of improved gross
margins and lower underlying operating costs contributed to an
increase in Group underlying operating profit from operating
activities to US $0.9m from an underlying operating loss of US
$2.5m in the prior period. Non-underlying costs for the 6-month
period were US $25.4m and included US $22.3m of costs related to
the Sanmina litigation and US $3.1m in charges related to the
Transformation plan. Finance costs were US $1.5m compared to US
$2.1m in the comparable period. The Group sold the Traffic business
on 29 July 2024 for proceeds and a gain on net book value of US
$5.2m.
The statutory loss before tax for
the 6-month period ended 30 September 2024 was US $20.8m compared
with a statutory loss before tax of US $6.6m in the comparable
period.
Lighting
represented c.74% of revenues in the 6-month
period (H1 FY24: c.75%). Lighting orders fell 11% driven by
continued weakness in all markets. Our core US market saw orders
decline by 3% with the continued deferment of capex orders. EMEA
Lighting orders saw a decline of 54%, while Asia and Australia
orders were down 31% and 11%, respectively.
The majority of our large US
customers and target customers require a "preferred supplier
agreement" to be in place with their corporate Head Office, before
any sale can be confirmed at the plant level. We continue to
develop our strategic accounts team who are working closely with
our field sales team to address this opportunity.
Signals &
Components is a high-volume
business operating within highly competitive markets.
Within this division, strong Vehicle sales were
offset by weaker demand in OE (opto-electronic). OE orders in H1
FY25 were 5% below prior period and inventory levels in the channel remain high. Market conditions
are expected to remain challenging.
Operations and supply chain
management remained a key focus for the Group in 2025, with a
gradual shift from maintaining security of supply to focusing on
price renegotiation, as material availability improved for some
components. We continue to see some short-term impact from material
shortages within the market but remain committed to maintaining
short lead times and c.90% on time delivery within Lighting and
Signals & Components, which has been critical in supporting our
MRO orders.
Cash generated from underlying
operations was US $7.8m (H1 FY24: US $11.7m), with underlying net
operating cash inflows of US $5.6m after tax and interest,
benefitting from a reduction in inventory and accounts receivable
(H1 FY24: US $9.0m).
We continued to invest in new and
improved product development with US $5.2m spent in H1 FY25
(H1 FY24: US $2.9m). The
main areas of investment were Backup Battery for ProSite
Floodlight, Next Generation Linear, New Street Light for industrial
applications, value added product accessories, Power Supply
upgrades for simplification and automation, product simplification
products for SKU reduction, and product cost reduction.
The Group had net bank debt of US
$15.4m at 30 September 2024 (H1 FY24: US
$27.3m).
Transformation plan
The Group has continued to execute
on its transformation plan, which is focused on streamlining the
Group, accelerating growth, and improving profitability. The plan
focuses on unlocking value within the Group, whilst growing the
core Lighting business with an ambition to deliver above market
revenue growth and mid-teens ROS in the medium term generating
sustainable cash conversion above 80%, funded by net bank debt less
than 1.5x EBITDA.
Implementation of the plan will
require a relentless focus on execution excellence. To reach the
ambition set out above, certain additional investments will be
required in the short term, which will deliver the improved
financial returns assumed over the medium term. To ensure
successful delivery and clear strategic oversight, the Board has
established a formal Board Committee, which meets regularly with
senior executives.
Reducing cost through consolidation and
automation
Dialight operates from four
principal manufacturing sites across Mexico, the US and Malaysia.
This footprint helps to support the international nature of our
customer base, but also gives rise to inefficiency at both a site
and network level. Reducing complexity in our site network forms a
key component of streamlining the business, but also provides the
potential for cost reduction through consolidation. Progress has
been made in the transformation of our Malaysia operations and we
have moved to a new smaller production facility in Penang,
Malaysia.
In addition to site consolidation,
the transformation plan is focused on cost reduction through
automation. Today, many of our manufacturing processes are labour
intensive, which has resulted in rapid cost escalation in the last
two years as wage inflation has accelerated. Against this backdrop,
automation represents a significant improvement opportunity. The
automation of the power supply sub-assembly project is well
underway, commencing with an investment during the first half of
the year of US $1.4m.
Increasing focus
The transformation plan includes
an ongoing review of the Group's business, with a view to narrowing
its focus to Dialight's core competencies. LED Lighting for
industrial applications is the Group's largest business,
representing 74% of revenues in H1 FY25 and where the majority of
our resources are focused. Alongside LED Lighting, the Group has
three smaller businesses focused on niches within the wider
lighting market: Components, Vehicle, and Obstruction (representing
25% of Group revenues). The Group's Traffic business was disposed
of in July 2025 and generated US $5.2m in cash proceeds.
Accelerating growth
The industrial LED lighting
market, with an addressable market of c. US $10.0b, continues to be
very attractive, with the conversion from historic technologies and
increasing focus on safety and sustainability supporting long term
structural growth. Our historic focus on the harsh and hazardous
segment has helped achieve a market leading position in the US,
with excellent customer and distributor relationships. This
continues to be enhanced by the strategic account initiative which
has improved penetration of large-scale customers.
Alongside longer term growth in
LED Lighting demand, we are also seeing a rapid evolution in
technology as customers seek ever-increasing levels of productivity
and efficiency from their sites. The integration of monitoring,
safety and productivity features within our lighting fixtures
represents an immediate opportunity to enhance our products and
over the longer term we see the potential for the lighting networks
within buildings to play a key role in industrial
connectivity.
The transformation plan seeks to
capitalise on this opportunity through two initiatives; further
monetising our technology expertise through selling component
elements, for example power supply topology, into markets where we
do not operate, and developing fixture products with integrated
monitoring or control components for specified higher value
customer applications.
Streamlining processes and reducing
complexity
As identified during the Board's
business review last year, our current product range is too broad
and complex. We have made good progress on standardising our
product offering, with our engineering and operations functions
collaborating to achieve large reductions in SKUs through
standardisation of sub-assemblies and completion of upgrades to low
volume products. This will not only enable more efficient
production but will also support greater material purchasing
accuracy and inventory control. We expect these projects to be
completed by March 2025.
Realigning the cost base
In addition to focusing on
improvements in our gross profit, the transformation plan will seek
to address our operating cost base with a realignment to reflect
the current organisation. This is being carried out in phases, with
the initial steps taken through restructuring of operating
departments. We conducted a cost analysis study which reviewed all
cost layers by sales region, production sites and administrative
functions. We are reviewing the findings and will make appropriate
recommendations to further realign the cost base.
The second phase of this aspect of
the transformation focused on the US sales function, ensuring this
is structured to position Dialight for growth whilst minimising
external sales costs incurred.
Sanmina litigation
As previously announced, the
Sanmina trial concluded on 23 September 2024. The jury rejected
Dialight's claims relating to fraudulent inducement and wilful
misconduct (the "Tort Claims"), whilst granting Dialight's claim
that Sanmina had breached the Manufacturing Services Agreement
("MSA") and granting Sanmina's claims that Dialight had breached
the MSA with respect to Sanmina's accounts receivable ("AR") and
'excess and obsolete' materials ("E&O") claims. Whilst the
jury's verdict on the Tort Claims was disappointing, and contrary
to the general thrust of previous rulings by the judge as it has
limited the scope of damages to which Dialight is entitled
(illustrating the risks inherent in a New York jury trial),
Dialight welcomes the confirmation by the jury of Sanmina's breach
of contract (which Sanmina had refused to acknowledge, despite the
overwhelming weight of evidence). The jury awarded damages of US
$0.9m to Dialight in respect of Sanmina's breach of contract, and
awarded c. US $5.3m in damages against Dialight in respect of
Sanmina's AR claim and c. US $3.4m in damages against Dialight in
respect of Sanmina's E&O claim. These awards are, however,
subject to further challenge and to a definitive ruling by the
judge that is not expected until Q1 2025.
The initial post-trial motions
filed by both Dialight and Sanmina have been made available on the
Company's corporate website at www.dialight.com/ir/shareholder-information/sanmina-litigation/
and include motions relating to damages, interest payable on
damages, and legal costs. There are multiple upside and downside
variables outlined in these pleadings and the final potential
outcomes in respect of damages range from the c. US $8.7m of gross
damages awarded by the jury to Sanmina through to a net damages
payment by Sanmina to Dialight of c. US $4.8m (if all of Dialight's
post-trial motions are successful). Any awards in respect of
interest and legal costs will, in part, follow the position on
damages, though there are further stand-alone issues relating to
the calculation of both interest and the award of legal
costs. These issues will be refined through the current
pleadings process, with final replies by both parties on the
various motions due to be filed by 18 December 2024. The definitive
judgment in this matter ("Definitive Judgment") will be issued at
some point after the filing of those final replies (likely to be in
Q1 of 2025), and will crystalise Dialight's liability, subject to
any appeals process. Notwithstanding the wide-range of potential
outcomes, management has taken a best estimate approach to the
quantification of non-underlying litigation costs to be expensed in
respect of the 6-month period to 30 September 2024 (see note 4),
with the US $22.3m expensed including management's best estimate of
the net future outflow of damages, interest and legal costs, along
with actual legal costs incurred in the 6-month period and legal
costs committed to be incurred over the next 6-month period. It is
possible that the Definitive Judgment could be more or less than
management's quantification. Once management has certainty on the
Definitive Judgment it will decide on the appropriate means and
timing of funding any awards to Sanmina under that Definitive
Judgment, which may include seeking to agree a payment plan with
Sanmina and/or new equity funding. Any awards due under the
Definitive Judgment would ordinarily be payable to Sanmina within
30 days of the publication of the Definitive Judgment, unless
appealed or otherwise agreed with Sanmina. Any appeal process is
likely to require bonding arrangements at least equal to the
quantum of any judgment. Dialight will continue to make any
court-filed documents available on its website and will provide
further updates as and when appropriate.
Financial review
Overall performance in H1 FY25
showed improvement with underlying operating profit of US $0.9m
compared to an underlying operating loss of US $2.5m in H1 FY24
(being the 6-month period to 30 September 2023). Revenues decreased
by US $0.7m against the comparable period, largely driven by a US
$1.4m reduction in Lighting, with the business continuing to be
impacted by capital projects being deferred. This was offset by a
US $0.7m increase in Signals & Components revenues.
Group gross margins for the
6-month period improved to 33.0%, a 2.2% increase in the comparable
period. This was driven by operational efficiencies and improved
direct material costs.
First half underlying operating
costs decreased by US $1.6m and we continue to remain focused on
strong cost controls.
Group orders in H1 FY25 decreased
by 7.0% compared H1 FY24. This was driven by Lighting orders which
were down 11.0%. US Lighting orders were down 3.0% with EMEA and
APAC orders significantly below prior period. This was offset by
strong Signals & Components orders, which were up 5.9% versus
prior period.
From 31 March 2024 net bank debt
reduced by US $1.0m from US $16.4m to US $15.4m as at 30 September
2024.
Lighting segment before unallocated costs
|
Lighting
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
Variance
|
|
Revenue
|
66.7
|
68.1
|
(1.4)
|
|
Gross profit
|
24.2
|
22.0
|
2.2
|
|
Gross margin
|
36.3%
|
32.3%
|
400bps
|
|
Overheads
|
(19.2)
|
(20.7)
|
1.5
|
|
Underlying EBIT before unallocated costs
|
5.0
|
1.3
|
3.7
|
The Lighting (Lighting &
Obstruction) segment represents approximately 74% of the Group's
revenue, and consists of two main revenue streams: large capex
projects and on-going Maintenance, Repair and Operations (MRO)
spend. The segment demand remained weaker than expected with
customers continuing to exercise tight controls over spending,
particularly within capex projects.
Half year revenues declined by US
$1.4m driven by weakness in the Lighting Segment. Lighting was US
$2.0m unfavourable and was driven by continued economic uncertainty
and delays in capex projects. This was offset by a US $0.6m
increase in Obstruction revenue compared to the comparable
period.
Gross margins improved in H1 FY25
to 36.3% from 32.3% in H1 FY24. The improvements in margin have
arisen from favourable material and freight costs slightly offset
by increases in labour costs. Operating costs were US $1.5m lower
compared with H1 FY24 due to lower amortisation of development
costs and a reduction in tariff costs.
Lighting orders were down 11%
versus prior year and Obstruction orders were down 13%, reflecting
challenging market conditions and a cautious outlook by
distributors.
The combination of both improved
margin and reduced overhead costs resulted in a US $5.0m underlying
EBIT compared to prior period of US $1.3m.
Signals & Components before unallocated
costs
|
Signals & Components
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
Variance
|
|
Revenue
|
23.6
|
22.9
|
0.7
|
|
Gross profit
|
5.6
|
6.0
|
(0.4)
|
|
Gross margin
|
23.7%
|
26.2%
|
250bps
|
|
Overheads
|
(3.9)
|
(5.2)
|
1.3
|
|
Underlying EBIT before unallocated costs
|
1.7
|
0.8
|
0.9
|
Signals & Components is a
high-volume business operating within highly competitive markets.
The main elements to this business are Opto-Electronic (OE)
components and vehicle lights. Overall revenue increased by US
$0.7m, driven by Vehicle lights, which was US $0.6m
greater than the prior period. However, this was
offset by a softness in the OE market, which was US $0.3m below
prior period. OE H1 FY25 orders declined by 5.3% versus prior
period and distributor Point of Sale data has been slowly trending
downward, indicating weakening demand.
Gross margin in H1 FY25 was 2.5%
below prior period due to lower absorption of fixed production
costs and increased labour rates.
Overheads costs for the 6 months
were reduced by US $1.3m to US $3.9m from US $5.2m, resulting in an
underlying EBIT of US $1.7m compared with US $0.8m in the prior
period.
Unallocated costs
Unallocated costs comprise costs
not directly attributable to a segment and primarily relate to head
office costs and professional fees. Total underlying unallocated
costs increased from US $4.6m to US $5.8m in the 6-month period to
30 September 2024. The key drivers were increases in foreign
exchange losses, staff costs and expenses, and professional
fees.
Non-underlying costs (note 4)
|
Non-underlying costs
|
6-month period ended 30
September 2024
US $m
(unaudited)
|
6-month
period ended 30 September 2023
US
$m
(unaudited)
|
|
Sanmina litigation
|
22.3
|
1.3
|
|
Transformation project
|
3.1
|
0.7
|
|
Total non-underlying costs
|
25.4
|
2.0
|
Sanmina
litigation
Costs of US $22.3m have been
recognised relating to the Sanmina litigation including management's best estimate of the net future outflow
of damages, interest, and legal costs.
Refer to note 4 for further details.
Transformation
project
In the 6-month period ended 30
September 2024 the Group has incurred US $3.1m of non-underlying
costs relating to the transformation plan (H1 FY24: US $0.7m) to
reset and realign the Group's cost base. The costs incurred include
severances, consulting costs, legal and professional
fees.
Gain on disposal of business
On 29 July 2024 the Group entered
into an agreement for the sale of its business manufacturing signal
lights used in traffic, pedestrian and railroad management in North
America (the Traffic Business) to Leotek Electronics USA LLC
realising gross cash proceeds and a gain of US $5.2m.
Tax
The tax credits of US $2.6m for
the 6-month period to 30 September 2024 (H1 FY24: US $1.4m) reflect
the best estimate of the weighted average annual income tax rate
expected for the full financial year. Non-underlying items have
been taxed using the relevant tax rates where tax deductions are
available.
Cash and borrowings
As at 30 September 2024 the Group
had net bank debt of US $15.4m, a decrease of US $1.0m from March
2024. Net bank debt excludes liabilities recognised under IFRS 16
Leases, as these are excluded for covenant testing
purposes.
The roll forward of net bank debt
was as follows:
|
Net bank debt
|
US $m
|
US $m
|
|
Opening balance at 1 April 2024
|
|
(16.4)
|
|
Underlying cash generated by operations
|
|
|
|
Underlying operating cash inflows
before movements in working capital
|
5.3
|
|
|
Movements in inventory
|
2.0
|
|
|
Movements in working capital
excluding inventory
|
1.0
|
|
|
Defined benefit pension
contributions
|
(0.5)
|
|
|
Interest and tax paid
|
(2.2)
|
5.6
|
|
Other cash inflows
|
|
|
|
Proceeds on disposal of
business
|
5.2
|
5.2
|
|
Cash outflows
|
|
|
|
Non-underlying operating
cashflows
|
(3.5)
|
|
|
Capital expenditure including
development costs
|
(5.2)
|
|
|
Lease payments
|
(1.2)
|
(9.9)
|
|
Foreign exchange
movements
|
|
0.1
|
|
Closing balance at 30 September 2024
|
|
(15.4)
|
|
|
Cash
|
7.4
|
|
|
Borrowings
|
(22.8)
|
The main factors behind the
movement in net bank debt were:
· Underlying operating activities generating cash inflows of US
$5.3m before movements in working capital;
· A
further US $2.5m increase attributable to movements in working
capital of which US $2.0m related to inventory;
· The
disposal of the traffic business generating US $5.2m of net cash
proceeds;
· Non-underlying cash outflows of US $3.5m relating to the
transformation project and Sanmina litigation; and
· Continued investment into new product development and capital
expenditure of US $5.2m.
Gross bank debt was US $22.8m and
offset by cash on hand of US $7.4m. The interest expense was US
$1.5m and is analysed in note 5.
Banking and covenants
The Group's bank facility
comprises a revolving credit facility (RCF) of US $28.8m from HSBC.
A balance of US $5.2m was repaid in August 2024 using the proceeds
received from the disposal of the Traffic business after which the
facility was reduced by a corresponding amount from US $34.0m to US
$28.8m. The facility was extended on 14 June 2024 to 21 July 2026
on the same terms as the original agreement. Aligned with the
Group's robust commitment to environmental, social, and governance
principles, the RCF facility operates as a sustainability-linked
loan.
The RCF facility is subject to
quarterly covenants comprising maximum leverage and minimum
interest cover. The covenants for the quarter ending 30 September
2023 were temporarily reset from a leverage ratio maximum target of
less than 3.0x to 4.5x, and an interest cover minimum covenant
target of a 4.0x to 2.5x. The covenants reverted to the
original hurdles from quarter ending 31 December 2023
onwards.
The cash flow forecasts to 31
March 2026 show a potential breach in the 12-month rolling interest
cover covenant in FY25 Q3 due to the historical weak trading
performance in the final quarter of the financial period ending 31
March 2024. The potential covenant breach has been communicated to
HSBC who have agreed to reduce the interest rate covenant for the
third quarter of FY25 (only) to 2.5x. This amendment is subject to
legal finalisation at the date of these interim financial
statements.
In the 6-month period to 30
September 2024 the covenants have been complied with and the
outstanding borrowings of US $22.8m have been classified as a
non-current liability as at 30 September 2024 in line with the
facility expiring in July 2026.
Capital management and dividend
The Board's policy is to have a
strong capital base to maintain customer, investor, and creditor
confidence and to sustain future development of the business. The
Board considers consolidated total equity as capital, which at 30
September 2024 equated to US $45.7m (30 September 2023: US $74.1m).
The Board is not declaring an interim dividend payment for the
period (30 September 2023: nil).
Market condition and outlook
The current state of the economies
in which we operate provides a cautious outlook for capital
expenditures across various sectors. High underlying inflation and
ongoing labour shortages are major constraints, causing delays in
project timelines and deferring investment decisions. The
petrochemical industry, in particular, faces additional uncertainty
due to fluctuating demand and unpredictable energy prices. There is
added hesitation and increased uncertainty following the recent US
election as businesses anticipate potential policy changes, further
delaying capital commitments. However, the relentless focus by
management on executing the Transformation Plan is beginning to
show positive results and provides a solid foundation to achieve
our medium-term ambitions. With this background, the Board is
confident that further progress will be made in the second half of
the year.
Steve Blair
Group Chief Executive
25 November 2024
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR
LOSS
For the 6-month period ended 30
September 2024
|
|
Note
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
|
|
|
|
|
|
Revenue
|
2
|
90.3
|
91.0
|
226.0
|
|
Cost of sales
|
|
(60.5)
|
(63.0)
|
(158.9)
|
|
Gross profit
|
|
29.8
|
28.0
|
67.1
|
|
Distribution costs
|
|
(14.7)
|
(15.0)
|
(36.8)
|
|
Administrative expenses
|
|
(34.4)
|
(17.5)
|
(60.5)
|
|
Loss from operating activities
|
2
|
(19.3)
|
(4.5)
|
(30.2)
|
|
|
|
|
|
|
|
Underlying profit/(loss) from operating
activities
|
|
0.9
|
(2.5)
|
(4.6)
|
|
Non-underlying costs
|
4
|
(25.4)
|
(2.0)
|
(25.6)
|
|
Gain on disposal of
business
|
4
|
5.2
|
-
|
-
|
|
Loss from operating activities
|
|
(19.3)
|
(4.5)
|
(30.2)
|
|
|
|
|
|
|
|
Financial expense
|
5
|
(1.5)
|
(2.1)
|
(4.1)
|
|
Loss before tax
|
|
(20.8)
|
(6.6)
|
(34.3)
|
|
Income tax credit
|
6
|
2.6
|
1.4
|
1.8
|
|
Loss for the period
|
|
(18.2)
|
(5.2)
|
(32.5)
|
|
|
|
|
|
|
|
Loss for the period attributable to:
|
|
|
|
|
|
Equity owners of the
Company
|
|
(18.2)
|
(5.2)
|
(32.5)
|
|
Non-controlling
Interests
|
|
-
|
-
|
-
|
|
Loss for the period
|
|
(18.2)
|
(5.2)
|
(32.5)
|
|
|
|
|
|
|
|
Earnings per share
|
|
|
|
|
|
Loss per share - basic and
diluted
|
7
|
(45.8)
cents
|
(15.8)
cents
|
(91.1)
cents
|
All results arise from continuing
operations.
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
For the 6-month period ended 30
September 2024
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Other comprehensive (expense)/income
|
|
|
|
|
Exchange difference on translation
of foreign operations
|
(0.1)
|
(0.2)
|
0.4
|
|
Income tax on exchange differences
on transactions of foreign operations
|
-
|
-
|
-
|
|
|
(0.1)
|
(0.2)
|
0.4
|
|
Items that will not be reclassified subsequently to profit
and loss
|
|
|
|
|
Remeasurement of defined benefit
pension liability
|
-
|
-
|
(0.5)
|
|
Income tax on remeasurement of
defined benefit liability
|
-
|
-
|
0.1
|
|
|
-
|
-
|
(0.4)
|
|
Other comprehensive
(expense)/income for the period, net of tax
|
(0.1)
|
(0.2)
|
-
|
|
Loss for the period
|
(18.2)
|
(5.2)
|
(32.5)
|
|
Total comprehensive expense for the period
|
(18.3)
|
(5.4)
|
(32.5)
|
|
|
|
|
|
|
Attributable to:
|
|
|
|
|
-
Owners of the parent
|
(18.3)
|
(5.4)
|
(32.5)
|
|
-
Non-controlling interests
|
-
|
-
|
-
|
|
Total comprehensive expense for the period
|
(18.3)
|
(5.4)
|
(32.5)
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the 6-month period ended 30
September 2024 (unaudited)
|
|
Share
capital
US
$m
|
Merger
reserve
US
$m
|
Translation
reserve
US
$m
|
Capital
redemption
reserve
US
$m
|
Share
premium
US
$m
|
Own
shares
US
$m
|
Retained
Earnings
US
$m
|
Total
US $m
|
Non-controlling interests
US
$m
|
Total
equity
US $m
|
|
Balance at 1 April 2024
|
1.2
|
1.0
|
12.6
|
4.3
|
13.0
|
(1.2)
|
32.8
|
63.7
|
0.2
|
63.9
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(18.2)
|
(18.2)
|
-
|
(18.2)
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Foreign exchange translation
differences, net of taxes
|
-
|
-
|
(0.1)
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
|
Total comprehensive expense for the period
|
-
|
-
|
(0.1)
|
-
|
-
|
-
|
(18.2)
|
(18.3)
|
-
|
(18.3)
|
|
Transactions with owners, recorded directly in
equity:
|
|
|
|
|
|
|
|
Share-based payments
|
-
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
-
|
0.1
|
|
Total transactions with owners
|
-
|
-
|
-
|
-
|
-
|
-
|
0.1
|
0.1
|
-
|
0.1
|
|
Balance at 30 September 2024
|
1.2
|
1.0
|
12.5
|
4.3
|
13.0
|
(1.2)
|
14.7
|
45.5
|
0.2
|
45.7
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the 6-month period ended 30
September 2023 (unaudited)
|
|
Share
capital
US
$m
|
Merger
reserve
US
$m
|
Translation
reserve
US
$m
|
Capital
redemption
reserve
US
$m
|
Share
premium
US
$m
|
Own
shares
US
$m
|
Retained
Earnings
US
$m
|
Total
US $m
|
Non-controlling interests
US
$m
|
Total
equity
US $m
|
|
Balance at 1 April 2023
|
1.0
|
1.0
|
11.7
|
4.3
|
1.2
|
(1.1)
|
60.7
|
78.8
|
0.2
|
79.0
|
|
Loss for the period
|
-
|
-
|
|
-
|
-
|
-
|
(5.2)
|
(5.2)
|
-
|
(5.2)
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Foreign exchange translation
differences, net of taxes
|
-
|
-
|
(0.2)
|
-
|
-
|
-
|
-
|
(0.2)
|
-
|
(0.2)
|
|
Total comprehensive expense for the period
|
-
|
-
|
(0.2)
|
-
|
-
|
-
|
(5.2)
|
(5.4)
|
-
|
(5.4)
|
|
Transactions with owners, recorded directly in
equity:
|
|
|
|
|
|
|
|
Share-based payments
|
-
|
-
|
-
|
-
|
-
|
-
|
0.6
|
0.6
|
-
|
0.6
|
|
Re-purchase of own shares
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
-
|
(0.1)
|
|
Total transactions with owners
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
0.6
|
0.5
|
-
|
0.5
|
|
Balance at 30 September 2023
|
1.0
|
1.0
|
11.5
|
4.3
|
1.2
|
(1.2)
|
56.1
|
73.9
|
0.2
|
74.1
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY
For the 15-month period ended 31
March 2024 (audited)
|
|
Share
capital
US
$m
|
Merger
reserve
US
$m
|
Translation
reserve
US
$m
|
Capital
redemption
reserve
US
$m
|
Share
premium
US
$m
|
Own
shares
US
$m
|
Retained
Earnings
US
$m
|
Total
US $m
|
Non-controlling interests
US
$m
|
Total
equity
US $m
|
|
Balance at 1 January 2023
|
1.0
|
1.0
|
12.2
|
4.3
|
1.2
|
(1.1)
|
64.2
|
82.8
|
0.2
|
83.0
|
|
Loss for the period
|
-
|
-
|
-
|
-
|
-
|
-
|
(32.5)
|
(32.5)
|
-
|
(32.5)
|
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
Foreign exchange translation
differences, net of taxes
|
-
|
-
|
0.4
|
-
|
-
|
-
|
-
|
0.4
|
-
|
0.4
|
|
Remeasurement of defined benefit
pension liability, net of taxes
|
-
|
-
|
-
|
-
|
-
|
-
|
(0.4)
|
(0.4)
|
-
|
(0.4)
|
|
Total comprehensive income/(expense) for the
period
|
-
|
-
|
0.4
|
-
|
-
|
-
|
(32.9)
|
(32.5)
|
-
|
(32.5)
|
|
Transactions with owners, recorded directly in
equity:
|
|
|
|
|
|
|
|
Issue of share capital (notes 12 and
13)
|
0.2
|
-
|
-
|
-
|
12.7
|
-
|
-
|
12.9
|
-
|
12.9
|
|
Transaction costs (note
13)
|
-
|
-
|
-
|
-
|
(0.9)
|
-
|
-
|
(0.9)
|
-
|
(0.9)
|
|
Share based payments
|
-
|
-
|
-
|
-
|
-
|
-
|
1.5
|
1.5
|
-
|
1.5
|
|
Re-purchase of own shares
|
-
|
-
|
-
|
-
|
-
|
(0.1)
|
-
|
(0.1)
|
-
|
(0.1)
|
|
Total transactions with owners
|
0.2
|
-
|
-
|
-
|
11.8
|
(0.1)
|
1.5
|
13.4
|
-
|
13.4
|
|
Balance at 31 March 2024
|
1.2
|
1.0
|
12.6
|
4.3
|
13.0
|
(1.2)
|
32.8
|
63.7
|
0.2
|
63.9
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
As at 30 September 2024
|
|
Note
|
30 September
2024
US $m
(unaudited)
|
30
September 2023
US
$m
(unaudited)
|
31 March
2024
US
$m
(audited)
|
|
Assets
|
|
|
|
|
|
Property, plant, and
equipment
|
|
14.3
|
15.1
|
12.7
|
|
Right of use assets
|
|
9.6
|
10.1
|
8.8
|
|
Intangible assets
|
3
|
8.4
|
24.9
|
8.1
|
|
Deferred tax assets
|
|
8.3
|
4.0
|
5.8
|
|
Defined benefit pension
assets
|
|
5.9
|
5.5
|
5.4
|
|
Other receivables
|
|
0.7
|
6.2
|
5.9
|
|
Total non-current assets
|
|
47.2
|
65.8
|
46.7
|
|
|
|
|
|
|
|
Inventories
|
9
|
47.1
|
58.6
|
49.1
|
|
Trade and other
receivables
|
|
30.9
|
30.9
|
32.3
|
|
Income tax recoverable
|
|
0.5
|
0.4
|
0.8
|
|
Cash and cash
equivalents
|
|
7.4
|
2.5
|
11.5
|
|
Total current assets
|
|
85.9
|
92.4
|
93.7
|
|
Total assets
|
|
133.1
|
158.2
|
140.4
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Trade and other payables
|
|
(31.0)
|
(38.3)
|
(34.3)
|
|
Provisions
|
11
|
(21.7)
|
(0.8)
|
(1.2)
|
|
Tax liabilities
|
|
(0.7)
|
(2.0)
|
(1.4)
|
|
Lease liabilities
|
|
(2.5)
|
(2.1)
|
(2.0)
|
|
Borrowings
|
10
|
-
|
-
|
(27.9)
|
|
Total current liabilities
|
|
(55.9)
|
(43.2)
|
(66.8)
|
|
|
|
|
|
|
|
Provisions
|
11
|
(0.7)
|
(1.7)
|
(1.6)
|
|
Borrowings
|
10
|
(22.8)
|
(29.8)
|
-
|
|
Lease liabilities
|
|
(8.0)
|
(9.4)
|
(8.1)
|
|
Total non-current liabilities
|
|
(31.5)
|
(40.9)
|
(9.7)
|
|
Total liabilities
|
|
(87.4)
|
(84.1)
|
(76.5)
|
|
Net assets
|
|
45.7
|
74.1
|
63.9
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Issued share capital
|
12
|
1.2
|
1.0
|
1.2
|
|
Merger reserve
|
|
1.0
|
1.0
|
1.0
|
|
Share premium
|
13
|
13.0
|
1.2
|
13.0
|
|
Other reserves
|
|
15.6
|
14.6
|
15.7
|
|
Retained earnings
|
|
14.7
|
56.1
|
32.8
|
|
|
|
45.5
|
73.9
|
63.7
|
|
Non-controlling
interests
|
|
0.2
|
0.2
|
0.2
|
|
Total equity
|
|
45.7
|
74.1
|
63.9
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH
FLOWS
For the 6-month period ended 30
September 2024
|
|
Note
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Operating activities
|
|
|
|
|
|
Loss for the period
|
|
(18.2)
|
(5.2)
|
(32.5)
|
|
Adjustments for:
|
|
|
|
|
|
Non-underlying costs
|
4
|
25.4
|
2.0
|
25.6
|
|
Financial expense
|
5
|
1.5
|
2.1
|
4.1
|
|
Income tax credit
|
6
|
(2.6)
|
(1.4)
|
(1.8)
|
|
Share-based payments
|
|
0.1
|
0.6
|
1.5
|
|
Gain on disposal of
business
|
4
|
(5.2)
|
-
|
-
|
|
Depreciation of property, plant,
and equipment
|
|
1.4
|
2.0
|
4.3
|
|
Depreciation of right of use
assets
|
|
1.3
|
1.3
|
3.0
|
|
Amortisation of intangible
assets
|
3
|
1.6
|
3.0
|
7.7
|
|
Underlying operating cash inflow before movements in working
capital
|
|
5.3
|
4.4
|
11.9
|
|
Decrease in inventories
|
9
|
2.0
|
3.8
|
12.7
|
|
Decrease in trade and other
receivables
|
|
1.5
|
1.4
|
5.2
|
|
(Decrease)/increase in trade and
other payables
|
|
(0.1)
|
2.1
|
(10.9)
|
|
Decrease in provisions
|
|
(0.4)
|
(0.1)
|
(0.2)
|
|
Pension contributions to defined
benefit pension scheme
|
|
(0.5)
|
0.1
|
0.1
|
|
Cash generated by underlying operations
|
|
7.8
|
11.7
|
18.8
|
|
Income taxes paid
|
|
(0.7)
|
(0.6)
|
(2.6)
|
|
Interest paid
|
|
(1.5)
|
(2.1)
|
(4.1)
|
|
Net cash generated by underlying operations
|
|
5.6
|
9.0
|
12.1
|
|
Cash used in non-underlying
operations
|
|
(3.5)
|
(2.0)
|
(5.5)
|
|
Net cashed generated by operations
|
|
2.1
|
7.0
|
6.6
|
|
Investing activities
|
|
|
|
|
|
Profit on disposal of
business
|
|
5.2
|
-
|
-
|
|
Purchase of property, plant, and
equipment
|
|
(3.4)
|
(0.8)
|
(1.4)
|
|
Additions to intangible
assets
|
3
|
(1.8)
|
(2.1)
|
(5.4)
|
|
Net cash used in investing activities
|
|
-
|
(2.9)
|
(6.8)
|
|
Financing activities
|
|
|
|
|
|
Proceeds on issue of shares - net
of issue costs
|
12,
13
|
-
|
-
|
12.0
|
|
Drawdown of bank
facility
|
10
|
-
|
0.5
|
6.2
|
|
Repayment of bank
facility
|
10
|
(5.2)
|
(1.3)
|
(5.9)
|
|
Re-purchase of own
shares
|
|
-
|
-
|
(0.1)
|
|
Repayment of lease liabilities
(excluding payments of interest)
|
|
(1.2)
|
(1.5)
|
(2.9)
|
|
Net cash (used in)/generated from financing
activities
|
|
(6.4)
|
(2.3)
|
9.3
|
|
Net (decrease)/increase in cash and cash
equivalents
|
|
(4.3)
|
1.8
|
9.1
|
|
Cash and cash equivalents at
beginning of period
|
|
11.5
|
0.6
|
2.0
|
|
Effect of exchange
rates
|
|
0.2
|
0.1
|
0.4
|
|
Cash and cash equivalents at end of period
|
|
7.4
|
2.5
|
11.5
|
The accompanying notes on pages 18
to 33 form an integral part of these condensed interim financial
statements.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 30 September
2024 (unaudited)
1. Basis of preparation and principal accounting
policies
Dialight plc (the Company)
provides sustainable, energy efficient and intelligent LED lighting
technologies driving towards a net zero economy. Its primary market
is North America, with smaller operations in EMEA and the rest of
the world.
The Company is listed on the
London Stock Exchange and is incorporated and domiciled in England
and Wales under registration number 2486024. Its registered office
is at 60 Petty France, London, England, SW1H 9EU.
This condensed consolidated
interim financial information was approved for issue on 25 November
2024 and has not been audited nor reviewed.
Statement of compliance
This condensed consolidated interim
financial information for the 6-month period ended 30 September
2024 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with
UK-adopted International Accounting Standard 34 'Interim Financial
Reporting' (IAS 34). The condensed consolidated interim financial
information should be read in conjunction with the financial
statements for the 15-month period ended 31 March 2024, which have
been prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the
Companies Act 2006.
This condensed consolidated interim
financial information for the 6-month period ended 30 September
2024, and the comparative information in relation to the 6-month
period ended 30 September 2023, do not comprise statutory accounts
within the meaning of Section 434 of the Companies Act 2006.
Statutory accounts for the 15-month period ended 31 March 2024 were
approved by the Board of Directors on 29 July 2024 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, and did not contain a statement under
Section 498 of the Companies Act 2006. The report drew attention by
way of emphasis to a material uncertainty related to going
concern.
Going concern
At 31 March 2024 the Group had US
$28.8m of multicurrency revolving credit facilities of which US
$22.8m was drawn with US $7.4m of cash on hand. Net bank debt has
decreased from US $16.4m as at 31 March 2024 to US $15.4m as at 30
September 2024.
The facility was extended on 14
June 2024 to 21 July 2026 on the same terms as the original
revolving credit facility agreement. The covenants are tested
quarterly and are as follows:
|
Ratio
|
Calculation
|
Threshold
|
|
Leverage ratio
|
Net bank debt : Proforma unaudited
EBITDA
|
<3.0x
|
|
Interest cover
|
Proforma unaudited EBITDA :
Interest expense
|
>4.0x
|
Further details of borrowings are
included in note 10.
In assessing the going concern
assumptions, the Directors have prepared an 18-month forecast
through to 31 March 2026.
Whilst the Directors continue to
believe the Group will be able to deliver on its transformation
plan, generate forecast organic sales growth and realise cost
reductions within the next 18 months, the Directors recognise that
the transformation plan is in its early stages and, as such, a
reliable history of its effectiveness is not yet available. In the
18-month forecast the Directors have assumed a 5% year on year
increase in FY26 through organic growth and price increases. Whilst
the Group believe this to be realistic target, market conditions
continue to be challenging and the economic impact of the recent US
election remains to be seen.
1. Basis of preparation and principal accounting
policies (continued)
The cash flow forecasts to 31
March 2026 show a potential breach in the 12-month rolling interest
cover covenant in FY25 Q3 due to the historical weak trading
performance in the final quarter of the financial period ending 31
March 2024. The potential covenant breach has been communicated to
HSBC who have agreed to reduce the interest rate covenant for the
third quarter of FY25 (only) to 2.5x. This amendment is subject to
legal finalisation at the date of these interim financial
statements.
Further, the legal claim against
the Company by Sanmina, which is explained further in note 4
represents an adverse outcome outside of the Group's control which
may result in a material cash outflow for which a provision of US
$19.5m has been recognised as at 30 September 2024.
At the balance sheet date the
Group does not have sufficient liquidity to settle the provision
without taking mitigating actions or securing additional funding
within the going concern period which may
include seeking to agree a payment plan with Sanmina and/or new
equity funding. The amount, timing, and
receipt of any such funding is uncertain at the date of the
approval of the interim financial statements.
These circumstances give rise to
material uncertainty, which may cast significant doubt on the
entity's ability to continue as a going concern, meaning it may be
unable to realise it assets and discharge its liabilities in the
normal course of business. Notwithstanding this material
uncertainty, the Directors consider it remains appropriate to
continue to adopt the going concern basis in the preparation of the
financial statements.
Taxation
The tax charge/credit reflect the
best estimate of the weighted average annual income tax rate
expected for the full financial year.
Uncertainties under income
tax treatment
The Group operates in certain
jurisdictions that are unstable or have changing political
conditions, giving rise to occasional uncertainty over the tax
treatment of items of income and expense. In addition, from
time-to-time certain tax positions taken by the Group are
challenged by the relevant tax authorities, which carry a financial
risk as to the final outcome. The Directors have considered the
potential impact arising from these uncertainties and risks on the
Group's tax assets and liabilities, both recognised and
unrecognised, and believe that they are not material to these
condensed financial statements.
Adoption of new and revised standards
The accounting policies adopted in
the preparation of these unaudited condensed financial statements
are consistent with the policies applied by the Group in its
consolidated financial statements for the 15-month period ended 31
March 2024.
During the period the Group has
adopted the following new and revised standards and interpretations
which have had no impact on these condensed consolidated financial
statements:
• Amendments to IAS 1 Presentation of Financial Statements-
Classification of Liabilities as Current or Non-current;
• Amendments to IAS 1 Presentation of Financial Statements-
Non-current Liabilities with Covenants; and
• Amendments to IFRS 16 Leases-Lease Liability in a Sale and
Leaseback.
Consolidated statement of cash flows
Non-underlying costs have been separately presented
for within operating activities in the consolidated statement of
cash flows in order to present underlying cash generated by
operations. An adjustment for non-underlying cash outflows has been
made to present total cash generated by operations. Comparatives
have been restated where applicable.
1. Basis of preparation and principal accounting
policies (continued)
Estimates and judgements
The preparation of the condensed
consolidated interim financial information requires management to
make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and
liabilities, income and expenses. These estimates, judgements and
assumptions are based on historical experience and other factors
that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates. The areas which require
the most use of management estimation and judgement are set out
below.
Judgements
Development and patent
costs
The Group capitalises development
costs and patent costs provided they meet all criteria in the
respective accounting policy. Costs are only capitalised when
management applies judgement that is satisfied as to the ultimate
commercial viability of the projects based on review of the
relevant business case. The capitalised costs are amortised over
the expected useful economic life, which is determined based on the
reasonable commercial prospects of the product and a comparison to
similar products being sold by the Group. The Group has US $7.8m
(31 March 2024: US $7.4m) of development and patent costs that
relate to the current product portfolio of new products expected to
launch over the next one to two years.
Inventory reserve - disposal
of Traffic business
Following the decision by
management to dispose of the Traffic business a judgement was made
to make a specific provision for Traffic related inventory given
the inventory remained the property of the Group at the date of
completion and that there is no obligation by the acquirer to
purchase any such inventory subsequent to completion. While under
the sales and purchases agreement the acquirer has the right to
acquire all or part of the related inventory, at the date of the
approval of these financial statements the intention of the
acquirer is not known. The provision totals $3.0m as at 30
September 2024 and 31 March 2024.
Estimates
Sanmina
litigation
As previously announced, the
Sanmina trial concluded on 23 September 2024. The jury rejected
Dialight's claims relating to fraudulent inducement and wilful
misconduct (the "Tort Claims"), whilst granting Dialight's claim
that Sanmina had breached the Manufacturing Services Agreement
("MSA") and granting Sanmina's claims that Dialight had breached
the MSA with respect to Sanmina's accounts receivable ("AR") and
'excess and obsolete' materials ("E&O") claims. The jury
awarded damages of US $0.9m to Dialight in respect of Sanmina's
breach of contract, and awarded c. US $5.3m in damages against
Dialight in respect of Sanmina's AR claim and c. US $3.4m in
damages against Dialight in respect of Sanmina's E&O claim.
These awards are, however, subject to further challenge and to a
definitive ruling by the judge that is not expected until early
2025.
The initial post-trial motions
filed by both Dialight and Sanmina include motions relating to
damages, interest payable on damages, and legal costs. There are
multiple upside and downside variables outlined in these pleadings
and the final potential outcomes in respect of damages range from
the c. US $8.7m of gross damages awarded by the jury to Sanmina
through to a net damages payment by Sanmina to Dialight of c. US
$4.8m (if all of Dialight's post-trial motions are successful). Any
awards in respect of interest and legal costs will, in part, follow
the position on damages, though there are further stand-alone
issues relating to the calculation of both interest and the award
of legal costs. These issues will be refined through the current
pleadings process, with final replies by both parties on the
various motions due to be filed by 18 December 2024.
Based on the wide-range of
potential outcomes, a provision of $19.5m (note 11) has been
recognised as at 30 September 2024 representing management's best
estimate of the net future outflow of damages, interest and legal
costs, along with actual legal costs incurred in the 6-month period
and legal costs committed to be incurred.
Inventory
reserve
The total value of the inventory
provision for all categories of inventory over which judgement has
been exercised was US $7.7m (31 March 2024: US $6.6m) and this
represents 14.0% (31 March 2024: 11.8%) of the gross inventory
value.
Inventory reserve - raw materials and
sub-assemblies
All raw and sub-assembly inventory
that is over 24-months old at the balance sheet date is provided
for. This basis for estimate reduces estimation subjectivity,
whilst allowing for the adverse impact from component shortages
that have led to high inventory levels and some components being
held for longer than expected. Two years has been assessed to be
appropriate as the components have a long shelf life, continue to
be used in production and the product demand mix between project
and MRO business continues to be skewed as a result of COVID-19.
Management believes that any reasonably possible change in the
assumption would not cause any significant change in the provision
estimate for raw materials and sub-assemblies in the next financial
year.
Inventory reserve - finished goods
The review of finished goods
inventory was based on all inventory over 365 days old. Inventory
on hand was compared to historical sales, current orders, sales
pipeline and whether the product had been recently launched.
Management judgement was then applied to determine whether there
was a reasonable probability that the inventory would be sold,
with a provision being required for any inventory that failed this
assessment. Management believes that any reasonably possible change
in the assumption would not cause any significant change in the
provision estimate for finished goods.
2. Operating segments
The Group has two reportable
operating segments. These segments have been identified based on
the internal information that is supplied regularly to the Group's
chief operating decision maker for the purposes of assessing
performance and allocating resources. The chief operating decision
maker is considered to be the Group Chief Executive
Officer.
The two reportable operating
segments are:
· Lighting, which develops, manufactures, and supplies highly
efficient LED lighting solutions for hazardous and industrial
applications in which lighting performance is critical and includes
anti-collision obstruction lighting; and
· Signals & Components, which develops, manufactures, and
supplies status indication components for electronics OEMs,
together with niche industrial and automotive electronic components
and highly efficient LED signalling solutions for the traffic and
signals markets.
There is no inter-segment revenue
and there are no individual customers that represent more than 10%
of revenue.
All revenue relates to the sale of
goods. Segment gross profit is revenue less the costs of materials,
labour, production, and freight that are directly attributable to a
segment. Overheads comprise operations management, selling costs
plus corporate costs, which includes share‑based payments.
Costs relating to the
administration of the PLC holding company are not allocated to an
operating segment and disclosed as unallocated.
Segmental assets and liabilities
are not reported internally and are therefore not presented
below.
2. Operating segments
(continued)
|
6-month period ended 30 September 2024
(unaudited)
|
Lighting
US
$m
|
Signals &
Components
US
$m
|
Unallocated
US $m
|
Total
US
$m
|
|
Revenue
|
66.7
|
23.6
|
-
|
90.3
|
|
Gross profit
|
24.2
|
5.6
|
-
|
29.8
|
|
Overhead costs
|
(19.2)
|
(3.9)
|
(5.8)
|
(28.9)
|
|
Underlying profit/(loss) from operating
activities
|
5.0
|
1.7
|
(5.8)
|
0.9
|
|
Non-underlying costs (note
4)
|
(23.1)
|
-
|
(2.3)
|
(25.4)
|
|
Gain on disposal of
business
|
-
|
5.2
|
-
|
5.2
|
|
(Loss)/profit from operating activities
|
(18.1)
|
6.9
|
(8.1)
|
(19.3)
|
|
Financial expense
|
-
|
-
|
(1.5)
|
(1.5)
|
|
(Loss)/profit before tax
|
(18.1)
|
6.9
|
(9.6)
|
(20.8)
|
|
Taxation
|
-
|
-
|
2.6
|
2.6
|
|
(Loss)/profit after tax
|
(18.1)
|
6.9
|
(7.0)
|
(18.2)
|
|
|
|
|
|
|
|
Other segmental data
|
|
|
|
|
|
Depreciation of property, plant, and
equipment
|
1.0
|
0.4
|
-
|
1.4
|
|
Depreciation of right of use
asset
|
1.0
|
0.3
|
-
|
1.3
|
|
Amortisation of intangible
assets
|
1.6
|
-
|
-
|
1.6
|
|
Impairment of property, plant and
equipment
|
0.4
|
-
|
-
|
0.4
|
|
|
|
|
|
|
|
6-month period ended 30 September 2023
(unaudited)
|
Lighting
US
$m
|
Signals &
Components
US
$m
|
Unallocated
US $m
|
Total
US
$m
|
|
Revenue
|
68.1
|
22.9
|
-
|
91.0
|
|
Gross profit
|
22.0
|
6.0
|
-
|
28.0
|
|
Overhead costs
|
(20.7)
|
(5.2)
|
(4.6)
|
(30.5)
|
|
Underlying profit/(loss) from operating
activities
|
1.3
|
0.8
|
(4.6)
|
(2.5)
|
|
Non-underlying costs (note
4)
|
(1.4)
|
-
|
(0.6)
|
(2.0)
|
|
(Loss)/profit from operating activities
|
(0.1)
|
0.8
|
(5.2)
|
(4.5)
|
|
Financial expense
|
-
|
-
|
(2.1)
|
(2.1)
|
|
(Loss)/profit before tax
|
(0.1)
|
0.8
|
(7.3)
|
(6.6)
|
|
Taxation
|
-
|
-
|
1.4
|
1.4
|
|
(Loss)/profit after tax
|
(0.1)
|
0.8
|
(5.9)
|
(5.2)
|
|
|
|
|
|
|
|
Other segmental data
|
|
|
|
|
|
Depreciation of property, plant, and
equipment
|
1.5
|
0.5
|
-
|
2.0
|
|
Depreciation of right of use
asset
|
1.0
|
0.3
|
-
|
1.3
|
|
Amortisation of intangible
assets
|
3.0
|
-
|
-
|
3.0
|
2. Operating segments
(continued)
|
15-month period ended 31 March 2024
(audited)
|
Lighting
US
$m
|
Signals &
Components
US
$m
|
Unallocated
US $m
|
Total
US
$m
|
|
Revenue
|
171.1
|
54.9
|
-
|
226.0
|
|
Gross profit
|
57.6
|
12.5
|
-
|
70.1
|
|
Overhead costs
|
(50.8)
|
(12.3)
|
(11.6)
|
(74.7)
|
|
Underlying profit/(loss) from operating
activities
|
6.8
|
0.2
|
(11.6)
|
(4.6)
|
|
Non-underlying costs (note
4)
|
(20.6)
|
(3.6)
|
(1.4)
|
(25.6)
|
|
Loss from operating activities
|
(13.8)
|
(3.4)
|
(13.0)
|
(30.2)
|
|
Financial expense
|
-
|
-
|
(4.1)
|
(4.1)
|
|
Loss before tax
|
(13.8)
|
(3.4)
|
(17.1)
|
(34.3)
|
|
Taxation
|
-
|
-
|
1.8
|
1.8
|
|
Loss after tax
|
(13.8)
|
(3.4)
|
(15.3)
|
(32.5)
|
|
|
|
|
|
|
|
Other segmental data
|
|
|
|
|
|
Depreciation of property, plant and
equipment
|
3.3
|
1.0
|
-
|
4.3
|
|
Impairment of property, plant and
equipment
|
1.1
|
-
|
-
|
1.1
|
|
Depreciation of right-of-use
assets
|
2.3
|
0.7
|
-
|
3.0
|
|
Amortisation of intangible
assets
|
7.7
|
-
|
-
|
7.7
|
|
Impairment of goodwill
|
11.2
|
-
|
-
|
11.2
|
|
Impairment of other intangible
assets
|
4.1
|
0.5
|
-
|
4.6
|
Geographical segments
The Lighting and Signals &
Components segments are managed on a worldwide basis but operate in
three principal geographic areas: North
America, EMEA and the Rest of World. The following table provides
an analysis of the Group's sales by geographical market,
irrespective of the origin of the goods. All revenue relates to the
sale of goods.
Sales revenue by geographical market
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
North America
|
76.3
|
74.7
|
183.7
|
|
EMEA
|
5.0
|
6.3
|
18.3
|
|
Rest of World
|
9.0
|
10.0
|
24.0
|
|
Revenue
|
90.3
|
91.0
|
226.0
|
3. Intangible assets
|
|
Patents,
licenses, and
trademarks
US
$m
|
Software
licenses
US
$m
|
Development
costs
US
$m
|
Total
US $m
|
|
Net book value at 1 April 2024
|
1.6
|
0.7
|
5.8
|
8.1
|
|
Additions
|
0.4
|
-
|
1.4
|
1.8
|
|
Amortisation
|
(0.5)
|
(0.2)
|
(0.9)
|
(1.6)
|
|
Foreign exchange
movements
|
-
|
0.1
|
-
|
0.1
|
|
Net book value at 30 September 2024
|
1.5
|
0.6
|
6.3
|
8.4
|
Additions to development costs and
patents, licenses, and trademarks relate to the development of new
products and include direct costs of material, direct labour and
directly attributable overheads. Costs are only capitalised once
the initial research phase has been completed and the business case
has been approved by management. Further the costs must be
reliability measurable, the product and process is technically and
commercially viable, future economic benefits are probable, the
Group has intention and sufficient resource to complete the
development and intends to use or sell the asset.
The amortisation expense is
recognised within administrative expenses.
4. Non-underlying costs and gain on disposal of
business
Non-underlying costs
The Group incurs cost and earns
income that is non-recurring in nature or that, in the Director's
judgement, should be separately disclosed for users of the
consolidated financial statements to obtain a full understanding of
the financial information and the best indication of the underlying
performance of the Group.
The table below represents the
components of non-underlying items recognised in the income
statement. All costs are recognised within administrative expenses
unless otherwise stated.
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Transformation project
|
3.1
|
0.7
|
4.5
|
|
Business disposal costs
|
-
|
-
|
3.5
|
|
Sanmina litigation
|
22.3
|
1.3
|
2.3
|
|
Impairment of goodwill
|
-
|
-
|
11.2
|
|
Impairment of other intangible
assets (excluding business disposal impairment)
|
-
|
-
|
4.1
|
|
Non-underlying costs
|
25.4
|
2.0
|
25.6
|
Transformation
project
In the 6-month period ended 30
September 2024 the Group has incurred US $3.1m of non-underlying
costs relating to the transformation plan (6-month period ended 30
September 2023: US $0.7m). This is a significant multi-year change
programme for the Group which is designed to address legacy issues
associated with excess cost and complexity within the organisation,
whilst at the same time focusing more resources on the most
attractive growth opportunities within its core industrial LED
lighting market. The multi-year transformation plan is a material,
infrequent programme and is not considered to be part of the
underlying performance of the business. Implementation of the plan
is expected to be complete by 31 March 2026. The costs incurred in
the 6-month period to 30 September 2024 relate to
resetting and realigning the Group's cost
base including severances, consulting costs, and related legal and
professional fees.
Sanmina
litigation
During the 6-month period to 30
September 2024 costs of US $22.3m have been expensed (6-month
period ended 30 September 2023: US $1.3m) in connection with
Company's legal action taken against Sanmina.
As previously reported, Dialight
sought to reach a negotiated conclusion of various outstanding
matters and performance issues following the termination, in 2018,
of the manufacturing services agreement (MSA) with its former
manufacturing partner, Sanmina Corporation ("Sanmina").
The trial between the Group and
Sanmina commenced on 9 September 2024 and concluded on 23 September
2024. The jury rejected Dialight's claims relating to fraudulent
inducement and wilful misconduct, whilst granting Dialight's claim
that Sanmina had breached the Manufacturing Services Agreement
("MSA") and granting Sanmina's claim that Dialight had breached the
MSA with respect to Sanmina's accounts receivable ("AR") and
'excess and obsolete' materials ("E&O") claims.
The jury awarded damages of US
$0.9m to Dialight in respect of Sanmina's breach of contract, and
awarded c. US $5.3m in damages against Dialight in respect of
Sanmina's AR claim and c. US $3.4m in damages against Dialight in
respect of Sanmina's E&O claim.
The expense incurred in the 6-month
period to 30 September 2024 of US $22.3m includes managements best
estimate of the future outflow of the damages awarded against
Dialight, less the damages awarded to Dialight and the write-off of
an escrow account held by the Company at 31 March 2024 in relation
to the Sanmina litigation. Legal costs incurred by the Company in
during the 6-month period to 30 September 2024, together with an
estimate of those legal costs committed to be incurred over the
next 6-month period in concluding this litigation have also been
included in this charge, together with management's best estimate
of the potential costs that may be awarded against the Company in
respect of interest accrued on the damages awarded to Sanmina and
on meeting Sanmina's legal costs associated with this
litigation.
It is anticipated that, following
the jury verdict, the judge will issue her final judgement on this
litigation, including any award of interest costs and reimbursement
of the defendant's legal costs within the next six
months.
Refer to note 11 for details of the
provision recognised in the period.
Gain on disposal of business
On 29 July 2024 the Group entered
into an agreement for the sale of its business manufacturing signal
lights used in traffic, pedestrian and railroad management in North
America (the Traffic Business) to Leotek Electronics USA LLC
realising gross cash proceeds of US $5.2m.
5. Financial expense
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Net interest income on defined
benefit pension asset
|
-
|
-
|
(0.3)
|
|
Interest expense on financial
liabilities, except lease
liabilities
|
1.1
|
1.6
|
3.3
|
|
Facility arrangement fee
expense
|
0.1
|
-
|
0.4
|
|
Interest expense on lease
liabilities
|
0.3
|
0.5
|
0.7
|
|
Financial expense
|
1.5
|
2.1
|
4.1
|
6. Income tax expense
The tax credits of US $2.6m for
the 6-month period to 30 September 2024 and of US $1.4m for the
6-month period to 30 September 2023 reflect the best estimate of
the weighted average annual income tax rate expected for the full
financial year. Non-underlying items have been taxed using the
relevant tax rates where deductions are available.
7. Earnings per share (EPS)
Basic earnings per share
The calculation of the basic EPS
for the 6-month period ending 30 September 2024 was based on a loss
for the period of US $18.2m (6-month period to 30 September 2023:
US $5.2m loss) and a weighted average number of ordinary shares
outstanding during the 6 months ended 30 September 2024 of
39,828,141 (6 months ended 30 September 2023:
33,186,149).
The calculation of the basic EPS
for the 15-month period ending 31 March 2024 was based on a loss
for the period of US $32.5m and a weighted average number of
ordinary shares outstanding during the period of
35,603,515.
|
|
6-month period
ended
30 September
2024
(unaudited)
|
6-month
period ended
30
September 2023
(unaudited)
|
15-month
period ended
31 March
2024
(audited)
|
|
Loss for the period (US
$m)
|
(18.2)
|
(5.2)
|
(32.5)
|
|
Weighted average number of shares
(000s)
|
39,828
|
33,186
|
35,604
|
|
Basic loss per share
|
(45.8)
cents
|
(15.8)
cents
|
(91.1)
cents
|
Diluted earnings per share
Where a loss has been recognized
the same number of shares are used in both the basic and diluted
loss per share calculation as there is no dilutive effect when the
Group is in a loss-making position.
|
|
6-month period
ended
30 September
2024
(unaudited)
|
6-month
period ended
30
September 2023
(unaudited)
|
15-month
period ended
31 March
2024
(audited)
|
|
Loss for the period (US
$m)
|
(18.2)
|
(5.2)
|
(32.5)
|
|
Weighted average number of shares
(000s)
|
39,828
|
33,186
|
35,604
|
|
Diluted loss per share
|
(45.8)
cents
|
(15.8)
cents
|
(91.1)
cents
|
8. Dividends
There were no dividends declared
or paid in the 6-month period ended 30 September 2024 (6-month
period ended 30 September 2023: nil).
The Directors have not declared an
interim dividend for 2024 (2023: nil).
9. Inventories
|
|
30 September
2024
US $m
(unaudited)
|
30
September 2023
US
$m
(unaudited)
|
31 March
2024
US
$m
(audited)
|
|
Raw materials and
consumables
|
19.5
|
23.9
|
18.8
|
|
Work in progress
|
10.4
|
15.1
|
13.4
|
|
Finished goods
|
17.0
|
19.4
|
16.7
|
|
Spare parts
|
0.2
|
0.2
|
0.2
|
|
Total
|
47.1
|
58.6
|
49.1
|
In the 6-month period to 30
September 2024 inventories to the value of US $33.8m (30 September
2023: $36.8m) were recognised as an expense. The inventory reserve
at the balance sheet date was US $7.7m (30 September 2023: $3.5m,
31 March 2024: $6.6m), which represents 14.0% of gross inventory
(30 September 2023: 5.6%, 31 March 2024: 11.8%). The reserve
increased from 31 March 2024 by US $1.1m due to additions of US
$1.9m driven by an increase in ageing of stock on hand offset by
utilisation of stock previously provided for totalling US
$0.8m.
10. Borrowings
The Group's bank facility comprise
a revolving credit facility (RCF) of US $28.8m from HSBC. A balance
of US $5.2m was repaid in August 2024 using the proceeds received
from the disposal of the Traffic business after which the facility
was reduced by a corresponding amount from US $34.0m to US $28.8m.
The facility was extended on 14 June 2024 to 21 July 2026 on the
same terms as the original agreement. Aligned with the Group's
robust commitment to environmental, social, and governance
principles, the RCF facility operates as a sustainability-linked
loan.
The RCF facility is subject to
quarterly covenants comprising maximum leverage and minimum
interest cover. The covenants for the quarter ending 30 September
2023 were temporarily reset from a leverage ratio maximum target of
less than 3.0x to 4.5x, and an interest cover minimum covenant
target of a 4.0x to 2.5x. The covenants reverted to the original
hurdles from quarter ending 31 December 2023 onwards.
The cash flow forecasts to 31
March 2026 show a potential breach in the 12-month rolling interest
cover covenant in FY25 Q3 due to the historical weak trading
performance in the final quarter of the financial period ending 31
March 2024. The potential covenant breach has been communicated to
HSBC who have agreed to reduce the interest rate covenant for the
third quarter of FY25 (only) to 2.5x. This amendment is subject to
legal finalisation at the date of these interim financial
statements.
In the 6-month period to 30
September 2024 the covenants have been complied with and the
outstanding borrowings of US $22.8m have been classified as a
non-current liability as at 30 September 2024 in line with the
facility expiring in July 2026.
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Borrowings at the beginning of the
period
|
27.9
|
30.4
|
27.4
|
|
Facility drawdown (RCF)
|
-
|
0.5
|
6.2
|
|
Facility repayment (RCF)
|
(5.2)
|
-
|
(3.4)
|
|
Facility repayment
(CBILS)
|
-
|
(1.3)
|
(2.5)
|
|
Foreign exchange
movements
|
0.1
|
0.2
|
0.2
|
|
Borrowings at the end of the period
|
22.8
|
29.8
|
27.9
|
11. Provisions
|
|
Warranty
and claims
US
$m
|
Lease
dilapidations
US
$m
|
Sanmina
litigation
US
$m
|
Total
US $m
|
|
Balance at 1 April 2024
|
2.2
|
0.6
|
-
|
2.8
|
|
Additions
|
-
|
0.5
|
22.3
|
22.8
|
|
Net transfer from other liabilities
and other receivables
|
-
|
-
|
(0.9)
|
(0.9)
|
|
Utilisation
|
-
|
(0.5)
|
(1.9)
|
(2.4)
|
|
Foreign exchange
movements
|
-
|
0.1
|
-
|
0.1
|
|
Balance at 30 September 2024
|
2.2
|
0.7
|
19.5
|
22.4
|
|
Of which:
|
|
|
|
|
|
Current
|
2.2
|
-
|
19.5
|
21.7
|
|
Non-current
|
-
|
0.7
|
-
|
0.7
|
Warranty and claims
The warranty provision relates to
sales made over the last nine years and has been estimated based on
historical warranty data for similar products.
Lease dilapidations
Lease dilapidations relate to
obligations to restore leased premises back to the original
condition. During the period to 30 September 2024 lease restoration
costs of US $0.5m were incurred in relation to the old Malaysian
facility with US $0.5m of costs provided for in relation to the new
Malaysian facility and new head office in London.
Sanmina litigation
Refer to note 4 for details of the
Sanmina litigation provision.
12. Share capital
|
|
6-month period
ended
30 September
2024
Number
(unaudited)
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
Number
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
|
Authorised:
|
|
|
|
|
|
Ordinary shares of 1.89p
each
|
39,828,141
|
1.2
|
33,192,884
|
1.0
|
|
|
|
|
|
|
|
Issued and fully paid:
|
|
|
|
|
|
Share capital at the beginning of
the period
|
39,828,141
|
1.2
|
32,946,371
|
1.0
|
|
Issued during the period
|
-
|
-
|
246,513
|
-
|
|
Share capital at the end of the period
|
39,828,141
|
1.2
|
33,192,884
|
1.0
|
|
|
|
|
15-month
period ended
31 March
2024
Number
(audited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Authorised:
|
|
|
|
|
|
Ordinary shares of 1.89p
each
|
|
|
39,828,141
|
1.2
|
|
|
|
|
|
|
|
Issued and fully paid:
|
|
|
|
|
|
Share capital at the beginning of
the period
|
|
|
32,946,371
|
1.0
|
|
Issued during the period
|
|
|
6,881,770
|
0.2
|
|
Share capital at the end of the period
|
|
|
39,828,141
|
1.2
|
On 5 April 2023 a total of 246,513
new ordinary shares of 1.89 pence each in the capital of the
Company were issued.
On 31 October 2023 a total of
6,635,257 new ordinary shares of 1.89 pence each in the capital of
the Company have been allotted to raise gross proceeds of
approximately US $12.7m. Share issue costs of US $0.9m have been
netted off against the share premium arising on the new share issue
(see note 13).
13. Share premium account
|
|
6-month period
ended
30 September
2024
US $m
(unaudited)
|
6-month
period ended
30
September 2023
US
$m
(unaudited)
|
15-month
period ended
31 March
2024
US
$m
(audited)
|
|
Share premium at the beginning of
the period
|
13.0
|
1.2
|
1.2
|
|
Issued during the period
|
-
|
-
|
12.7
|
|
Share issue costs
|
-
|
-
|
(0.9)
|
|
Share premium at the end of the period
|
13.0
|
1.2
|
13.0
|
14. Principal exchange rates
|
|
6-month period
ended
30 September
2024
(unaudited)
|
6-month
period ended
30
September 2023
(unaudited)
|
15-month
period ended
31 March
2024
(audited)
|
|
Average for the period
|
|
|
|
|
Pound sterling
|
0.7815
|
0.7944
|
0.8010
|
|
Euro
|
0.9201
|
0.9183
|
0.9240
|
|
Canadian dollar
|
1.3666
|
1.3422
|
1.3491
|
|
Mexican peso
|
18.0464
|
17.3735
|
17.5790
|
|
|
30 September
2024
(unaudited)
|
30
September 2023
(unaudited)
|
31 March
2024
(audited)
|
|
At
balance sheet date
|
|
|
|
|
Pound sterling
|
0.7479
|
0.8237
|
0.7925
|
|
Euro
|
0.8952
|
0.9490
|
0.9264
|
|
Canadian dollar
|
1.3449
|
1.3515
|
1.3540
|
|
Mexican peso
|
19.4581
|
17.6017
|
16.5558
|
15. Related party transactions
The ultimate parent company of the
Group is Dialight plc. Transactions between the Company and its
subsidiaries have been eliminated on consolidation.
There have
been no changes in the nature of related party transactions from
those described in the March 2024 Annual Report that could have a
material effect on the financial position or performance of the
Group in the period to 30 September 2024.
16. Principal and emerging risks
The Board has conducted a robust
assessment of the Company's principal and emerging risks. The risks
outlined in this section are the principal risks that the Board
have identified as material to the Group. They represent a
"point-in-time" assessment, as the environment in which the Group
operates is constantly changing and new risks may always
arise.
The principal risks and
uncertainties affecting the business activities of the Group for
the six months ended 30 September 2023 remain substantially
unchanged as those disclosed in the March 2024 Annual
Report.
Risks are considered in terms of
probability and impact and are based on residual risk rating of:
high, medium and low. Mapping risks in this way helps not only to
prioritise the risks and required actions but also to direct the
required resource to maintain the effectiveness of controls already
in place and mitigate further where required.
The risks outlined in this section
are not set out in any order of priority, and do not include all
risks associated with the Group's activities.
Additional risks not presently
known to management, or currently deemed less material, may also
have an adverse effect on the business.
· Intellectual property
- Intellectual property infringement
risk - by Dialight or against Dialight. Security of protectable
intellectual property.
· Growth (Current offering,
customer requirements and markets) - Risk of stagnation of addressable market of current product
portfolio, product portfolio management efficiency, and execution
risk on current sales/route to market. Understanding customer
requirements regarding product function and price. Risk from
failure to recognise emerging markets and focus concentrated on
North America.
· Environmental and geological
- The Group's main manufacturing
centre is in Mexico and its main market is North America. Any
impediment to raw materials getting into Mexico or restrictions on
finished goods entering North America related to natural disasters
could have a large impact on profitability. Disruption to global
markets and transport systems and/or workforce arising from
geological, biological, economic and/or political events may impact
the Group's ability to operate and the demand for its
products.
· Funding -
The Group has a net bank debt position and there
is a significant risk related to liquidity. The Group has not paid
a dividend since 2015. In light of the litigation against Sanmina,
the Group has a potentially large cash outflow in settlement of
damages that have been awarded against the Company.
· Cyber and data integrity
- Disruption to business systems
would have an adverse impact on the Group if our systems suffered
cyber-attacks (including ransomware, phishing, DDOS attack). The
Group also needs to ensure the protection and integrity of its
data. There can be additional risk if internal data management
processes are not mapped and continually improved. With the Group's
dispersed international footprint, increasing automation there is
greater risk of impact on IT infrastructure/communications between
employees.
· Talent and diversity
- Group performance is dependent on
attracting and retaining high-quality staff across all functions.
Risk in the labour market hardening in all markets (especially
Mexican wage inflation risk) and age profile of key staff
increasing.
· Geo-political and
macro-economic impacts - There is
risk attaching to macroeconomic performance in North America. Risk
of macro-economic shocks (including interest rates) have increased
globally, and geopolitical risk has increased across Europe, Middle
East and Asia. Following the results of the US election in November
2024 there is an increased risk in relation to the Group's Mexican
facilities arising from the outcome of any decision to renew the
United States-Mexico-Canada Agreement in July 2026 and to the
imposition of tariffs by the new US administration.
16. Principal and emerging risks (continued)
· Product risk -
Risk relating to commercial obligations (including
warranty), legal, product recall and reputational risks arising
from under-performance or non-performance of product against
contracted specification and/or product malfunction.
· Product development strategy
- Inability to translate market
requirements into profitable products. Failure to deliver
technologically advanced products and to react to disruptive
technologies. Emerging pressure to innovate ESG-friendly and less
carbon-dense products.
· Production capacity and
supply chain - The Group operates a
complex international supply chain (both inbound and outbound)
which can be impacted by a range of risk factors including
political disruption, border frictions, logistics challenges and
other compliance issues. Supply chain challenges can in turn impact
production capacity and efficiency - as well as other factors
including investment in capacity, labour-supply issues and costs of
production.
The identification of risks and
opportunities, the development of action plans to manage the risks
and maximise the opportunities, and the continual monitoring of
progress against agreed key performance indicators (KPIs) are
integral parts of the business process and core activities
throughout the Group.
These will continue to be
evaluated, monitored, and managed through the remainder of 2024 and
beyond.
DIRECTORS' RESPONSIBILITIES
We confirm that to the best of our
knowledge:
a) the condensed set of financial
statements has been prepared in accordance with UK-adopted IAS 34
'Interim Financial Reporting';
b) the interim management report
includes a fair review of the information required by DTR 4.2.7R
(indication of important events and their impact during the first
six months and description of principal risks and uncertainties for
the remaining six months of the year); and
c) the interim management report
includes a fair review of the information required by DTR 4.2.8R
(disclosure of related parties' transactions and changes
therein).
On behalf of the Board,
Steve Blair
Group Chief Executive
25 November 2024
The directors are required to
prepare financial statements for the Group in accordance with
International Financial Reporting Standards (IFRS).
International Accounting Standard
34 (IAS 34), defines the minimum content of an interim financial
report, including disclosures, and identifies the accounting
recognition and measurement principles that should be applied to an
interim financial report.
Directors are also required
to:
· select
suitable accounting policies and then apply them consistently;
present information, including accounting policies, in a manner
that provides relevant, reliable, comparable and understandable
information; and
· provide additional disclosures when compliance with the
specific requirements under IFRS are insufficient to enable users
to understand the impact of particular transactions, other events
and conditions on the entity's financial position and financial
performance.
The directors are responsible for
keeping adequate accounting records that are sufficient to show
and
explain the Parent Company's transactions and disclose with
reasonable accuracy at any time the
financial position of the Parent Company and enable them to ensure
that its financial statements comply with the Companies Act 2006.
They have a general responsibility for taking such steps as are
reasonably open to them to safeguard the assets of the Group and to
prevent and detect fraud and other irregularities.
The directors are also responsible
for the maintenance and integrity of the corporate and financial
information included on the Company's website.
Legislation in the UK governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.