TIDMDSN
RNS Number : 9566E
Densitron Technologies PLC
16 April 2014
DENSITRON TECHNOLOGIES PLC
PRELIMINARY UNAUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER
2013
Densitron Technologies plc ("Densitron" or the "Company" or the "Group"),
the designer, developer and distributor of electronic displays announces
its preliminary unaudited results for the year ended 31 December 2013.
Ø Profit from continuing operations of GBP0.1 million (2012: GBP0.6
million).
Ø Dividends for the year totaling 0.1p per share (2012: 0.3p per
share).
Ø Gross margin decreased to 27.3% (2012: 28.6%) reflecting the
increasing competition for standard products.
Ø Settlement of lease claim in Newcastle.
Ø Wirelessly networked Epaper displays (Densipaper) introduced.
Jan G Holmstrom, Chairman of Densitron, commented:
"2013 was an extremely difficult year but having now settled the
claim on the property in Newcastle and addressed the cost base of
the Group I believe that the business is well placed to grow
profitably in the coming year."
Enquiries:
Densitron Westhouse Securities
Grahame Falconer / Tim Pearson Martin Davison
Tel: 0207 648 4200 Tel: 020 7601 6100
Chairman's statement
2013 was a challenging and ultimately disappointing year. A
combination of issues has resulted in lower than forecast sales and
consequently a lower profit for the year. In addition the Company
settled the claim made against it in respect of the lease of a
property occupied by a former subsidiary in Newcastle and this
caused the Group to make a loss for the year.
Trading results
Revenues from the operating business for the year were
disappointing with a reduction from GBP22.6m in 2012 to GBP20.0m in
2013. This reduction, together with a reduction in the gross margin
percentage, resulted in the gross profit falling from GBP6.5m in
2012 to GBP5.5m in 2013. Despite a reduction in administrative
expenses the operating profit for the year fell from GBP0.6m in
2012 to GBP0.1m in 2013. Together with the exceptional loss
incurred as a result of the property in Newcastle the Group has
incurred a loss before taxation of GBP0.5m compared with a profit
of GBP0.5m in 2012.
There were two main areas of the displays business that caused
the disappointing 2013 operating result - the UK and Japan.
Firstly, in the UK it was anticipated that the year would
deliver an increase in business and at the time of putting the
operating forecasts together the management were confident that the
numbers could be achieved. However a combination of factors during
the year resulted in substantially lower than forecast
revenues:
-- There were delays in bringing internal developments to market;
-- Revenues from internally developed business have taken longer to achieve;
-- New projects have taken longer to get to mass production; and
-- New markets in which the business has opened offices have taken longer to deliver revenues.
Secondly, during 2013 the Japanese yen has fallen in value
against the US$ by approximately 22% which has resulted in a
substantial increase in the cost of purchases in our Japanese
subsidiary. As the subsidiary sells into the local market in
Japanese yen the gross margin on sales has been negatively impacted
resulting in a substantial fall in profit for the year.
As a consequence of the disappointing result the Board has
reviewed its strategy for the Business and has concluded that it
remains sound in the medium to long term. However, in the short
term it considers that a review of how the business is structured
should be carried out and the cost structure of the business
reviewed further.
Land at Blackheath
The Group owns a piece of land at Blackheath, London, retained
from the larger sports ground we previously owned, the majority of
which was sold to Greenwich Council in 2006. It is designated as
Metropolitan Open Land which was the primary reason planning
permission was refused when an application was made in 2010. The
Council is undertaking a review of its Core Strategy in relation to
all open spaces under its designation and as part of this process
we are seeking to have the land re-designated to make future
development possible. This process has been protracted and it is
unlikely that it will be concluded within the next 12 months. The
Board also continues to investigate other options to enhance or
realise value from the land.
Newcastle property
As has previously been communicated, the Company was issued with
a writ in early 2012 by the landlord of a property in Newcastle
previously occupied by a former subsidiary of the Company. In my
report last year I advised shareholders that the Board considered
that the most appropriate way forward was to achieve a negotiated
settlement with the Landlord. After lengthy discussions in
September 2013 the Company reached a settlement with the Landlord
and, while it was agreed that the details of that settlement
remained confidential, this agreement has unfortunately resulted in
the Group being loss making for the year. The out of court
settlement means that the Company is now free to market the
property and the Agents that have been appointed are confident that
this can be achieved during this year. This will mitigate future
costs until the lease expires in 2023.
Shareholders and dividends
Despite the difficulties experienced in 2013 the Directors
remain committed to turn the business around and deliver a return
to the Company's Shareholders both by increasing shareholder value
and paying dividends.
While the Board remains committed to returning profits to
shareholders by way of dividends, I do not consider that it is
appropriate considering the circumstances to propose a final
dividend for the year (2012: 0.1p per share). An interim dividend
of 0.1p per share (2012: 0.2p per share) was paid to shareholders
and at that point in the year we felt confident that the second
half would deliver a substantially higher return than it ultimately
achieved. The total dividend payment for the year will, therefore,
remain 0.1p per share (2012: 0.3p per share).
Outlook
I believe that the outlook for the business remains positive
despite the difficulties the Group has encountered over the past 12
months.
The Board of Directors has identified several areas of the
business and its processes that require attention and are in the
process of implementing the necessary changes that will enhance the
business going forward.
The first quarter of the year has started promisingly with a
positive impact from some of the changes that were made during the
final quarter of 2013 and the beginning of 2014. This has enabled
the business to be operating ahead of its internal forecast and the
result achieved in the first quarter in 2013. The pipeline of new
business remains fairly strong and we are receiving good orders
from our existing and new customers.
Richard Lane, who was appointed as a non-executive director in
2005, retired from the Board in March 2014. I would like to thank
Richard for the support he has given to the Company and wish him
well in his retirement and continued work as President of Diabetes
UK.
I would also like to thank the Directors and staff throughout
the Group for their continued hard work and dedication during the
year. 2013 was a difficult year for the business but I am confident
that it is on the right track and we will see the results of this
coming through during 2014.
Finally I would like to thank the Company's Shareholders for
their continued support.
Jan G Holmstrom
Chairman
Densitron Technologies plc
Consolidated income statement
For the year ended 31 December 2013
2013 2013 2013 2012
Group Exceptional Total Total
GBP000 GBP000 GBP000 GBP000
Revenue 20,047 - 20,047 22,612
Cost of sales (14,584) - (14,584) (16,139)
--------- ------------ --------- ---------
Gross profit 5,463 - 5,463 6,473
Other operating income 3 - 3 12
Distribution costs (53) - (53) (69)
--------- ------------ --------- ---------
Administrative expenses (5,271) - (5,271) (5,851)
Exceptional costs in respect
of lease settlement - (593) (593) -
--------- ------------ --------- ---------
(5,271) (593) (5,864) (5,851)
--------- ------------ --------- ---------
Profit/(loss) from operations 142 (593) (451) 565
Financial income - - - -
Financial expenses (69) - (69) (45)
--------- ------------ --------- ---------
Profit/(loss) before tax 73 (593) (520) 520
Income tax expenses (199) - (199) (276)
--------- ------------ --------- ---------
(Loss)/profit for the year (126) (593) (719) 244
--------- ------------ --------- ---------
Attributable to:
Equity holders of the parent (112) (593) (705) 248
Non-controlling interests (14) - (14) (4)
--------- ------------ --------- ---------
(126) (593) (719) 244
--------- ------------ --------- ---------
Basic and diluted (loss)/earnings
per share (0.16)p (0.86)p (1.02)p 0.36p
--------- ------------ --------- ---------
Densitron Technologies plc
Consolidated statement of comprehensive income
For the year ended 31 December 2013
2013 2012
GBP000 GBP000
(Loss)/profit for the year (719) 244
-------- -------
Other comprehensive expense
Items that may be reclassified subsequently
to profit or loss
Exchange losses on translation
of foreign operations (358) (483)
Total other comprehensive expense (358) (483)
-------- -------
Total comprehensive expense for
the year (1,077) (239)
-------- -------
Total comprehensive expense attributable
to:
Owners of the parent (1,062) (234)
Non-controlling interests (15) (5)
-------- -------
(1,077) (239)
-------- -------
Densitron Technologies plc
Consolidated Statement of Financial Position
At 31 December 2013
2013 2012
GBP000 GBP000
Non current assets
Property, plant and equipment 765 839
Goodwill 143 143
Other intangible assets 582 388
Deferred tax assets 7 29
------- -------
1,497 1,399
------- -------
Current assets
Inventories 1,424 1,282
Trade and other receivables 3,895 5,132
Income tax recoverable 125 116
Cash and cash equivalents 848 1,577
------- -------
6,292 8,107
------- -------
Total assets 7,789 9,506
------- -------
Current liabilities
Borrowings and overdrafts 1,764 2,132
Trade and other payables 3,121 3,234
Current tax payable 34 62
Provisions 9 9
------- -------
4,928 5,437
------- -------
Non current liabilities
Borrowings 83 134
Trade and other payables 81 -
Provisions 111 117
Deferred tax liabilities 37 54
------- -------
312 305
------- -------
Total liabilities 5,240 5,742
------- -------
2,549 3,764
------- -------
Equity
Share Capital 697 697
Retained earnings 1,917 2,750
Special reserve 87 97
Revaluation reserve 450 450
Translation reserve (617) (260)
------- -------
Equity attributable to shareholders
of Densitron 2,534 3,734
Non-controlling interests 15 30
Total equity 2,549 3,764
------- -------
Densitron Technologies plc
Consolidated Cash Flow Statement
For the year ended 31 December 2013
2013 2012
GBP000 GBP000
Cash flows from operating activities
(Loss)/profit before taxation (520) 520
Adjustments for:
Depreciation 117 82
Amortisation 79 27
Net finance expense 68 45
(256) 674
Change in inventories (187) (17)
Change in trade and other receivables 988 (897)
Change in trade and other payables (20) 813
Change in provisions - (122)
------- -------
525 451
Income tax paid (218) (388)
------- -------
Net cash from operating activities 307 63
------- -------
Cash flows from investing activities
Deferred consideration on past
disposal of discontinued operations - 74
Payment for intangible asset (276) (243)
Acquisition of property, plant
and equipment (50) (126)
------- -------
Net cash used in investing activities (326) (295)
------- -------
Cash flows from financing activities
Inception of new loans - 237
Repayment of borrowings (169) (24)
Interest paid (69) (45)
Change in invoice discounting
creditor 261 (14)
Change in letters of credit (626) (71)
Dividend paid to the owners of
the Company (138) (415)
Net cash used in financing activities (741) (332)
------- -------
Net (decrease)/increase in cash
and cash equivalents (760) (564)
Cash and cash equivalents at 1(st)
January 961 1,616
Effect of exchange rate fluctuations
on cash held (90) (91)
------- -------
Cash and cash equivalents at 31(st)
December 111 961
------- -------
Densitron Technologies plc
Statement of Changes in Shareholder's Equity
For the year ended 31 December 2013
Share Translation Special Revaluation Retained Total Non-controlling Total
Capital reserve reserve reserve earnings attributable interest Equity
to equity
holders
of parent
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at
1(st) January
2012 697 223 107 450 2,907 4,384 35 4,419
Profit/(loss)
for the year - - - - 248 248 (4) 244
Other total
comprehensive
income - (483) - - - (483) (1) (484)
Payment of
dividends - - - - (415) (415) - (415)
Transfer from
special
reserve - - (10) - 10 - - -
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
31(st)
December
2012 697 (260) 97 450 2,750 3,734 30 3,764
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
1(st) January
2013 697 (260) 97 450 2,750 3,734 30 3,764
Profit/(loss)
for the year - - - - (705) (705) (14) (719)
Other total
comprehensive
income - (357) - - - (357) (1) (358)
Payment of
dividends - - - - (138) (138) - (138)
Transfer from
special
reserve - - (10) - 10 - - -
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Balance at
31(st)
December
2013 697 (617) 87 450 1,917 2,534 15 2,549
-------- ------------ --------- ------------ --------- ------------- ---------------- --------
Densitron Technologies plc
Notes to the Consolidated Financial Statements
For the year ended 31 December 2013
1. Basis of preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards, International Accounting Standards and
Interpretations (collectively IFRSs) issued by the International Accounting
Standards Board (IASB) as adopted by the European Union (Adopted IFRSs)
and are in accordance with IFRS as issued by the IASB.
The accounting policies applied are consistent with those set out in
the financial statements of Densitron Technologies plc for the year
ended 31 December 2012. The financial information in the announcement
is unaudited and does not constitute the company's statutory accounts
for the years ended 31 December 2013 or 2012. The financial information
for the year ended 31 December 2012 is derived from the statutory accounts
for that year, which were prepared under IFRSs as adopted by the EU,
which have been delivered to the Registrar of Companies. The auditors
reported on those accounts; their report was unqualified, did not include
references to any matters to which the auditors drew attention by way
of emphasis without qualifying their reports and did not contain statements
under the Companies Act 2006.
The statutory accounts for the year ended 31 December 2013, prepared
in accordance with IFRSs as adopted by the EU, will be finalised on
the basis of the financial information presented by the directors in
this preliminary announcement and will be delivered to the Registrar
of Companies following the company's annual general meeting.
2. Exceptional item
The exceptional item relates to costs associated with the settlement
of a writ relating to a property in Newcastle previously occupied by
a former subsidiary of the Company. As part of the settlement it was
agreed that the details of the settlement would remain confidential
but the exceptional item incorporates all costs incurred to date relating
to the settlement of the claim.
3. Financial expense
2013 2012
GBP000 GBP000
Financial expenses
Bank borrowings 54 35
Invoice discounting charge 15 10
69 45
------------- -------------
4. Business and geographical segments
The chief operating decision maker in the organization is made up of
an Executive Committee comprising the Executive Directors and Chairman,
they have determined the operating segments detailed within this report
and on which the business is managed.
The Group is managed by the geographical location of its subsidiaries
and resources are allocated as required on this basis:
Ø Europe - The European market, being so diverse, is serviced by
subsidiaries based in four locations:
Ø UK - the UK is responsible for business conducted in the UK,
management of the Group's distribution network and sales into other
locations where the Group does not have a physical presence. The UK
business contributed 23% (2012: 27%) to Group revenues.
Ø France - the subsidiary in France is responsible for business
conducted in France and with French customers whose manufacturing operations
may be located elsewhere in the world. The French business contributed
10% (2012: 11%) to Group revenues.
Ø Nordic - Densitron Nordic is the Group's subsidiary located in
Finland and servicing business locally along with Sweden and customers
located in the Baltic region. The Finnish business contributed 1% (2012:
2%) to Group revenues.
Ø Germany - Densitron Deutschland is the Group's subsidiary based
in Germany. It is responsible for business conducted in Germany, Switzerland
and Austria and through the Group's distributor based in Germany. The
German business contributed 9% (2012: 9%) to Group revenues.
In total the European region represented the largest part of the business
contributing 43% (2012: 49%) to Group revenues.
Ø US - the US segment is responsible for business conducted in
the US, Canada and Central and South America. It represents 41% (2012:
35%) of the Group total revenues.
Ø Asia - The Asian segment is made up of subsidiaries located in
Japan and Taiwan.
Ø Japan - Densitron Japan is responsible for sales into Japan.
It contributed 14% (2012: 13%) to Group revenues.
Ø Taiwan - Densitron Asia is the Group's subsidiary located in
Taiwan. It is primarily a facilitating function for the rest of the
Group managing suppliers located in Taiwan and China. It contributed
2% (2012: 3%) to Group revenues.
Inter-segment transfer pricing is based on the level of work carried
out and the risk encountered by each party in order to make a third
party sale.
UK France Finland Germany US Japan Taiwan Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2013
Revenue
Total 5,963 2,042 352 1,733 8,351 2,796 4,785 26,022
Intercompany (1,473) (57) (54) - (64) - (4,327) (5,975)
-------- -------- -------- -------- -------- -------- -------- ---------
Revenue
from external
customers 4,490 1,985 298 1,733 8,287 2,796 458 20,047
-------- -------- -------- -------- -------- -------- -------- ---------
Profit/(loss)
before tax (61) 26 (70) 55 660 136 (282) 464
-------- -------- -------- -------- -------- -------- -------- ---------
Balance
Sheet
Assets 1,700 729 87 642 2,494 1,047 420 7,119
Liabilities (1,369) (225) (19) (38) (1,207) (195) (809) (3,862)
-------- -------- -------- -------- -------- -------- -------- ---------
Net assets 331 504 68 604 1,287 852 (389) 3,257
-------- -------- -------- -------- -------- -------- -------- ---------
Other
Interest
payable 37 3 - - 9 1 - 50
Capital
expenditure
- Property,
plant and
equipment - 17 1 - 14 8 9 49
- Depreciation 1 9 1 1 67 12 23 114
- Capitalised
development
expenditure 128 - - 62 64 - 22 276
- Amortisation 32 - - 4 36 - 2 74
-------- -------- -------- -------- -------- -------- -------- ---------
UK France Finland Germany US Japan Taiwan Total
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
2012
Revenue
Total 7,696 2,513 591 2,140 8,033 2,911 6,162 30,046
Intercompany (1,565) (78) (74) (44) (63) - (5,610) (7,434)
-------- -------- -------- -------- -------- -------- -------- ---------
Revenue
from external
customers 6,131 2,435 517 2,096 7,970 2,911 552 22,612
-------- -------- -------- -------- -------- -------- -------- ---------
Profit/(loss)
before tax (13) 76 (20) 69 656 331 (97) 1,002
-------- -------- -------- -------- -------- -------- -------- ---------
Balance
Sheet
Assets 2,351 791 187 749 2,307 1,333 1,074 8,792
Liabilities (1,937) (236) (47) (109) (1,066) (210) (1,314) (4,919)
-------- -------- -------- -------- -------- -------- -------- ---------
Net assets 414 555 140 640 1,241 1,123 (240) 3,873
-------- -------- -------- -------- -------- -------- -------- ---------
Other
Interest
payable 26 5 - - 7 2 - 40
Capital
expenditure
- Property,
plant and
equipment - 10 - 1 26 29 60 126
- Depreciation 1 4 1 1 63 7 - 77
- Capitalised
development
expenditure 29 - - 19 185 - 10 243
- Amortisation 27 - - - - - - 27
-------- -------- -------- -------- -------- -------- -------- ---------
Reconciliation of reportable segments, profit and loss, assets and
liabilities to the Group's corresponding amounts:
2013 2012
GBP000 GBP000
(Loss)/profit after income
tax expense
Total profit for reporting
segments 464 1,002
Costs associated with
head office (391) (482)
Exceptional items (593) -
Income tax expenses (199) (276)
------- ---------------
(Loss)/profit after income
tax expense (719) 244
------- ---------------
2013 2012
GBP000 GBP000
Assets
Total assets for reportable
segments 7,119 8,792
Assets attributable to
Head Office 171 215
Land at Blackheath 499 499
Group assets 7,789 9,506
------- ---------------
Liabilities
Total liabilities for reportable
segments 3,862 4,919
Liabilities attributable
to Head Office 1,378 823
------- ---------------
Group liabilities 5,240 5,742
------- ---------------
The analysis of the Group's segmental information by
geographical location is:
External revenue Non current Capital expenditure
by location assets by location by location
of customers of asset of assets
2013 2012 2013 2012 2013 2012
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Total operations
UK 2,197 2,549 708 615 130 30
France 1,650 2,114 32 24 17 10
Finland 185 517 8 9 1 -
Germany 1,242 1,848 177 119 62 20
Portugal 37 785 - - - -
Italy 362 428 - - - -
Other European 973 824 - - - -
USA 6,347 6,443 446 497 78 211
Canada 925 990 - - - -
Other Americas 88 15 - - - -
Japan 1,768 2,206 27 36 8 29
Taiwan 399 557 99 99 31 69
Malaysia 380 335 - - - -
China 1,784 1,736 - - - -
Other Asia 1,651 1,099 - - - -
Tunisia - - - - - -
Other Rest of the world 59 166 - - - -
--------- -------- ---------- ---------- ---------- ----------
20,047 22,612 1,497 1,399 327 369
--------- -------- ---------- ---------- ---------- ----------
5. Tax expense
2013 2012
GBP000 GBP000
Current tax expense
UK corporation tax and income tax of overseas operations
on profits for the year 175 294
Adjustments for (over)/under provision
in prior periods 20 11
-------- -------
195 305
Deferred tax expense
Origination and reversal of temporary
differences 4 (29)
-------- -------
Total tax charge 199 276
-------- -------
The reasons for the difference between the actual tax charge for the
year and the standard rate of corporation tax in the UK applied to
profits for the year are as follows:
2013 2012
GBP000 GBP000
(Loss)/profit before tax (520) 520
-------- -------
Expected tax charge based on the
standard rate of corporation tax
in the UK of 23% (2012: 24%) (120) 125
Losses carried forward 214 99
Disallowed expenses 10 28
Non taxable income (2) -
Movement in unprovided deferred tax 14 -
assets
Utilisation of tax losses brought
forward (13) (66)
Adjustments for overseas rate 76 79
Adjustment to prior years tax charge 20 11
-------- -------
199 276
-------- -------
6. Earnings per share
The earnings and weighted average number of ordinary shares used in
the calculation of earnings per share are as follows.
2013 2012
GBP000 GBP000
Profit attributable to ordinary shareholders (705) 248
2013 2012
Number Number
Weighted average number of ordinary
shares
Issued ordinary shares at 1(st) January 69,669,106 69,669,106
Effect of purchase of Treasury shares on 23 October
2008 (500,000) (500,000)
------------- --------------
Weighted average number of ordinary shares at 31
December 69,169,106 69,169,106
------------- --------------
7. Notes supporting the cash flow
statement
Cash and cash equivalents for the purposes of the cash
flow statement comprises:
2013 2012
GBP000 GBP000
Cash at bank and in hand 848 1,577
Bank overdrafts (737) (616)
------- -------
Cash and cash equivalents at 31 December
2013 111 961
------- -------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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