Full Year Results 2014 02 March 2015 2014 Highlights Lighting - - PowerPoint PPT Presentation
Full Year Results 2014 02 March 2015 2014 Highlights Lighting revenue increased by 46% to 99.9m (constant currency +50%) Lighting operating profit increased by 26% to 14.5m (constant currency +30%) Obstruction revenue increased by
Lighting revenue increased by 46% to £99.9m (constant currency +50%) Lighting operating profit increased by 26% to £14.5m (constant currency +30%) Obstruction revenue increased by 16% to £17.0m (constant currency +22%) Group underlying EBIT increased 25% to £18.1m (constant currency +30%) Basic underlying EPS up 20% at 36.8 pence (2013: 30.8 pence) Basic statutory EPS up 12% to 29.4 pence (2013: 26.2 pence)
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Revenue growth driven by Lighting and Obstruction Currency movements negatively impacted revenue by £4.6m and EBIT by £0.6m Underlying EBIT growth of 30% Increase in underlying tax rate due to growth in US business and withdrawal of capital allowance incentives
Development costs £m 2014 2013 Gross costs 5.3 4.5 Capitalised (2.6) (2.9) Amortisation 1.5 0.7 Net cost 4.2 2.3 Capitalised % 49.1% 64.4% £m 2014 2013 Underlying tax rate 33.5% 31.3% Tax rate 38.7% 30.6% Basic EPS Underlying 36.8 30.8 Basic EPS Statutory 29.4 26.2 Variance £m 2014 2013 Reported Constant currency Revenue 159.8 131.2 21.8% 25.1% Direct costs (90.2) (72.5) Contribution 69.6 58.7 18.6% 22.6% Production overhead (18.2) (14.8) Development cost (4.2) (2.3) Distribution costs (19.8) (18.1) Administration costs (9.3) (9.0) Underlying EBIT 18.1 14.5 24.6% 30.1% Non-underlying items (2.3) (2.9) Finance expense (0.3) (0.4) Profit before income tax 15.5 11.2 38.6% 44.5% Income tax expense (6.0) (3.5) Gain from discontinued operations
Profit for the year 9.5 8.4 13.2% 17.0%
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Revenue increase resulted in £11m increase in contribution Production costs remained at 11% of revenue and in line with capacity growth Development costs remain constant and increase was driven by the amortisation charge Other overheads decreased from 2.1% of revenue in 2013 to 1.8% in 2014
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0.0% 10.0% 20.0% 30.0% 40.0% 50.0% Lighting Signals Components
Contribution margin
2013 2014
Average selling prices remained robust and in line with prior year Lighting margins remain strong but were affected by: Increased air freight as a result of component shortages and US West Coast industrial action Product mix Unallocated overheads of £2.8m
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Lighting Signals Components £m 2014 2013 2014 2013 2014 2013 Revenue 99.9 68.5 40.2 41.8 19.7 20.9 Direct Costs (57.6) (37.2) (22.2) (24.3) (10.4) (11.0) Contribution 42.3 31.3 18.0 17.5 9.3 9.9 Overhead (27.8) (19.8) (12.0) (12.3) (8.9) (8.6) Segment result 14.5 11.5 6.0 5.2 0.4 1.3 Contribution margin 42.3% 45.7% 44.8% 41.9% 47.2% 47.4%
Settlement of Airinet deferred consideration Change in inventory provisioning methodology Intangibles related to Airinet acquisition written down Redundancy and termination costs in relation to closure of Japanese operations incurred in the first half of the year
£m 2014 2013 Contingent consideration 3.1 0.0 Inventory provision (2.8) 0.0 Goodwill and asset write-down (1.3) (0.8) Employee severance and restructuring costs (1.1) (0.4) Intellectual property past-use access fee 0.0 (1.4) Other (0.2) (0.3) Non-underlying items (2.3) (2.9)
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Net assets increased by £6.1m Increase in working capital of £12m driven by an increase in
inventory of £8.2m
Strengthening of supply chain Strong Lighting growth £25m RCF with HSBC, with £25m accordion Compliant with all covenants at year end Net Debt to EBITDA 2.5:1 – net cash at year end Interest cover 4:1 – tested at 60x ROCE improved 300bps to 24% (2013:21%)
ROCE = Underlying EBIT/Total assets less current liabilities Investment in production capacity £m 2014 Mexico 3.2 Europe 0.2 Malaysia 0.2 Brazil 0.1 Total 3.7 £m 2014 2013 Fixed assets 15.2 13.4 Intangible assets 21.0 21.1 Net Working Capital 43.1 31.1 Net cash 0.6 7.1 Pension Provision (1.2) (0.4) Tax (current + deferred) (4.4) (1.3) Contingent consideration (0.3) (3.3) Other provision (1.2) (1.0) Net Assets 72.8 66.7
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Working capital absorption increased as the supply chain is
strengthened
Capital expenditure of £7.2m Tax and dividend payments of £7.9m
Net Cash Movement
Working Capital Day (countback) 2014 2013 Debtor days 53.2 46.6 Creditor days (102.0) (108.5) Inventory days 95.4 86.5 Net Working Capital Days 46.7 24.6
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Integrated systems approach – vertical integration Power Supply Technology Key to reliability & fixture longevity (10 year warranty) In-house designed , patent protected technology Most efficient power supplies available today (93-94%) Intelligent Thermal Management Temperature compensation technology managing heat from
LEDs to maximize life
Optical Design Custom reflectors to direct light to where it is needed at the
work place
Intelligent Controls (IoT) Controls embedded within Dialight power supply Integrating with existing building / process management system
infrastructure
Hazardous certified control systems
Controls Heat Management Optical Design
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Freedonia Global Estimate:
£50bn annual lighting market
£3.5bn annual industrial revenue
Dialight addresses installed base; 20+ years retro-fit cycle for light fixtures
£70bn - £100bn Total Addressable Market (TAM) Heavy Industrial
Steel processing Pulp & paper Auto manufacturing plants
Oil, Gas & Petrochem
Upstream (exploring & drilling) Downstream (refining)
Food & Beverage
Food processing Agricultural
Power Generation
Coal, nuclear Renewable (wind, solar, geothermal)
Mining
Surface mining
Dialight targets: 11
£70bn - £100bn TAM Dialight estimates LED lighting sales into Industrial / Hazardous locations are between £650m to £1bn to date This excludes markets that Dialight does not sell into such as China, Russia, India & Africa
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Asia & Australia
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Expanding distribution channel to maximise
reach
Making in-roads to customers and territories not previously available to us
Established national distributor programs:
Rexel / Gexpro
Affiliated Distributors/ SupplyFORCE
Consolidated Electrical Distributors (CED)
From trials to orders to roll out 50% increase in
30% increase in channel to market 176% increase in
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Area Lights
10’ → 20’ mounting
Indoor & outdoor rated
Hazardous & industrial Linears
10’ → 20’ mounting
Indoor & outdoor rated
Hazardous & industrial High Bays
15’ → 100’ mounting
Mostly indoor
Hazardous & industrial Flood Lights
15’ → 100’ mounting
Mostly outdoor
Hazardous & industrial 15
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US Obstruction
2014: a changed business model
Direct relationships with tower operators
New technology – Internet-based monitoring systems
Dialight is the only FAA approved high intensity LED system
Telecom Market The market for lit towers is estimated to be 70,000 towers in the US 10% have adopted LED, with an estimated 90% using Dialight Broadcast 3,000+ towers in the US 4% have adopted LED
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Lighting revenue increased by 50% (constant currency) Lighting operating profit increased by 30% (constant currency) Obstruction back to growth 2014 – a year of strong growth
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