Dialight
plc
("Dialight" or the "Group")
Trading
and operational update, and proposed change of financial
year-end
Dialight plc (LSE: DIA.L), the
global leader in LED lighting for heavy industrial applications,
today publishes the following trading and operational
update.
Trading update
Demand trends and operating
conditions in the Group's end markets through the latter part of
2023 remained consistent with those we reported in the half year
results announced in September 2023. Despite ongoing softness
in a number of segments, the Group continued to take market share
through benefitting from improved service and availability as a
result of the actions taken over the previous 18 months.
Following a 9% reduction in H1 (down
13% at constant currency ("CCY")), Group revenue for the full
12-month period to 31 December 2023 (the "Period")
reduced by 12% to £148.8m (down 12% at CCY).
Lighting revenues were down 7% on a reported basis (CCY 6%) in the
Period, with Signals & Components revenues down 25% (CCY 25%).
Whilst Lighting revenue improved sequentially in the
second six-months of the Period, Signals & Components sales
were particularly impacted by weak trading within Opto Electronics.
Order intake within the Lighting business for the 12-month
period was down 2% on the prior period (CCY reduction of 2%) which
represented a relative outperformance against industry-wide end
market weakness, especially for capex projects.
As expected, profit performance was
appreciably stronger in the latter part of 2023, benefiting from
both increased revenue and lower costs. Following an
underlying operating loss of £2.5m in the six months to 30 June
2023, the Group returned to underlying operating profitability in
the six months to 31 December 2023, resulting in a broadly
breakeven position for the Period (before financing and
non-underlying costs).
Net debt at 31 December 2023 was in
line with the Board's expectations at £12.3m (June 2023 £22.7m)
including the benefit of the £10.6m equity fundraising completed in
October 2023.
Outlook
Dialight demonstrated resilience in
the latter part of 2023, returning the business to run rate
operating profitability, despite subdued demand, and taking
decisive action to reinforce its financial position. As a
result, and whilst markets are expected to remain challenging into
2024 with ongoing uncertainty around the timing of capex projects,
the Board is confident in the Group's ability to sustain this
momentum. Supported by an encouraging aftermarket sales
backdrop and further self-help initiatives, we expect to make
progress over the course of 2024.
Transformation plan update
The Board has established a formal
Board committee, chaired by Steve Blair, Senior Independent
Director, which has strategic oversight of the implementation of
the Group transformation plan announced in September 2023 (the
"Transformation Plan"), and which meets on a regular basis with
senior executives.
The Group has made good progress on
the Transformation Plan including the securing of the land for the
new production site in Mexico which is expected to be opened and
operational in 2025. The Group has also placed an initial
capex order to implement the first phase of our automation
programme in Mexico, with delivery of equipment expected in the
first half of 2024. In addition, a lease has been signed for
a smaller OE-focused production facility in Penang, Malaysia with
the reconfiguration of production already underway following the
transfer of Malaysian Lighting production to the Group's Mexican
manufacturing facilities.
The Transformation Plan includes an
ongoing review of the Group's businesses, with a view to
streamlining operations and narrowing focus on Dialight's core
competencies. The Board continues to believe that value can
be extracted from the portfolio through small divestments of
non-core assets and will update the market as appropriate regarding
any developments.
Sanmina litigation update
Dialight confirms that a trial
date has been set for 15 July 2024, subject to any further
motions, appeal processes and/or mediation, and is anticipated to
last for 10 days. Further details of Dialight's claim against
Sanmina can be accessed at
www.dialight.com/ir/shareholder-information/sanmina-litigation/.
If Dialight's claims are successful at trial, the range
of outcomes could include the payment by Sanmina
to Dialight of between $0 and
c. $220m (excluding legal costs and judicial
interest). If Sanmina's claim is successful at trial the
range of outcomes could include the payment
by Dialight to Sanmina of
between $0m and $8.3m (excluding legal costs
and judicial interest).
Change of accounting
year-end
As set out in the interim results,
Dialight has been reviewing its statutory accounting period with a
view to better aligning the Group's reporting calendar with its
trading seasonality. The three months to 31 December is
typically the Group's busiest trading quarter, with a significant
number of short-notice orders placed for immediate delivery,
especially in the final month. Uncertainty over the extent and
timing of these orders creates difficulty in managing and
forecasting the business. In light of this, the decision has been
taken to change the Group's financial year-end to 31 March in order
to finish the reporting year with the quietest trading
quarter. The change to its accounting year-end will be
effective immediately and impact near-term reporting as
follows:
· the
Group will publish additional unaudited interim results for the
12-month period ending 31 December 2023, on 19 February 2024;
and,
· final,
audited results for the 15-month period ended 31 March 2024 are
expected to be published in July 2024.
The accounting reference date of all
subsidiaries will be aligned with that of Dialight to the extent
permissible in each relevant jurisdiction.
Additionally, for historic reasons the Group has
presented its financial results in Pounds sterling despite most of
the revenues, costs, and financing being denominated in US dollars.
As a result, movements in foreign exchange rates can result
in major translational differences in the reported results. To
mitigate this, the Board is currently
reviewing whether it remains appropriate to continue to report the
Group's results for the 15-month period ending 31 March
2024 in UK sterling. A final decision on this matter will be
confirmed by the Board on or before 31 March 2024.
Contacts:
Dialight plc
Tel: +44 (0)203 058 3542
Fariyal Khanbabi - Group Chief
Executive
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
the main operations in
the USA, UK, Mexico, Malaysia and Singapore, Australia.
To find out more about Dialight,
visit www.dialight.com.
Notes:
Cautionary Statement. This
announcement may contain 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 is 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.
Inside information. This
announcement includes inside information as defined in Article 7 of
the Market Abuse Regulation No. 596/2014 and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations. On the publication of this announcement via a
Regulatory Information Service, this information is considered to
be in the public domain. The person responsible for making
this announcement is Richard Allan, General Counsel & Company
Secretary of Dialight plc