DENSITRON TECHNOLOGIES PLC
("Densitron" or the "Company")
PRELIMINARY FIGURES FOR THE YEAR ENDED 31st DECEMBER 2006
Company Highlights
2006 2005
� millions � millions
Revenue 20.3 19.6
Operating loss (0.8) (1.0)
Loss before taxation (0.3) (1.0)
Loss per share (0.56)p (2.19)p
Gearing 62% 41%
Order Book (continuing operations) 5.1m 5.9m
> The Public Information Displays Division sold for a total of �1 million.
> The Gaming Division sold in January 2007.
> A further �291,000 received in respect of the disposal of Hitech Electronics
Corporation.
> Increase in turnover from �19.6 million to �20.3 million.
> Reduction in administrative expenses to �7.0million from �7.3 million.
CHAIRMAN'S STATEMENT
The year to 31 December 2006 has seen the Group undergo further changes and
rationalisations as the Board seeks to create maximum value for Shareholders.
I reported in my statement in last year's Annual Report that the operating
businesses had been reorganised under a divisional structure in order "to bring
greater clarity, visibility and above all accountability". This strategy has
been successful in that it enabled the senior management of each division to
focus on their specific performance and results. It also had the effect of
highlighting a number of issues within the divisions that has ultimately
resulted in the Board taking the decision to sell two of the operating
businesses. This now leaves the Group with a single operating division and two
assets.
Assets
VBestElectronics Co Ltd - VBest, as many Shareholders will know, is a high
volume LCD and LCM manufacturer with Headquarters in Taiwanand factories in
both Taiwanand mainland China. Densitron owns 24.48% of the share capital in
VBest. Turnover is currently in the region of �40m and management expects this
to grow significantly in 2007. In addition, net assets are in excess of �24m.
VBest remains a significant investment for the Group and the Directors are
committed to looking at ways of maximizing the value of this investment. Your
Board considers that the value represented by this investment on the Company's
balance sheet of �6.8m is reasonable.
BlackheathLand - The Company continues to own a sports ground of approximately
5.5 acres at Blackheath in the London Borough of Greenwich. I am pleased to
report that the Company has successfully resisted the claim by the Old Addeyans
Football Club (OAFC) to take possession of the land. The trustees of the OAFC
had claimed rights by adverse possession. I reported last year that the advice
that the Company had received was that its case was sound and this was
vindicated when the OAFC withdrew its claim the week before the case came to
Court in December 2006. The OAFC settled with a contribution towards the
Company's legal costs of �48,650. Negotiations continue with the Local
Authority and others over the terms of a proposed land swap and when there are
further developments Shareholders will be informed.
Disposals
DensitronPublic Information Displays - The public information displays division
(Densitron Ferrograph Limited) had been centred on providing information
displays for the Bus sector for several years. The Board recognised that it
needed to move into the Rail sector and to that end recruited an experienced
sales professional in that market place during 2005. During 2006 in-roads were
made into the Rail sector but market research carried out suggested that the
market for information displays in the Rail and Bus sectors was far smaller
than had been previously perceived. In order to generate significant returns
from the division the Group would have needed to expand into other markets or
geographically. The Board investigated this possibility but concluded that a
return on the investment would only be made in the long term and was
exceedingly uncertain. Consequently it was decided that disposal would be the
preferred option giving a return on the investment already made. The business
was sold on 31 December 2006 to Trueform Engineering Limited for cash.
DensitronGaming- The gaming division had required significant investment over a
number of years but the market has been growing and the Computer Boards
developed by Densitron Gaming had been very well received by the major
manufacturers of gaming machines. As reported in the Annual Report last year a
substantial order had been won from a leading Russian manufacturer for delivery
during 2006. Due to legislation issues in Russia little of this order was
delivered in the year and further business expected to be won in Russia was
delayed. Lead times in this business can be in excess of 12 months and as the
Board did not see sufficient evidence that the business was going to deliver a
return in the short term and in order to stem the ongoing losses, the Board
took the decision to sell the business. The business was sold on 31 January
2007 for the value of its net operating assets plus goodwill of �500,000 and a
royalty based on the level of turnover for the following 5 years.
Future Strategy
The remaining Displays Division has traditionally been the core business within
Densitron generating around � of the overall annual turnover. In 2006 the
division generated sales of �15.4 million and an operating profit before group
charges of approximately �800,000. Until the move to a Divisional structure it
had been perceived as a business that did not offer the same opportunity for
growth as the Public Information Displays and Gaming divisions. Following the
reorganization to a Divisional structure it became evident that the Displays
division was a well organized, well run, profitable and growing business.
Consequently your Board is committed to focusing on the Displays division and
growing it further, both through organic growth and by strategic acquisition.
Outlook- The Board is confident that the decisions to sell the two loss making
divisions will enable a more focused approach for the Group. The Displays
business offers significant opportunity to grow organically in the long term as
markets which are currently being addressed become more developed. Business at
good margins remains the key driver and areas of potential cost savings have
been identified and are being progressed. Organic growth together with a plan
to make certain strategic acquisitions means that the remaining business is in
a strong position to capitalize on its strengths and the outlook is one of
cautious optimism.
I would like to take this opportunity to thank the directors and staff at
Densitron for their continuing commitment and efforts particularly during a
period of change for the Company. I would also like to thank our Shareholders
for their ongoing support.
Ralph Baber
Interim Chairman
25 April 2007
Consolidated profit and loss account
For the year ended 31st December 2006
2006 2006 2006 2005 2005 2005
Continuing Discontinued Total Continuing Discontinued Total
�000 �000 �000 �000 �000 �000
Turnover 15,441 4,873 20,314 19,606 1,221 20,827
Cost of sales (10,807) (3,346) (14,153) (13,572) (538) (14,110)
Gross profit 4,634 1,527 6,161 6,034 683 6,717
Distribution (54) (4) (58) (72) - (72)
costs
Administrative (4,525) (2,443) (6,968) (7,275) (534) (7,809)
expenses
Other 52 50 102 319 10 329
operating
income
Operating 107 (870) (763) (994) 159 (835)
(loss)/profit
Share of - - - 44 - 44
associates'
operating
profit
Profit on - 748 748 - 1,623 1,623
sales of
subsidiaries
(Loss)/profit 107 (122) (15) (950) 1,782 832
on ordinary
activities
before
interest and
taxation
Interest 53 - 53 47 - 47
receivable and
similar
income
Interest (245) (79) (324) (373) (1) (374)
payable and
similar
charges
(Loss)/profit (85) (201) (286) (1,276) 1,781 505
on ordinary
activities
before
taxation
Tax on (loss)/ (66) - (66) (102) (39) (141)
profit on
ordinary
activities
(Loss)/profit (151) (201) (352) (1,378) 1,742 364
on ordinary
activities
after taxation
Minority (11) - (11) (38) (87) (125)
interests
Retained
(loss)/profit
for the
financial year (162) (201) (363) (1,416) 1,655 239
Basic and
diluted (loss)
/earnings per
share (0.25)p (0.31)p (0.56)p (2.19)p 2.56p 0.37p
Consolidated statement of total recognised gains and losses
For the year ended 31st December 2006
2006 2005
Total Total
�000 �000
Group (loss)/profit for the financial year (363) 201
Associated undertakings' profit for the financial year - 38
Foreign exchange adjustments (111) 212
Total recognised gains and losses for the year (474) 451
Consolidated and parent company balance sheets
As at 31st December 2006
The Group The Company
2006 2005 2006 2005
�'000 �'000 �'000 �'000
Fixed assets
Intangible assets 160 184 - -
Tangible assets 364 388 293 305
Investments 6,917 6,917 7,957 9,102
7,441 7,489 8,250 9,407
Current assets
Stocks 931 1,311 - -
Debtors - due after more than one year 651 540 - -
Debtors - due within one year 4,198 4,150 544 1,545
Total debtors 4,849 4,690 544 1,545
Cash at bank and in hand 1,292 2,382 11 11
7,072 8,383 555 1,556
Creditors: amounts falling due within one (6,021) (8,037) (2,739) (3,101)
year
Net current assets/(liabilities) 1,051 346 (2,184) (1,545)
Total assets less current liabilities 8,492 7,835 6,066 7,862
Creditors: amounts falling due after more (1,741) (609) (102) (400)
than one year
Provisions for liabilities (325) (325) (325) (325)
Net assets 6,426 6,901 5,639 7,137
Capital and reserves
Called up share capital 3,233 3,233 3,233 3,233
Share premium account 21,204 21,204 21,204 21,204
Revaluation reserve - - 117 117
Profit and loss account (18,063) (17,589) (18,915) (17,417)
Total equity shareholders' funds 6,374 6,848 5,639 7,137
Minority interests 52 53 - -
6,426 6,901 5,639 7,137
Consolidated cash flow statement
For the year ended 31st December 2006
2006 2005
�000 �000
Net cash outflow from operating activities (953) (1,748)
Returns on investment and servicing of finance
Interest received 53 46
Interest paid (284) (351)
Interest element of finance lease payments (2) (7)
Dividends paid to minority interests (11) (33)
(244) (345)
Taxation paid
UK tax paid - -
Overseas tax paid (146) (369)
(146) (369)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (19) (86)
Receipts from the sale of tangible fixed assets 2 -
(17) (86)
Acquisitions and disposals
Purchase of shares in subsidiary undertakings - (76)
Sale of shares in subsidiary undertaking 291 4,059
291 3,983
Financing
Capital element of finance lease payments (25) (30)
Decrease in advances from factors - (2)
Increase in advances from Invoice Discounting (225) 788
Increase in letters of credit (161) 15
Repayments of bank loans (470) (476)
New bank loans 1,500 247
Net cash inflow from financing 619 542
(Decrease)/increase in cash (450) 1,977
NOTES
Reconciliation of operating loss to net cash outflow from operating activities
2006 2005
�000 �000
Operating loss (763) (835)
Depreciation and impairment of tangible fixed assets 79 172
Amortisation and impairment of intangible assets 12 25
Decrease in stocks 193 332
Increase in debtors (154) (288)
Decrease in creditors (374) (668)
Decrease in provisions for liabilities - (207)
Currency adjustments 54 (279)
Net cash outflow from operating activities (953) (1,748)
Reconciliation of net cash flow to movement in net debt
2006 2005
�000 �000
(Decrease)/increase in cash (450) 1,977
Cash outflow from decrease in debt and lease finance (619) (542)
Increase in net debt and lease finance (1,069) 1,435
Inception of finance leases (59) -
Disposal of subsidiary undertaking - (648)
Foreign exchange movements 15 44
(Increase)/decrease in net debt (1,113) 831
Net debt at 1st January (2,855) (3,686)
Net debt at 31st December (3,968) (2,855)
Analysis of net debt
1st Inception Foreign exchange 31st
January Cash Of movements December
2006 Flow finance 2006
Leases
�000 �000 �000 �000 �000
Cash at bank and in 2,382 (967) - (123) 1,292
hand
Bank overdraft (2,552) 517 - 102 (1,933)
Net cash/(overdraft) (170) (450) - (21) (641)
Loans (1,019) (1,030) - 26 (2,023)
Finance leases (9) 25 (59) - (43)
Advances from Invoice (788) 225 - - (563)
Discounting
Letters of credit (869) 161 - 10 (698)
Borrowings (2,685) (619) (59) 36 (3,327)
Net debt (2,855) (1,069) (59) 15 (3,968)
Saleof business
The cash flow effect of the sale of Densitron Ferrograph Limited is shown
below:
2006
�000
Net assets disposed of
Fixed assets 19
Stock 85
Debtors 879
Creditors (440)
543
Profit on disposal 457
1,000
Satisfied by:
Short term debt 700
Amounts due in more than one year 300
1,000
The business sold during the year absorbed �518,000 from the group's net
operating cash flows, paid �24,000 in respect of net returns on investments and
servicing of finance and paid �4,000 in respect of capital expenditure.
TURNOVER
Analysis of turnover and gross profit by class of business
2006 2005
Turnover Gross Turnover Gross profit
profit
�000 �000 �000 �000
Display related products 15,442 4,634 15,325 4,885
Gaming Boards 1,650 286 1,436 289
Human machine interfaces - - 1,123 380
Public information displays 3,222 1,241 2,943 1,163
20,314 6,161 20,827 6,717
BASIC AND DILUTED EARNINGS PER SHARE
Basic earnings per share has been calculated on the Group loss attributable to
the ordinary shareholders on ordinary activities after taxation and minority
interest of �363,000 (2005: profit �239,000) and the average number of ordinary
shares in issue during the year being 64,669,106 (2005: 64,669,106).
There are no share options in existence at the end of either financial year so
the diluted earnings per share is the same as the basic earnings per share for
both years.
STATUTORY INFORMATION
The financial information set out above does not constitute the Company's
statutory accounts within the meaning of section 240 of the Companies Act
1985. The 2006 figures are based on unaudited accounts for the year ended 31
December 2006. The auditors do not expect to issue a qualified report on the
statutory accounts which will be finalised on the basis of the financial
information presented by the directors in the preliminary announcement and
which will be delivered shortly to the Registrar of Companies.
The 2005 comparatives are derived from the statutory accounts for 2005 which
have been delivered to the Registrar of Companies and received an unqualified
audit report and did not contain a statement under the Companies Act 1985, s237
(2) or (3).
Densitron Technologies plc, 5th Floor, 145 Cannon Street, London, EC4N 5BP
Telephone 020 7648 4200
For further details please contact:
Tim Pearson, Group Finance Director
Densitron Technologies plc Tel: 0207 648 4200
John Wakefield, Director
Blue Oar Securities Plc Tel: 0117 933 0020
END
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