REG - Dialight PLC - Full year results 2017 <Origin Href="QuoteRef">DIAL.L</Origin>
26/02/2018 07:11
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Dialight PLC
26 February 2018
26 February 2018
Dialight plc
("Dialight" or "the Group")
Full year results 2017
Dialight plc (LSE: DIA.L), the global leader in sustainable LED lighting for
industrial applications, announces its final results for the year ended 31
December 2017.
2017£m 2016£m
Revenue 181.0 182.2
Underlying1 operating profit 9.7 13.1
Underlying1 profit before tax 9.4 12.6
Underlying basic EPS 17.9p 26.9p
Statutory profit/(loss) from operating activitiesStatutory profit/(loss) before tax 3.33.0 (3.3)(3.8)
Statutory EPS 4.8p (8.4)p
Net cash 12.8 8.0
Key points · Production issues impacted 2017 financial performance · Actions underway to resolve the production issues· Revenues broadly flat (4% below at constant currency2)· Lighting order intake3 4% down at constant currency· Net cash of £12.8m (2016: £8.0m)· Major upgrade launched to High Bay and Area Light products
Marty Rapp, Group Chief Executive, said:
"2017 was a disappointing year, in which operational issues hampered our
ability to deliver orders to our customers. We are taking corrective action
and in the near term are wholly focused on the manufacturing challenges which
will continue to impact our results in H1. As a consequence our results for
2018 will be heavily weighted to H2 reflecting the successful resolution of
these issues.
Our market proposition remains compelling with the sustainability benefits of
reduced energy usage, lower carbon emissions, reduced maintenance and improved
safety offering real value to our customers. We remain excited by the Group's
prospects over the medium to long term and are confident of delivering future
growth."
Results presentation:
A presentation to analysts and investors will be held today at 09.00 GMT at
The City Centre, 80 Basinghall Street, London, EC2V 5AG, United Kingdom. The
presentation and an audiocast will be made available on the company's website,
www.dialight.com.
Contacts:
Dialight Plc
Marty Rapp - Group Chief Executive
Tel: +44 (0)203 058 3542
Fariyal Khanbabi - Group Finance Director
Tel: +44 (0)203 058 3542
MHP Communications
Tim Rowntree
Tel: +44 (0)20 3128 8100
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,
Denmark, Germany, Malaysia, Singapore, Australia, Mexico and Brazil.
www.dialight.com.
Notes:
1. Defined as excluding non-underlying items of £6.4m (2016: £16.4m)
2. Constant currency impact is calculated by re-translating the prior year
numbers at the exchange rate prevailing in the current year.
3. Order intake is the value of orders received in a given period.
4. 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 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. This announcement
contains inside information on Dialight Plc.
OVERVIEW
In 2015, we outlined a plan to rebuild our operations to enable scalable and
cost efficient production. This plan included transitioning to outsourced
manufacturing, streamlining our product portfolio and moving to common product
platforms. Whilst much has been achieved, problems in execution of our
outsource manufacturing transfer resulted in a poor year for reported
financial results. Our results were adversely affected by reduced production
output from our manufacturing partner principally as a result of procurement
planning issues and delays in the new product launches of High Bay and Area
Light.
I have been on board as the full time Group Chief Executive since the 8
January 2018. I have visited each of our Lighting manufacturing locations and
have spent time at our manufacturing partner site in Guadalajara, Mexico. The
whole business is very focused on resolving the issues we have and ensuring
the Group has a robust and scalable manufacturing platform.
At the current time we have a significant level of order backlog. As our
delivery performance improves we expect this to reduce. We are taking
aggressive action to address these operational issues. We are confident these
will be significantly improved by the end of H1 2018 and we will start to see
the benefits in the second half of the year. We have the right products and a
market with good growth prospects; it is incumbent on us to better serve our
customers in order to maximise the opportunities open to us as a Group.
Operations
The product requirements for the market we serve result in a low volume/high
mix product portfolio. In addition, given the variety of our customers and
applications and the difficulty in accurately predicting future demand to the
part number level, our forecasts of required raw materials change
significantly over time. In order to address this issue we platform engineered
all of our product lines to reduce the sku count and thereby simplify the
forecasting process. The concept of platform engineering and building to a sub
assembly level was, with the benefit of hindsight, not fully recognised by our
manufacturing partner.
The biggest issue affecting production continues to be having materials
available when required. The majority of the issue has been related to
materials not being ordered in time and/or sufficient quantities. This was
compounded by industry wide material shortages of some of our critical
components, which we estimate to be the cause of about 15% of our late order
performance.
A further issue stemming from platform engineering concept relates directly to
the manufacturing process itself. Our manufacturing partner operates in a
small batch-size environment, resulting in a more job-shop approach rather
than a large scale manufacturing process and as a consequence has lost
productivity due to frequent changeovers. There are nuances in scheduling
lines to maximise throughput and minimise changeovers that come with
experience. Our joint challenge is to increase the speed of learning.
The issues that we face came to the forefront in Q4 2017 as our two largest
product lines transferred to our manufacturing partner. With the benefit of
hindsight, we placed an over reliance on their ability to ramp up in our
busiest quarter of the year and under estimated the difficulties of the
transition.
We have taken two key steps in order to address these short term challenges.
First, we have significantly increased the level of support we are providing
at the plant level to our manufacturing partner. We now have a group of our
most experienced supply chain and production management employees nearly full
time on-site until we have sustainable performance at acceptable levels.
Their mission is to review every raw material line item, side by side with our
manufacturing partner employees, and take immediate action to relieve the
shortages. They will also review the production planning schedule to help
ensure that the lines are scheduled as efficiently as possible and that we are
using raw materials to the maximum advantage.
The second key step is the removal of complexity from our manufacturing
partner by transferring the more complex product types back to our Ensenada,
Mexico facility, where we have retained assembly capabilities. We feel this
will significantly help the overall production throughput at our manufacturing
partner.
Our complete focus is on ensuring we get delivery times back to normal with a
manufacturing process that is stable and efficient. We need to make our
overall fulfilment process more robust by multi-sourcing key components to
reduce the impact of shortages from a single supplier. This is one of the keys
to building a robust operational platform.
It is important as we navigate through these operational challenges that we
measure our recovery. The key lighting performance indicators we will focus on
are order growth, gross margin and on time delivery.
Business fundamentals
Despite the short term challenges we must not forget that Dialight remains
well positioned in a growing market. We remain the market leader in terms of
our technology and continue to have a strong balance sheet and remain cash
positive.
Customers convert to LED lighting and buy Dialight's products because it
remains the most efficient way to drive down energy usage. We are delivering
the next generation of lighting solutions that not only reduce energy
consumption further but 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 rapid return on investment.
We also recognise the opportunity to drive corporate-wide LED conversion
programmes. The majority of Dialight's targeted strategic customers have a
public commitment to sustainability, including carbon footprint reduction and
energy saving programmes. Driving awareness of the economic benefits as well
as the sustainability and safety benefits of our lighting at the corporate
level can change the perception of our lighting away from just maintenance
cost savings.
In addition, Dialight products are being built with upgradeable and integrated
controls. Our customers can optimise their lighting solution through direct
lighting controls. The value for customers is that they will be able to take
advantage of their built-in network of intelligent lighting to provide access
to a wide array of sensors and applications in safety and productivity.
We launched major upgrades to our High Bay and Area Light product lines.
Controls enablement is a significant feature of the High Bay upgrade. This
allows customers to use them as data harvesting points that can relay
information to the facility control system for added safety and security.
These products also provide customers with greater energy efficiency and
global certifications.
Growth requires the right products, the preferred distribution channels, and
experienced sales teams. Dialight has built its strongest capabilities in the
U.S. providing a model that can be scaled around the world. Europe represents
an advanced customer base and significant opportunity, yet has been under
served by Dialight. Our new product road map will include the breadth of
product features and certification requirements needed in Europe. With strong
sales teams and a number of newly signed distributor partners, Dialight is
well positioned to begin to seize the European opportunity.
Dialight's Australian team has proven to be very successful in driving growth
and building capabilities in the region. Extending that leadership with strong
local support into South East Asia represents a significant opportunity for
growth.
The industrial LED opportunity remains largely untapped as the conservative
customer base has sought low-risk, proven solutions. Dialight's 10 years of
experience has earned a predominant position and we have an installed product
base of over one million products. With the aim of improving our quality of
earnings we have demonstrated our ability to sell across industrial sectors
and reduce our reliance on oil and gas markets. This initiative has continued
despite the operational challenges that we have faced.
Dialight will use its ability to deploy new technology to drive a shift in
spending and accelerate adoption of LED technology in industrial customers.
Our market proposition is compelling, with the sustainability benefits of
reduced energy usage, lower carbon emissions, reduced maintenance and improved
safety offering real value to our customers.
Outlook
2017 was a disappointing year, in which operational issues hampered our
ability to deliver orders to our customers. We are taking corrective action
and in the near term are wholly focused on the manufacturing challenges which
will continue to impact our results in H1. As a consequence our results for
2018 will be heavily weighted to H2 reflecting the successful resolution of
these issues.
Our market proposition remains compelling with the sustainability benefits of
reduced energy usage, lower carbon emissions, reduced maintenance and improved
safety offering real value to our customers. We remain excited by the Group's
prospects over the medium to long term and are confident of delivering future
growth.
FINANCIAL REVIEW
We have had a challenging year in the execution of our three-year strategy to
build a robust and scalable operational platform for future growth. In 2017,
we expected to complete the move to our manufacturing partner by mid-year.
However, the platform engineering of our products was not completed on time
and this delayed the launch of our two largest product families by six
months.
The ability of our manufacturing partner to ramp up production was slower than
they anticipated. At the same time, we also experienced extended lead times on
critical components leading to severe production delays which had a major
impact on our results. Despite the challenges that we faced, Group revenue was
on a par with 2016 at £181.0m (2016: £182.2m) and on a constant currency basis
was 4% lower than 2016. The resilience in revenue was counteracted by
additional costs of production due to the delays, resulting in a 130 basis
points reduction in gross margin. Operating costs were flat year on year,
resulting in an underlying operating profit of £9.7m, a reduction of £3.4m
compared to 2016.
The key drivers for the reduction in the underlying operating profit are as
follows:
- (£0.4m) gross margin impact of the revenue reduction;
- (£2.4m) due to additional freight charges due to expediting late
orders;
- (£1.6m) due to ongoing investment in sales;
offset by £1.0m due to operational savings.
Currency impact
Dialight reports its results in Sterling. Our major trading currency is the US
Dollar, which in 2017 comprised 81% of the Group's revenue. The Group has both
translational and transactional currency exposure. Translational exposures
arise on the consolidation of overseas results into Sterling and this is the
major currency exposure. Transactional exposure is where the currency of sales
or purchases differ from the local functional currency. We use natural hedging
on revenue and purchases to mitigate the majority of the currency risk.
The US Dollar strengthened by 5% compared to the prior year and was the main
driver for the currency impact. The average rate for the US Dollar against
Sterling has moved from 1.36 in 2016 to 1.29 in 2017.
Based on the current mix of currencies, a 1% movement in the US dollar
relative to Sterling changes revenue by £1.5m and EBIT by £0.2m.
Lighting segment
Lighting 2017£m 2016£m Variance
Revenue 137.5 136.6 +1%
Gross profit 54.3 57.4 (5%)
Gross profit % 40% 42% -200bps
Overheads (43.1) (43.9) (2%)
Underlying EBIT 11.2 13.5 (17%)
The Lighting segment represented 76% of the Group's revenue and 74% of the
Group's underlying segmental operating profit. Revenues were 1% higher (4%
lower at constant currency) compared with the prior year. The production
delays adversely impacted the level of on time delivery and this resulted in
lower revenues across all territories except Australia.
Our order intake, i.e. the value of orders received in the year, was also
adversely impacted with a year on year decline of 4% at constant currency.
This was caused by customers deferring orders due to delayed product launches
and poor on time delivery.
We have maintained our diversity of market penetration within the key vertical
markets and the top three market verticals now account for 39% of revenue in
2017 compared with 41% in the prior year.
Gross margin contracted by 200 basis points to 40% and gross profit reduced
£3.1 million year on year. The major elements for the decrease are:
- increased freight costs due to air freighting late deliveries
in order to meet customer demand;
- our manufacturing partner was not able to make the more
bespoke and higher margin products; and
- we had to operate our in-house facility below capacity
resulting in inefficiencies.
Operating costs increased by 2% with the cost of incremental headcount not
funded by increased revenue. The result of lower gross margin and higher costs
is that the overall underlying operating profit in the Lighting segment
reduced by 17% to £11.2m.
Signals and components
Signals and Components 2017£m 2016£m Variance
Revenue 43.5 45.6 (5%)
Gross profit 12.4 12.1 +2%
Gross profit % 29% 27% +200bps
Overheads (8.5) (7.2) (18%)
Underlying EBIT 3.9 4.9 (20%)
Signals and Components are high volume businesses operating within highly
competitive markets. Reported revenue reduced by 5% but the prior year
includes revenue from the discontinued European business of £5.5m. Excluding
this business, revenue grew by 8% year on year. There is significant
competition from low cost producers but margins improved by 2% as a continuous
cost improvement programme mitigated the price erosion. Overall there was a
reduction in underlying operating profit of £1.0m (20%).
Central overheads
Central overheads comprise of costs not directly attributable to a segment and
therefore not allocated to these segments. In 2017 they amounted to £5.4m, a
marginal increase of £0.1m from 2016.
Non-underlying costs
The Group incurs costs and earns income that is non-recurring in nature or
that is otherwise considered to not be reflective of the underlying
performance of the business. In the assessment of performance of the Group,
management examines underlying performance, which removes the impact of
non-underlying costs and income. The table below presents the components of
non-underlying profit or loss recorded within cost of sales and administrative
expenses:
Non-underlying costs 2017£m 2016£m
Employee severance and restructuring costs 0.3 (5.3)
Intangible asset impairment (1.2) (5.1)
Tangible asset impairment and disposals (0.9) 0.2
Inventory costs - (3.7)
Production transfer costs (4.6) (2.4)
Other - (0.1)
Non-underlying costs recorded in administrative expenses and cost of sales (6.4) (16.4)
Total cash impact (5.2) (4.9)
Over the past two years the Group has been implementing its strategic plan to
transform to a robust and scalable manufacturing platform. We incurred costs
of £4.6m relating to the transfer of lighting assembly to our manufacturing
partner. This figure relates to set-up costs, project management and dedicated
engineering time. In addition, we reviewed and impaired fixed assets of £0.9m
as part of scaling down our in-house Mexican facility and intangible assets of
£1.2m related to product prototypes that have subsequently been superseded as
a result of platform engineering.
In the prior year, non-underlying costs related to the closure of the UK
manufacturing facility, expected redundancy costs at the Mexican production
facility, goodwill impairment of the European Traffic business and the costs
of initial production transfer to our manufacturing partner.
Cash flow
The Group's net cash position improved by £4.8m in the year from a net cash
position of £8.0m at 31 December 2016 to a net cash position of £12.8m at 31
December 2017.
The roll forward of net cash was as follows:
Cash flow 2017£m 2016£m
Underlying operating profit (EBIT) 9.7 13.1
Depreciation 2.4 3.1
Amortisation 1.5 4.0
Adjusted underlying EBITDA 13.6 20.2
Working capital movements (excluding impact of non-underlying items) 5.9 0.8
Adjusted operating cash flow 19.5 21.0
Cash conversion % 143% 104%
There was a net reduction in working capital mainly driven by reduced
inventory as a result of production being partially transferred to our
manufacturing partner. The major outflows relate to capital expenditure of
£4.9m (2016: £6.0m) and a net cash outflow of £5.2m for non-underlying items.
Banking
The Group has its banking relationships with HSBC Bank plc and Wells Fargo.
The Group has a revolving credit facility with HSBC of £25m, with a further
£25m "accordion" feature, and a five-year term. The Group has no borrowings
against the facility at the balance sheet date and remains fully compliant
with its covenant requirements which ensures significant financial
flexibility.
Capital management and dividend
The Board's policy is to maintain a strong capital base in order to maintain
customer, investor and creditor confidence and to sustain future development
of the business. The Board considers consolidated total
equity as capital. At 31 December 2017 this equated to £76.1m (2016: £77.1m).
The Board is not proposing any final dividend payment for 2017 (2016: nil).
The Group has a clear capital allocation discipline and is committed to
returning excess funds to shareholders via future dividend or share
repurchase.
Full year guidance for 2018
The Board continues to expect a H2 weighting to the Group's trading
performance for the year ending 31 December 2018. As a result of the US tax
legislation changes which have been effective from 1 January 2018, we
anticipate the effective tax rate for 2018, will be in the low twenties before
discrete tax items. We expect our capital expenditure to be in the region of
£6m for 2018.
Marty Rapp, Group Chief Executive
Fariyal Khanbabi, Group Finance Director
26 February 2018
Principal Risks and Uncertainties
The Board is responsible for identifying the nature and extent of the risks
the Group has to manage in order to successfully pursue its growth strategy
and generate shareholder value over the long term.
The Board uses a risk framework which is designed to support the process for
identifying, evaluating and managing both financial and non-financial risk.
The Group has identified the following key risks. This is not an exhaustive
list but rather a list of the most material risks facing the Group. The impact
of these risks, individually or collectively, could potentially affect the
ability of the Group to operate profitably and generate positive cash flows in
the medium to long term. As a result these risks are actively monitored and
managed, as detailed below. As noted in the Business Review, the short term
management focus is on mitigating the production and supply chain risks which
impacted 2017.
STRATEGICOBJECTIVE RISK CATEGORY RISKDESCRIPTION IMPACT MITIGATION
1,2,3* Production capacity - Production capacity needs to be sufficient to ensure current orders can be fulfilled in a timely manner andbe scalable to support growth- Risks to production capacity by using a single-site location, for the manufacture of all Lighting products- The Group needs to maintain a robust supply chain - Inability to fulfil demand due to lack of product availability- Loss of revenue andoperating profit -The Group moved Lighting production to its manufacturing partner during the year in order to provide
scalable operations.- The complexity of our products was not fully appreciated by our manufacturing
partner. This resulted in a slower than expected ramp-up causing capacity constraints which led to
delays in order fulfilment and lower revenue.-We have placed full-time staff at our manufacturing
partner's facility to hasten the knowledge transfer on production and procurement management.
-Production capacity is being re-balanced between our manufacturing partner and our in-house facility
to mitigate part of this risk by moving production of certain complex products back to our own Mexican
facility.-The material shortages at our manufacturing partner resulted in significant production
capacityconstraints. The dual sourcing programme has been delayed while these immediate issues were
addressed but this is a high priority issue for the coming year.
1,2 Supply chain management The procurement planning process is dependent on the accuracy of sales forecasts to ensure adequacy of component supply -Inability to fulfil demanddue to lack of product availability-Higher inventoryobsolescence with an adverse impact on gross margin We continue to refine our forecasting process and review the accuracy levels monthly in order to
provide a continuous cycle of ownership and improvement.
2,3 IT systems The Group uses IT systems to operate and control its business; any disruption to this would have an adverse impact on the business. The Group also needs to ensure the protection and integrity of its data -Inability to supplycustomers-Loss of revenue andsignificant business disruption-Loss of commerciallysensitive information -The Group continually reviews its IT systems to ensure that they are robust and scalable in line with
the expansion of the business.-There are back-ups built into all Group systems and the spread of
systems offers good protection from individual events-Third-party suppliers are used to provide data
protection software.
3 Political conditions The Group's main manufacturing plants are in Mexico and its main market is North America. Proposed import tariffs could impact the Group's business model. "Brexit" has introduced uncertainty to the level of tariffs on goods imported from Europe -Reduced financial performance-Loss of market share-Unforeseen liabilities -Based on current information potential tariffs on imports from Mexico to USA and Canada are not a
major risk.-The Group is considering production locations within the EU.
2,3 Succession planning and staff calibre Group performance is dependent on attracting and retaining high quality staff across all functions Without good calibre staff, the Group will find it difficult to expand and achieve its strategic goals -The Group's development programmes enhance the skills of executives and middle managers.-A
comprehensive recruitment process and ongoing evaluation assist high-quality hiring and development.-
Considerable time is spent assessing middle and senior management in order to identify succession
plans.
3 Intellectual property Theft or violation of intellectual property ("IP") by third parties or third -Proprietary technology used by competitors leading to loss of market share and revenue -Unforeseen liabilities -All intellectual property is protected by patents and potential violations are pursued through legal
parties taking legal action for IP infringement process.-Patent office screening used to avoid infringing existing patents.
1,2,3 Market trends & competition -To continue to lead the market, the Group must be able to identify where customer demand is trending and ensure that we have the products to match- Failure to deliver technologically advanced products or to execute sales strategy could result in loss of market share Loss of market share -The Group has a robust business case process which incorporates feedback from customers and is
evaluated through market intelligence.-Internal and external marketing resources are used to review
market trends and ensure that the Group's products remain at the forefront of the market.-Significant
upgrades to our two largest product lines (High Bay and Area Light) were launched during the year.
1,2,3 Product development strategy Ability to deliver new products to the market on a timely basis -Loss of market share -Lack of order growth -New product development process is being reviewed due to delays in 2017 and greater emphasis is being
placed on manufacturability.
1,2,3 Product recall The Group gives a ten year warranty on Lighting products Unforeseen liabilities -We maintain a reserve against potential claims.-Product quality is a key focus in the design stage
and during the manufacturing process.
3 Foreign exchange Foreign currency risk is the most significant treasury related risk for the Group. In times of significant volatility, this can have a material impact on performance -Volatile financialperformance arising from translation of profit from overseas operations-Most of the Group'sprofit earned is not in the reporting currency -The Group uses natural hedging to cover operational exposure as the majority of revenue and costs are
in US Dollars. As the business expands geographically, the use of forward contracts will be reviewed
to limit operational exposure on a selected currency basis.-Translational exposure is not currently
hedged but the Group reports key financial indicators on an actual and a constant currency basis.
*Key 1 - Reinforce our foundations 2 - Strengthen our capabilities 3 - Create
and capture value
Consolidated income statement
For the year ended 31 December 2017
Twelve months ended Twelve months ended
31 December 2017 31 December 2016
Note Underlying Non-underlying Total Underlying Non-underlying Total
£'m £'m £'m £'m £'m £'m
Revenue 2 181.0 - 181.0 182.2 - 182.2
Cost of sales (114.3) - (114.3) (112.7) (3.7) (116.4)
Gross profit 66.7 - 66.7 69.5 (3.7) 65.8
Distribution costs (34.0) - (34.0) (32.7) - (32.7)
Administrative expenses (23.0) (6.4) (29.4) (23.7) (12.7) (36.4)
Profit/(loss) from operating activities 2 9.7 (6.4) 3.3 13.1 (16.4) (3.3)
Financial income - - - - - -
Financial expense (0.3) - (0.3) (0.5) - (0.5)
Net financing expense 4 (0.3) - (0.3) (0.5) - (0.5)
Profit/(loss) before income tax 9.4 (6.4) 3.0 12.6 (16.4) (3.8)
Income tax (expense)/credit 5 (3.5) 2.2 (1.3) (3.9) 4.9 1.0
Profit/(loss) for the year 5.9 (4.2) 1.7 8.7 (11.5) (2.8)
Profit/(loss) for the year attributable to:
Equity owners of the Company 1.3 (2.8)
Non-controlling interests 0.4 -
Profit/(loss) for the year 1.7 (2.8)
Earnings per share
Basic 7 4.8p (8.4p)
Diluted 7 4.8p (8.4p)
Consolidated statement of comprehensive income
For the year ended 31 December 2017
2017 2016
£'m £'m
Other comprehensive income
Items that may be reclassified subsequently to profit and loss
Exchange difference on translation of foreign operations (5.6) 11.3
Income tax on exchange difference on translation of foreign operations 0.6 (0.9)
(5.0) 10.4
Items that will not be reclassified subsequently to profit and loss
Remeasurement of defined benefit pension liability 1.9 (1.5)
Income tax on remeasurement of defined benefit pension liability (0.4) 0.3
1.5 (1.2)
Other comprehensive income for the year, net of tax (3.5) 9.2
Profit/(loss) for the year 1.7 (2.8)
Total comprehensive (expense)/income for the year (1.8) 6.4
Attributable to:
Owners of the parent (2.2) 6.4
Non-controlling interests 0.4 -
Total comprehensive (expense)/income for the year (1.8) 6.4
Consolidated statement of changes in equity
For the year ended 31 December 2017
Share Merger Translation Capital Retained Total Non- Total
capital reserve reserve redemption earnings £'m controlling equity
£'m £'m £'m reserve £'m interests£'m £'m
£'m
Balance at 1 January 2017 0.6 1.4 15.4 2.2 57.6 77.2 (0.1) 77.1
Profit for the year 1.3 1.3 0.4 1.7
Other comprehensive (expense)/income
Foreign exchange translation differences, net of tax (5.0) (5.0) (5.0)
Remeasurement of defined benefit pension liability, net of tax 1.5 1.5 1.5
Total other comprehensive (expense)/income (5.0) 1.5 (3.5) (3.5)
Total comprehensive (5.0) 2.8 (2.2) 0.4 (1.8)
(expense)/income for the year
Transactions with owners,
recorded directly in equity
Share-based payments, net of tax 0.8 0.8 0.8
Dividends
Total contributions by and distributions to owners 0.8 0.8 0.8
Balance at 31 December 2017 0.6 1.4 10.4 2.2 61.2 75.8 0.3 76.1
Share Merger Translation Capital Retained Total Non- Total
capital reserve reserve redemption earnings £'m controlling equity
£'m £'m £'m reserve £'m interests£'m £'m
£'m
Balance at 1 January 2016 0.6 1.4 5.0 2.2 61.0 70.2 (0.1) 70.1
Loss for the year - - - - (2.8) (2.8) - (2.8)
Other comprehensive income
Foreign exchange translation differences, net of tax - - 10.4 - - 10.4 - 10.4
Remeasurement of defined benefit pension liability, net of tax - - - - (1.2) (1.2) - (1.2)
Total other comprehensive income - - 10.4 - (1.2) 9.2 - 9.2
Total comprehensive - - 10.4 - (4.0) 6.4 - 6.4
income for the year
Transactions with owners,
recorded directly in equity
Share-based payments, net of tax - - - - 0.6 0.6 - 0.6
Dividends - - - - - - - -
Total contributions by and distributions to owners - - - - 0.6 0.6 - 0.6
Balance at 31 December 2016 0.6 1.4 15.4 2.2 57.6 77.2 (0.1) 77.1
At 31 December 2017 the number of shares held by the Group through the
Dialight Employees' Share Ownership Plan Trust ("ESOT") was nil (2016: nil).
The
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