REG - Dialight PLC - Trading Update

DialightAnnouncement

30/01/2024 07:15

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RNS Number : 2924B  Dialight PLC  30 January 2024

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
(http://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

 

 

 

 

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