Dialight finals

Supplier of light emitting diode (LED) solutions for industrial users. Applying leading edge LED technology, it produces retro-fittable lighting fixtures designed specifically for hazardous locations, obstruction signals and traffic signalling.  I have a holding in my growth portfolio (epic code: DIA). 

Dialight released their preliminary results today.  Group revenue increased by 22% to £159.8m and up 25% on constant exchange rates (CER) with underyling operating profit up 25% (30% CER) to £18.1m and up 36.2% on a reported basis to £15.8m.

Lighting performed strongly with revenue up by 46% and operating profit up 26%.  Signals revenue was down 4% due to a 20% decline in traffic lights, partially off-set by a 16% increase in lighting for the obstruction sector; operating profit for Signals was up 15%.  Components revenue and operating profits were down 6% and 69% respectively.

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Underlying EPS was 36.8p an increase of 20% and 29.2p on a reported basis up 23%.  Underlying operating margins were up 20 bps to 11.3% and ROCE was a healthy 23.9%.  Free cash flow, although an improvement, has not recovered to historic levels with £1.2m compared to -£4.7m last year.  Dividend payments amounted to £4.8m and £3.1m was paid on an agreed earn-out for the acquisition of Airinet purchased in 2012, consequently cash declined by £6.5m to £0.6m.  

A final dividend of 9.8p was declared making 15p for the year, an increase of 4.2%. 

The otlook was positive, but rather general in nature "...The adoption of LED lighting in the industrial and hazardous markets is still at an early stage and the opportunity for growth remains significant. We continue to see strong demand for our LED lighting and the Board remains confident in the future prospects of the Group..."

The share price responded well to these results, up over 4% to 689p, although there will continue to be some uncertainty, until a new CEO is appointed to replace Roy Burton who retired due to ill health and, free cash flow returns to historic levels.