Dialight plc Vantage Park Washingley Road Huntingdon PE29 6SR www.dialight.com

World leader in applied LED technology Half year report 2009

Our proven strategy:

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Group Revenue unchanged at £34.6 million Strong growth in sales of Obstruction products with excellent prospects based on major contract win Good cash generation and cash balance of £7 million Operating profit of £0.6 million (2008: £2 million) Interim dividend increased by 10% to 2.3p (2008: 2.1p)

Dialight plc 2B, Vantage Park, Washingley Road, Huntingdon PE29 6SR Telephone: 01480 447490 Facsimile: 01480 447493 Email: [email protected] www.dialight.com

01 05 06 07 08 09 10 19 20

Dialight Corporation 1501 Route 34 South Farmingdale New Jersey 07727 USA Telephone: +1 732 919 3119 Facsimile: +1 732 751 5778 Email: [email protected] www.dialight.com Dialight de Mexico Calle Lirios S/N Colona Pacheco Ensenada B.C. Mexico Telephone: +52 (646) 156 7080 Facsimile: +52 (646) 175 8283 Dialight Garufo GmbH Gewerbepark Spörerau 25 D-86368 Wang Germany Telephone: +49 87 09 92 490 Facsimile: +49 87 09 92 4910 Email: [email protected] www.dialight.com

Chairman and Chief Executive’s statement Condensed consolidated income statement Condensed consolidated statement of comprehensive income Condensed consolidated statement of changes in equity Condensed consolidated statement of total financial position Condensed consolidated statement of cash flows Notes to the financial statements Responsibility statement of the Directors in respect of the half-yearly financial report Independent review report to Dialight plc Designed and produced by Radley Yeldar www.ry.com

Dialight BLP Exning Road Newmarket Suffolk CB8 0AX Telephone: 01638 665161 Facsimile: 01638 660718 Email: [email protected] www.blpcomp.com Dialight Europe Exning Road Newmarket Suffolk CB8 0AX Telephone: 01638 665161 Facsimile: 01638 660718 Email: [email protected] www.dialight-obstruction-lights.com Dialight Lumidrives York House Wetherby Road Long Marston York YO26 7WH Telephone: 0845 6346161 Facsimile: 0845 6346160 Email: [email protected] www.lumidrives.com

01 Dialight plc Half year report 2009

Chairman and Chief Executive’s statement

Financial results We are pleased to report a creditable performance in a period of extremely difficult economic conditions with all business segments reporting a profit.

Harry Tee CBE Chairman

Group revenues for the six months ended 30 June 2009 were unchanged from 2008 at £34.6 million (2008: £34.5 million). Operating profit was £0.6 million (2008: £2 million) and profit before tax was £0.5 million (2008: £2.1 million). Two-thirds of the Group’s sales are denominated in US$ and the strengthening of the US$ against sterling has had a positive effect on Dialight’s results. The average US$:£ was 1.975 in 2008 compared to 1.49 in 2009. At constant currency Group sales were £28.2 million and operating profit was £0.1 million. Signals/Illumination revenue grew by 12% (decrease of 11% at constant currency) and we are particularly pleased to report the increase in obstruction product sales driven by adoption of our dual strobe product in the US. Overall within Signals/Illumination, obstruction sales grew by 54% (23% at constant currency). In addition the Signals business has improved its contribution margin by 4% compared with the first half of 2008 through the continuing processes to reduce material costs and by improving operational efficiencies.

Roy Burton Group Chief Executive

Basic earnings per share increased to 7.3p in 2009 from 4.2p in 2008. The underlying earnings per share decreased to 1p in 2009 from 4.2p in 2008. The basic earnings per share is adjusted to the underlying earnings by the non-cash release of provisions of £1.9 million no longer required, held against the profit on businesses sold in prior years. The Group has generated net cash inflows from operations of £5.4 million (2008: £2.4 million) representing 875% (2008: 122%) of operating profit. During the first half working capital reduced by £3.3 million including a reduction in inventory of £2.5 million. The Group also paid the final dividend to shareholders of £1.2 million (2008: £1.2 million). As at 30 June 2009 the Group had a cash balance of £7 million (December 2008: £4.1 million, June 2008: £3.5 million). Dividend The Board is pleased to declare an interim dividend of 2.3p per share (2008: 2.1p). The interim dividend is covered 3.14 times by profit after taxation (2008: 1.99 times). The interim dividend is payable on 17 September 2009 to shareholders whose names are on the Register of Members at close of business on 7 August 2009. Business review Signals/Illumination The Signals/Illumination segment addresses the increasing demands for Energy Efficient Lighting solutions. Through the use of high brightness LEDs and utilisation of a number of associated technologies we create and deliver compelling value propositions to our customers. In the view of the Board, this segment is a significant driver for growth as new applications gain increased relevance in a society which is ever more conscious of the potential scarceness of energy and harm to the environment.

02 Dialight plc Half year report 2009

Chairman and Chief Executive’s statement

Our strategy of identifying and servicing sizeable regulated niche markets remains unchanged. The Company will continue to work closely with LED developers to identify and bring to market Solid State Lighting and Signalling Products which deliver value to its customers through savings in energy and significantly improved product lifetimes and reliability. Traffic Lights Overall, sales of Traffic Lights reduced by 16% in constant currency with both North America and Europe contributing to the lower sales. In North America this slowdown can be attributed largely to an exceptional performance in the prior year due primarily to shipments against the Miami Dade contract. After a slow start to the year, we saw a recovery in the second quarter and expect the government stimulus package to favourably influence the second half; the recently announced order from the State of New Mexico being the first significant indication of stimulus money being allocated to LED Traffic Lights. The largest potential market for Traffic Signals growth remains in Europe where the adoption of LED technology for Traffic Lights rests at less than 10%. Whilst this potential for growth still exists and we believe over 7,000,000 Traffic Lights are still to be converted to LED technology, sales in the first half were adversely affected by lack of funding in Eastern Europe. Sales in Western Europe remained flat with the exception of the UK where we saw some significant increase in sales to our two key customers. Prospects for the second half look promising and we are starting the half with a strong order book and expect Europe to return to levels comparable with the second half of 2008. Obstruction Lights Once again Obstruction Lights demonstrated continued excellent growth with sales up over 23% from 2008 H1 despite some slowdown in products for the Wind Turbine Market due to funding difficulties for such projects. Dialight has been selling LED based products into this market since 2002 but until late 2007, all these lights have been based on red LEDs. The introduction at the end of 2007 of a white strobe product for the North American Telecommunication market is expected to be the significant growth driver for the future. The recently announced agreements with a major Telecommunications Tower operator is expected to drive significant sales growth. This contract, whilst significant, represents less than 5% of the $250 million installed base of Xenon based strobes which can be replaced by Dialight’s White LED Strobe with significant operational advantages. We anticipate continued strong growth in this product line driven not only by the White Strobe demand but also by the anticipated recovery of the Wind Turbine Market – wind turbines requiring the efficient and rugged lights provided by our LED products. Transportation Sales in this sector are primarily to the US Transit Bus market and for use on Heavy Duty Trucks. Revenues in the first half of this year at constant currency were unchanged from 2008. Long life and ruggedness are the primary attributes of our products for this market. Dialight maintains its strong position in this market which is subject to assistance from the US Federal Stimulus package.

03 Dialight plc Half year report 2009

Chairman and Chief Executive’s statement

Lighting Sales to the Architectural Lighting market were adversely affected by the weak economy on both sides of the Atlantic. Lighting revenues in total were down by 29% at constant currency although sales in the more strategically important sector of Industrial White Lighting grew. In 2009 the run rate for sales of our Safesite Hazardous Location Light grew by 50% compared to the whole of 2008. Whilst our sales are small in relation to the size of the market, we shipped products to many different customers including some leading players in the oil, petrochemical, pharmaceutical and mining industries. We anticipate that these initial trial sales will lead to strong adoption of these white LED products in challenging applications. Dialight has a pipeline of new white lighting products which will be introduced over the coming months – all for use in the Industrial sector – and which are expected to consolidate our position as the leader in bringing LED lighting to challenging environments. There has been significant interest in the use of LED lighting for streetlights. Dialight has supplied products for trial with a number of US authorities and whilst it is yet early days for this application, we anticipate the use of LEDs in street lighting when allied with intelligent control. Growth in Solid State Lighting will be driven by more efficient LEDs and the increasing requirement to save more energy and to reduce carbon emissions. Dialight is ideally placed to service this demand by firstly identifying those areas where a strong energy efficient value exists and then bringing innovative products to market early to satisfy that growing demand. Components Indication business It is important to recognise Dialight’s strong position in this market when viewed against the 36% (at constant currency) drop in sales versus 2008. These products are sold primarily to Electronics OEMs for status indication. This is a market niche and Dialight is an Approved Vendor to most of the world’s major OEMs in the professional electronic equipment market. We also sell to over 15,000 different customers through a number of major Electronic Distributors. The significant drop in sales merely reflects the market and we fully expect that Dialight’s sales will recover in line with the market. Demand has steadied through the first half with perhaps the first signs of some recovery although it is difficult to predict market trends. We expect modest improvement in the second half driven by a return of the sales channel to more normal inventory levels. Electromagnetic Disconnects The move towards “smart metering” and a “smart grid” has been well publicised and significant funding has been provided in the US Stimulus Package. Dialight has been supplying high reliability, high current switches to this market in the US for some time and whilst revenues show an 11% drop versus 2008, this is in the older products of this segment. The recently announced orders for the new “smart” products support the future growth of this segment and Dialight remains well positioned with a number of US meter manufacturers.

04 Dialight plc Half year report 2009

Chairman and Chief Executive’s statement

There are in the US over 100 million domestic electricity meters which represents a potential market of more than $1 billion for Dialight. Costs and margins Re-engineering and cost reduction are part of the normal course of business for Dialight and we pay close attention to the effects of incoming material costs and the prices that we can charge for our products and the obvious effects on our margins. The margins in our Component businesses have remained stable in the period except for some excess labour cost incurred in the first quarter whilst we reduced the direct labour workforce. Signals/Illumination is a business which is subject to much product development and new product introduction, giving us opportunities for improvements to the solutions which we offer to the market. Over the past years, we have seen improving contribution margins in this sector and the first half of 2009 is no exception to that trend. The contribution margin for the half for Signals/Illumination is a full four points better than the same period in 2008 and two points better than the second half of 2008. This improvement is partly due to a richer mix of sales but is also a major endorsement of the ongoing improvement programmes driven by our Engineering and Operations teams in all of our locations. Current trading and outlook Whilst the major economic downturn at the end of 2008 affected all of our businesses, the Board is pleased with the progress made in penetration of new markets and adoption of our new products. Although we expect only modest improvement in our Indication business, the recently announced contracts for Obstruction Lighting and Meter Disconnects supported by the strong opening orders for European Traffic, lend support to significantly improved prospects for the second half of the year. We also confidently expect accelerated adoption of our strategically important white lighting products. The Board remains confident in the Group’s prospects for the rest of the year and its ability to generate substantial sales of its Ultra Efficient Lighting products in the future.

Harry Tee CBE Chairman

Roy Burton Group Chief Executive

05 Dialight plc Half year report 2009

Condensed consolidated income statement For the period ended 30 June 2009

Note

Continuing operations Revenue Cost of sales

2

Gross profit Distribution costs Administrative expenses

6 months ended 30 June 2009 (unaudited) £’000

6 months ended 30 June 2008 (unaudited) £’000

12 months ended 31 December 2008 (audited) £’000

34,625 (27,626)

34,543 (27,504)

77,855 (61,595)

6,999 (3,018) (3,367)

7,039 (2,391) (2,675)

16,260 (5,146) (5,793)

1,973 1,104 (936)

5,321 2,177 (1,861)

Results from operating activities Financial income Financial expense

2

614 880 (965)

Net financing (expense)/income

4

(85)

Profit before income tax Income tax expense

2 5

529 (207)

2,141 (835)

5,637 (2,168)

322

1,306

3,469

1,939

–

–

2,261

1,306

3,469

7.3p 7.1p

4.2p 4.1p

11.2p 10.9p

Profit from continuing operations Prior periods discontinued operations Adjustment to profit from businesses sold in prior years

316

3

Profit for the period attributable to equity holders of the Company Earnings per share Basic Diluted

168

7 7

The accompanying Notes form an integral part of these interim financial statements.

06 Dialight plc Half year report 2009

Condensed consolidated statement of comprehensive income For the period ended 30 June 2009

6 months ended 30 June 2009 (unaudited) £’000

6 months ended 30 June 2008 (unaudited) £’000

12 months ended 31 December 2008 (audited) £’000

Other comprehensive income Exchange difference on translation of foreign operations Actuarial losses on defined benefit pension schemes Income tax on other comprehensive income

(3,081) (2,172) 548

317 – –

7,183 (3,407) 1,289

Other comprehensive income for the period, net of tax

(4,705)

317

5,065

2,261

1,306

3,469

(2,444)

1,623

8,534

Profit for the period Total comprehensive income for the period attributable to equity holders of the Company

The accompanying Notes form an integral part of these interim financial statements.

07 Dialight plc Half year report 2009

Condensed consolidated statement of changes in equity For the period ended 30 June 2009 (Unaudited)

Share capital £’000

Merger reserve £’000

Translation reserve £’000

Capital redemption reserve £’000

Retained earnings £’000

Total £’000

591 –

546 –

5,486 –

2,232 –

28,649 2,261

37,504 2,261

–

–

–

–

–

–

–

–

Transactions with owners recorded directly in equity: Dividends to equity holders Share–based payment transactions

–

–

–

–

–

–

–

–

Total transactions with holders

–

–

–

–

Balance at 30 June 2009

591

546

2,405

Balance at 1 January 2008 Profit or loss Other comprehensive income Foreign currency translation differences

591 –

546 –

(1,697) –

–

–

–

Balance at 1 January 2009 Profit or loss Other comprehensive income Foreign currency translation differences Defined benefit plan actuarial losses, net of taxes Total comprehensive income for the period

Total comprehensive income for the period

(3,081) – (3,081)

– –

(1,624) 637

(1,218) 93

(3,081) (1,624) (2,444)

(1,218) 93

(1,125)

(1,125)

2,232

28,161

33,935

60 –

31,349 1,306

30,849 1,306

317

–

–

317

–

317

–

1,306

1,623

Transactions with owners recorded directly in equity: Dividends to equity holders Share–based payment transactions Own shares purchased Redemption of shares

–

–

–

–

(1,187)

(1,187)

– – –

– – –

– – –

– – 2,021

51 (191) (2,021)

51 (191) –

Total transactions with holders

–

–

–

2,021

(3,348)

(1,327)

591

546

2,081

29,307

31,145

Balance at 30 June 2008

(1,380)

08 Dialight plc Half year report 2009

Condensed consolidated statement of total financial position As at 30 June 2009

30 June 2009 (unaudited) £’000

30 June 2008 (unaudited) £’000

31 December 2008 (audited) £’000

6,735 8,237 3,560

6,121 8,109 1,035

7,793 8,932 3,042

Total non-current assets

18,532

15,265

19,767

Inventories Trade and other receivables Cash and cash equivalents

9,490 14,624 7,041

10,936 16,560 3,540

12,994 20,366 4,145

Total current assets

31,155

31,036

37,505

Total assets

49,687

46,301

57,272

Liabilities Loans and borrowings Trade and other payables Tax liabilities

– (8,032) (1,141)

(151) (10,631) (2,513)

– (11,059) (2,786)

Total current liabilities

(9,173)

(13,295)

(13,845)

Employee benefits Provisions Deferred tax liability

(5,418) (1,011) (150)

(888) (851) (122)

(4,469) (1,307) (147)

Total non-current liabilities

(6,579)

(1,861)

(5,923)

(15,752)

(15,156)

(19,768)

Net assets

33,935

31,145

37,504

Equity Issued share capital Merger reserve Other reserves Retained earnings

591 546 4,637 28,161

591 546 701 29,307

591 546 7,718 28,649

Total equity attributable to equity shareholders of the parent company

33,935

31,145

37,504

Assets Property, plant and equipment Intangible assets Deferred tax asset

Total liabilities

09 Dialight plc Half year report 2009

Condensed consolidated statement of cash flows For the period ended 30 June 2009

6 months ended 30 June 2009 (unaudited) £’000

6 months ended 30 June 2008 (unaudited) £’000

12 months ended 31 December 2008 (audited) £’000

Operating activities Profit for the year Adjustments for: Financial income Financial expense Income tax expense Adjustment to profit on sale of businesses in prior years Share–based payments Depreciation of property, plant and equipment Amortisation of intangible assets

2,261

1,306

3,469

(880) 965 207 (1,939) 93 782 561

(1,104) 936 835 – 51 615 477

(2,177) 1,861 2,168 – 154 1,598 1,075

Operating cash flow before movements in working capital Decrease/(increase) in inventories Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other payables Transfer from Creditors Cash Account (Note 8) Pension contributions in excess of the income statement charge

2,050 2,546 3,781 (2,180) 21 (845)

3,116 (1,132) (969) 1,489 – (100)

8,148 (421) (1,041) 297 – (994)

Cash generated from operations Income taxes (paid)/received Interest paid

5,373 (387) –

2,404 (964) (40)

5,989 (2,382) (47)

Net cash from operating activities

4,986

1,400

3,560

Investing activities Interest received Capital expenditure Expenditure on development

12 (385) (467)

95 (579) (369)

125 (1,796) (771)

Net cash generated from/(used in) investing activities

(840)

(853)

(2,442)

(1,218) – – 416

(1,187) (2,021) (191) –

(1,843) (2,172) (190) –

(802)

(3,399)

(4,205)

Financing activities Dividends paid Redemption of preference shares treated as debt Own shares acquired Transfer from Creditors Cash Account (Note 8) Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents

3,344

(2,852)

(3,087)

Cash and cash equivalents at 1 January Effect of exchange rates on cash held

4,145 (448)

6,561 (169)

6,561 671

Cash and cash equivalents at end of period

7,041

3,540

4,145

10 Dialight plc Half year report 2009

Notes to the financial statements For the period ended 30 June 2009 (unaudited)

1. Basis of preparation and principal accounting policies Dialight Plc (the “Company”) is a company domiciled in the UK. The condensed set of financial statements as at, and for, the six month period ended 30 June 2009 comprises the Company and its subsidiaries (together referred to as the “Group”). The Group financial statements as at, and for, the year ended 31 December 2008 prepared in accordance with IFRSs as adopted by the EU and with those parts of the Companies Act 1985 applicable to companies reporting under IFRS, are available upon request from the Company’s registered office at 2B Vantage Park, Washingley Road, Huntingdon PE29 6SR. The comparative figures for the year ended 31 December 2008 are not the Company’s statutory accounts for that year. Those accounts have been reported on by the Company’s auditors and delivered to the registrar of companies. The report of the auditors was (i) unqualified (ii) did not include any reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and (iii) did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. The condensed set of financial statements for the six month ended 30 June 2009 is unaudited but has been reviewed by the auditors. The Independent review report is set out on page 20. Statement of compliance The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. The condensed set of financial statements do not include all of the information required for full annual financial statements, and should be read in conjunction with the Group’s financial statements as at, and for the year ended 31 December 2008. This condensed set of financial statements was approved by the Board of Directors on 27 July 2009. Significant accounting policies The accounting policies applied by the Group in this condensed set of financial statements are the same as those applied by the Group in its financial statements as at, and for the year ended 31 December 2008. The following new standards, amendments to standards or interpretations are mandatory for the first time for the year ending 31 December 2009 but have no material impact to the Group. • IFRS 8 Operating Segments introduces the “management approach” to segment reporting. IFRS 8, which becomes mandatory for the Group’s 2009 financial statements, will require the disclosure of segment information based on the internal reports regularly reviewed by the Group’s Chief Executive in order to assess each segment’s performance and to allocate resources to them. The Company expanded the segment information in 2005 to bring it more closely in line with the format of internal reporting. The Company has adopted IFRS 8 however has not changed the presentation of the segment information (see Note 2) to that presented under IAS 14 as the disclosure is already in compliance. The segment information is in the format of internal reports provided to and reviewed by the Group Chief Executive and also presented to the Board. Goodwill relating to previous acquisitions within the Signals/Illumination segment remains in that segment.

11 Dialight plc Half year report 2009

1. Basis of preparation and principal accounting policies continued • The Group applies revised IAS 1 Presentation of Financial Statements (2007), which became effective as of 1 January 2009. As a result, the Group presents in the consolidated changes in equity all owners changes in equity, whereas all non–owner changes in equity are presented in the consolidated statement of income. This presentation has been applied in these condensed interim financial statements as of and for the six months ended on 30 June 2009. Comparative information has been re-presented so that it is also in conformity with the revised standard. Since the change in accounting policy only impacts presentation aspects, there is no impact on earnings per share. The following new standards, amendments to standards or interpretations are mandatory for the first time for the year ending 31 December 2009 but are not currently relevant for the Group. • Amendment to IAS 23 – Borrowing costs • IAS 32 (Amendment) – Financial instruments: Presentation • IFRIC 13 – Customer loyalty programmes • IFRIC 16 – Hedges of a net investment in a foreign operation The following new standards, amendments to standards or interpretations have been issued, but are not effective for the financial year beginning 1 January 2009 and have not been early adopted: • IFRS 3 (revised), “Business combinations” and consequential amendments to IAS 27, “Consolidated and separate financial statements”, IAS 28 “Investments in associates” and IAS 31 “Interests in joint ventures”, effective prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 July 2009. Management is assessing the impact of the above. The Group does not have any joint ventures. The revised standard continues to apply the acquisition method to business combinations with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the statement of comprehensive income. All acquisition related costs should be expensed. The Group will apply IFRS 3 (revised) to all business combinations from 1 January 2010. Estimates and judgements The preparation of a condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. Except as described below, in preparing these condensed interim financial statements, the significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the Group financial statements as at 31 December 2008. During the six months ended 30 June 2009 management reassessed its estimates and assumptions in respect of post–retirement benefit obligations. The obligations under these plans are recognised in the balance sheet and represent the present value of the obligation calculated by independent actuaries, with input from management. These actuarial valuations include assumptions such as discount rates and inflation rates, details of which are included in Note 9 below.

12 Dialight plc Half year report 2009

Notes to the financial statements

2. Operating segments The Group has three reportable segments, as described below, which are the Group’s strategic business units. The strategic units offer different products. They require different technology and marketing strategies. For each of the units the CEO reviews internal monthly reports monthly. The following summary describes the operations in each of the Group’s reportable segments. The Group comprises the following business segments: • Signals/Illumination which addresses the increasing demands for Energy Efficient Lighting solutions through the use of high brightness LEDs and utilisation of a number of associated technologies. Areas of business include Traffic and Rail Signals, Obstruction Lights and Solid State Lighting products. • Components comprising (1) the indication businesses whose sales are primarily to Electronics OEMs for status indication and (2) electromagnetic components which supplies smart meter disconnect switches which are used by utility companies to manage remotely electrical supply to residential and business premises. There is no inter-segment revenue. Reportable segments

Six months ended 30 June 2009

Revenue Contribution Overhead costs Segment results Unallocated expenses Operating profit

Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

5,383

8,013

13,396

21,229

34,625

1,338 (1,239)

3,940 (2,956)

5,278 (4,195)

7,539 (7,188)

99

984

1,083

351

12,817 (11,383) 1,434 (820) 614

Net financing income

(85)

Profit before tax

529

Income tax expense Profit after tax

(207) 322

Discontinued operations

1,939

Profit for period

2,261

13 Dialight plc Half year report 2009

Notes to the financial statements

2. Operating segments continued Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

Revenue

6,045

9,509

15,554

18,989

34,543

Contribution

1,494

5,015

6,509

5,976

12,485

(1,502)

(2,603)

(4,105)

(5,737)

(9,842)

2,412

2,404

Six months ended 30 June 2008

Overhead costs Segment result

(8)

239

Unallocated expenses

2,643 (670)

Operating profit

1,973

Net financing income

168

Profit before tax

2,141

Income tax expense

(835)

Profit after tax

1,306 Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

Revenue

15,073

19,389

34,462

43,393

77,855

Contribution Overhead costs

3,516 (2,990)

10,250 (5,342)

13,766 (8,332)

14,187 (12,475)

27,953 (20,807)

4,908

5,434

1,712

7,146

Year ended 31 December 2008

Segment results

526

Unallocated expenses Operating profit Net financing income Profit before tax Income tax expense Profit after tax Note: Contribution is revenue less direct material, direct labour, freight and sales commission.

(1,825) 5,321 316 5,637 (2,168) 3,469

14 Dialight plc Half year report 2009

Notes to the financial statements

2. Operating segments continued Six months ended 30 June 2009 Other information

Capital additions Depreciation and amortisation

Year ended 31 December 2008 Other information

Capital additions Depreciation and amortisation

30 June 2009 Total financial position – assets

Segment assets Unallocated assets

Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

137 223

49 225

186 448

199 888

385 1,336

Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

475 411

180 582

655 993

1,141 1,661

1,796 2,654

Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

Total £’000

5,652

7,101

12,753

27,412

Consolidated total assets

30 June 2009 Total financial position – liabilities

Segment liabilities Unallocated liabilities

49,687 Electromagnetic components £’000

(2,979)

Indication business £’000

(2,106)

Total Components £’000

(5,085)

Signals/ Illumination £’000

(6,206)

Consolidated total liabilities

31 December 2008 Total financial position – assets

Segment assets Unallocated assets

Segment liabilities Unallocated liabilities Consolidated total liabilities

Total £’000

(11,291) (4,461) (15,752)

Electromagnetic components £’000

Indication business £’000

Total Components £’000

Signals/ Illumination £’000

8,099

9,854

17,953

31,756

Consolidated total assets

31 December 2008 Total financial position – liabilities

40,165 9,522

Total £’000

49,709 7,563 57,272

Electromagnetic components £’000

(2,009)

Indication business £’000

(2,805)

Total Components £’000

(4,814)

Signals/ Illumination £’000

(6,832)

Total £’000

(11,646) (8,122) (19,768)

15 Dialight plc Half year report 2009

Notes to the financial statements

2. Operating segments continued Geographical segments The Components and Signals/Illumination segments are managed on a worldwide basis, but operate in three principal geographic areas, UK, Europe and North America. The following table provides an analysis of the Group’s sales by geographical market, irrespective of the origin of the goods. All revenue relates to the sale of goods. Sales revenue by geographical market

North America UK Rest of Europe Rest of World

Six months ended 30 June 2009

Six months ended 30 June 2008

Year ended 31 December 2008

24,494 3,341 3,159 3,631

21,335 5,178 4,267 3,763

50,848 9,740 8,823 8,444

34,625

34,543

77,855

3. Adjustment to profit from businesses sold in prior years The adjustment to profit from businesses sold in prior years comprises two non-cash items being a release of a provision of £0.4 million for a business sold in 2003 and a release of a tax provision of £1.5 million in connection with the disposal of businesses in 2005, which are no longer required. 4. Net financing income 6 months ended 30 June 2009 £’000

6 months ended 30 June 2008 £’000

12 months ended 31 December 2008 £’000

12 868

95 1,009

127 2,049

Finance income Interest expense on financial liabilities Interest charge on pension scheme liabilities

880 – (965)

1,104 (40) (896)

2,176 (47) (1,813)

Finance expense

(965)

(936)

(1,860)

Recognised in profit and loss account Interest income on bank deposits Expected return on assets in the defined benefit pension schemes

Net financing (expense)/income recognised in profit and loss account

(85)

168

316

5. Income tax expense The tax charge of £207,000 for the half year to 30 June 2009 reflects the anticipated effective tax rate of 39% for the year ending 31 December 2009. The effective tax rate for 2009 is higher than the current UK tax rate of 28% due to the level of Group profits in the US which has an effective tax rate of 37% and unrelieved European losses.

16 Dialight plc Half year report 2009

Notes to the financial statements

6. Dividends During the period the following dividends were paid:

Final – 3.9p (2008: 3.8p) per ordinary share Interim – 2.1p per ordinary share

6 months ended 30 June 2009 £’000

6 months ended 30 June 2008 £’000

12 months ended 31 December 2008 £’000

1,218 –

1,187 –

1,187 656

1,218

1,187

1,843

The Directors have declared an interim dividend of 2.30p per share (2008: 2.10p) costing £719,000 (2008: £656,000). It is payable on 17 September 2009 to shareholders whose names are on the Register of Members at close of business on 7 August 2009. The ordinary shares will become ex-dividend on 5 August 2009. As the dividend was declared after the end of the period being reported and in accordance with IAS 10 “Events After the Balance Sheet Date”, the interim dividend has not been accrued for in these financial statements. It will be shown as a deduction from equity in the financial statements for the year ending 31 December 2009. 7. Earnings per share The calculation of basic earnings per share is based on the profit for the period of £2,261,000 (2008: £1,306,000) and a weighted average number of ordinary shares outstanding during the six months ended 30 June 2009 of 30,984,000 (2008: 31,050,000). 6 months ended 30 June 2009 Number

6 months ended 30 June 2008 Number

12 months ended 31 December 2008 Number

Weighted average number of shares Diluted effect of share options

30,984,000 31,050,000 31,017,000 702,000 695,000 752,000

Diluted weighted average number of shares

31,686,000 31,745,000 31,769,000

The weighted average number of shares used in the basic earnings per share calculation excludes 256,000 shares held by the Dialight Employees’ Share Ownership Plan Trust. Underlying earnings per share are highlighted below as the Directors consider that this measurement of earnings gives valuable information on the performance of the Group.

Basic earnings Profit from businesses sold in prior years (Note 3)

6 months ended 30 June 2009 Per share

6 months ended 30 June 2008 Per share

12 months ended 31 December 2008 Per share

7.3p

4.2p

11.2p

–

–

(6.3p)

Underlying earnings

1.0p

4.2p

11.2p

Diluted earnings

7.1p

4.1p

10.9p

–

–

4.1p

10.9p

Profit from businesses sold in prior years (Note 3) Underlying diluted earnings

(6.1p) 1.0p

17 Dialight plc Half year report 2009

Notes to the financial statements

8. Cash and cash equivalents As part of the Capital Reduction approval in 2005 the Court required certain cash to be set aside into a separate bank account “Creditors Account” for the protection of actual, prospective or contingent liabilities of the Company. As at 30 June 2009 the balance of cash held in the Creditors Account is £19,000 (31 December 2008: £456,000). 9. Pension scheme obligations The net liability for pension scheme liabilities has increased from £4.5 million at 31 December 2008 to £5.4 million at 30 June 2009. The increase of £0.9 million comprises cash contributions of £0.9 million, a charge to the income statement of £0.1 million, an exchange gain of £0.5 million, actual return on investments less than expected by £0.6 million and an actuarial loss of £1.6 million. The net actuarial loss has arisen in part to changes in the principal assumptions used in the valuation of the plan’s assets and liabilities over those used at 31 December 2008. The assumptions subject to change are the UK discount rate 6% (2008: 6.25%), US discount rate 5.7% (2008: 6%), the UK inflation rate 3.6% (2008: 3.2%) and the rate of increase in UK pensions in payment to 3.6% (2008: 3.2%). 10. Principal exchange rates

Average for the period Euro US dollar

Spot rate Euro US dollar

Six months ended 30 June 2009

Six months ended 30 June 2008

Year ended 31 December 2008

1.12 1.49

1.29 1.98

1.26 1.85

30 June 2009

30 June 2008

31 December 2008

1.17 1.65

1.26 1.99

1.05 1.46

11. Related party transactions There have been no changes in the nature of related party transactions to those described in the 2008 Annual Report that could have a material effect on the financial position or performance of the Group in the period to 30 June 2009. 12. Principal risks and uncertainties As required by DTR 4.2.7R of the Disclosure and Transparency Rules we have described below the principal risks and uncertainties which may impact on the performance of the Group during the next six months. Macro-economic conditions A continuing significant slowdown in economic conditions globally and in certain territories such as North America could have a material effect on sales and operating profit in particular for the LED Indication business. Management of the LED Indication business monitor the general electronics demand index as well as industry forecasts so as to remain aware of market trends. In addition the monthly Point of Sales data which is provided by US customers is reviewed on a monthly basis as this is also considered to provide valuable information on market demand. Increasing inflationary pressures on areas such as raw material and sub-contract costs may have a adverse impact on operating margins.

18 Dialight plc Half year report 2009

Notes to the financial statements

12. Principal risks and uncertainties continued The current adverse economic conditions may cause both private and public organisations to reduce their capital spending budgets which may impact on sales of almost all of our products. Currency exchange rate risk The Group is exposed to translation exchange rate risk as a significant proportion of the Group’s results and assets and liabilities are reported in US Dollars and Euros and are therefore subject to translation to Sterling for incorporation into the Group’s results. In addition, transactions are carried out by Group companies in currencies other than Sterling leading to transactional foreign exchange risk. Where possible the Group nets such exposures and maintains a hedging programme utilising foreign exchange forward contracts and currency overdrafts to cover specific contracts and such proportion of other anticipated exposures as can be estimated with reasonably certainty. Disposal of businesses During the last five years the Group has sold businesses in three separate transactions to major US corporations. In each transaction the Company was required to provide certain warranties and indemnities to the purchaser. The terms and nature of the warranties and indemnities were not unusual for these types of transactions. A number of the indemnities in relation to taxation are still in place and will expire over time with the last expiring in December 2011. The Company has not received any claims and has not been notified of any potential claims by any of the purchasers in relation to these warranties and indemnities. Management considers that the risk of a material claim by the purchasers to be remote and accordingly no provision is required to be made. Competitive environment We operate in competitive markets and there exists a threat that existing competitors or potential new entrants will be successful in taking market share. The threat may, for example, come from an extremely aggressive pricing policy for larger traffic contract bids in US and Europe. Our focus on identifying, developing and maintaining sales routes to market, servicing strong customer relationships, competitive and leading edge product portfolios and cost efficient manufacturing plants supports the Group as a major player in our chosen markets and helps to reduce the risk of losing market share to competition. Group strategy for revenue growth The strategy of the Group is to grow sales by compound double-digit percentage. The achievement of this goal is dependent in growing sales in the chosen markets within the Signals/Illumination business such as industrial white lighting. The adoption by the market of LEDs for new applications is principally dependent on the acceptance of current value propositions offered by LED lighting. Product liability risks If a product of the Group does not confirm to agreed specifications or is otherwise defective, the Group may be the subject to claims by its customers arising from end-product defects or other such claims. Financial markets Recent turmoil in global financial markets could pose risks to the financial position of both our customers and suppliers and also to the ability of the Group to renegotiate bank facilities. Customers are subject to credit checks and there is very close monitoring and review of debtor days, days outstanding and overdue amounts. Purchase limits are set for all customers. There are ongoing reviews of supplier bases to ensure wherever possible that there is not over-reliance on one specific supplier. The Group has built up long standing relationships with the Group’s principal bankers. Currently the Group has no drawdown on the existing facility. Regular contact will be kept with the banks to ensure that they understand the business and its requirements.

19 Dialight plc Half year report 2009

Responsibility statement of the Directors in respect of the half-yearly financial report

We confirm that to the best of our knowledge: • the condensed set of financial statements has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU; • the interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so. By order of the Board

Roy Burton Group Chief Executive 27 July 2009

Cathy Buckley Group Finance Director

20 Dialight plc Half year report 2009

Independent review report to Dialight plc

Introduction We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 which comprises the Condensed consolidated income statement, Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of changes in equity, the Condensed consolidated statement of financial position, the Condensed consolidated statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Services Authority (“the UK FSA”). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. Directors’ responsibilities The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FSA. As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the EU. Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

G. Watts For and on behalf of KPMG Audit Plc Chartered Accountants Birmingham 27 July 2009

Highlights

Directory of principal activities

Group Revenue unchanged at £34.6 million Strong growth in sales of Obstruction products with excellent prospects based on major contract win Good cash generation and cash balance of £7 million Operating profit of £0.6 million (2008: £2 million) Interim dividend increased by 10% to 2.3p (2008: 2.1p)

Dialight plc 2B, Vantage Park, Washingley Road, Huntingdon PE29 6SR Telephone: 01480 447490 Facsimile: 01480 447493 Email: [email protected] www.dialight.com

01 05 06 07 08 09 10 19 20

Dialight Corporation 1501 Route 34 South Farmingdale New Jersey 07727 USA Telephone: +1 732 919 3119 Facsimile: +1 732 751 5778 Email: [email protected] www.dialight.com Dialight de Mexico Calle Lirios S/N Colona Pacheco Ensenada B.C. Mexico Telephone: +52 (646) 156 7080 Facsimile: +52 (646) 175 8283 Dialight Garufo GmbH Gewerbepark Spörerau 25 D-86368 Wang Germany Telephone: +49 87 09 92 490 Facsimile: +49 87 09 92 4910 Email: [email protected] www.dialight.com

Chairman and Chief Executive’s statement Condensed consolidated income statement Condensed consolidated statement of comprehensive income Condensed consolidated statement of changes in equity Condensed consolidated statement of total financial position Condensed consolidated statement of cash flows Notes to the financial statements Responsibility statement of the Directors in respect of the half-yearly financial report Independent review report to Dialight plc Designed and produced by Radley Yeldar www.ry.com

Dialight BLP Exning Road Newmarket Suffolk CB8 0AX Telephone: 01638 665161 Facsimile: 01638 660718 Email: [email protected] www.blpcomp.com Dialight Europe Exning Road Newmarket Suffolk CB8 0AX Telephone: 01638 665161 Facsimile: 01638 660718 Email: [email protected] www.dialight-obstruction-lights.com Dialight Lumidrives York House Wetherby Road Long Marston York YO26 7WH Telephone: 0845 6346161 Facsimile: 0845 6346160 Email: [email protected] www.lumidrives.com

Dialight plc Vantage Park Washingley Road Huntingdon PE29 6SR www.dialight.com

World leader in applied LED technology Half year report 2009

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