World leader in applied LED technology Annual Report 2009 A proven strategy that’s good for People, Planet and Profits 01 Our proven strategy in action Highlights 16 Chairman’s statement 18 Our strategy at a glance 19 Business and Financial review: 19 – Operating review £46.4m 24 – Financial review Signals/Illumination revenue 28 Corporate responsibility report (2008: £43.4m) 30 Board of Directors 32 Directors’ report 36 Corporate governance £77.3m 42 Directors’ remuneration report Full year revenues maintained 47 Statement of Directors’ responsibilities in respect (2008: £77.9m) of the annual report and the financial statements 48 Independent auditors’ report to the members of Dialight plc 50 Consolidated income statement £5.5m 51 Consolidated statement of comprehensive income Operating profit (2008: £5.3m) 52 Consolidated statement of changes in equity 53 Consolidated statement of total financial position 54 Consolidated statement of cash flows 55 Notes to the consolidated financial statements £9.1m 83 Company balance sheet Cash balance (2008: £4.1m) 84 Notes to the Company financial statements 94 Notice of Annual General Meeting 100 Five year summary 4.3p 101 Directory of principal subsidiaries Second interim dividend (Final 2008: 3.9p) Cautionary statement Certain sections of this Annual Report contain forward-looking statements that are subject to risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors, many of which are beyond the control of the Company and its subsidiaries which could cause actual results and developments to differ from those expressed or implied by such statements. 01 Dialight Annual report 2009 Overview Our proven strategy in action Our aim: Low cost. Low carbon. reviewBusiness Financial and Governance statements Financial High growth. Reducing the cost of ownership and the cost to our environment. Increasing the potential for profits. Cost savings: Signalled Carbon savings: Indicated Energy savings: Illuminated Changing a failed light bulb may With governments and organisations Lighting is responsible for 20% of world not be a simple or cost effective task, worldwide setting goals to reduce electricity consumption, of which especially when maintenance crews CO2 emissions, our LED products are 65% is consumed in non-domestic need to shut down lanes of traffic, providing assistance to meet these applications1. In many circumstances, climb a tower or devise scaffolding sustainability objectives across the Dialight’s LED fixtures can save up to to climb above a petro chemical board. For example, one of our white 60% energy consumption per fixture. plant. With a life expectancy of light fixtures can save almost 1 tonne The potential for further dramatic cuts up to 10 years along with significant of CO2 per year. in energy use compared to traditional maintenance savings, Dialight’s lighting fixtures is clear. products combine elements of both safety and reliability. 1 Figures based on calculations provided by the US Department of Energy. 02 Dialight Annual report 2009 Our proven strategy in action Our products: We signal. We indicate. We illuminate. Our high-brightness LEDs show the way forward. Dual Strobe first generation Dual Strobe second generation Date manufactured 2007 88Date manufactured 2008 03 Dialight Annual report 2009 Overview Our proven strategy in action Bigger. Brighter. Brightest. The first of its kind, Dialight’s Durosite™ Series LED High Bay fixture is designed specifically to replace conventional lighting in many indoor and outdoor industrial applications. Within months, our fixture has become the brightest, most efficient product in its class. Stepping up the lumen output from the original 8,000 lumen design, our latest fixture delivers almost 12,000 lumens. Its impressive 140W reviewBusiness Financial and Governance statements Financial power consumption competes directly with a 400W traditional lighting fixture. Smaller. Brighter. Greener. The evolution of our Dual LED Beacon fixture. A prime example of our Engineering department’s technology progress and innovative design. As fixture weight falls and light output improves, our dual beacon becomes the obvious choice for tower owners worldwide. Evolving from six levels of LEDs and close to 90 pounds in weight, we’re currently providing our customers with a single level, 25 pound solution providing the same light output. Dual Strobe third generation Dual Strobe fourth generation Date manufactured 2009 8 Date manufactured December 2009 04 Dialight Annual report 2009 Our proven strategy in action Infrastructure applications: Eco-friendly. Bottom line-friendly. We identify and pursue markets with strong LED value propositions. As new LED applications evolve, we develop new products targeted towards our global customer base. 05 Dialight Annual report 2009 Overview Our proven strategy in action Sustainable lighting supports sustainable cities. Confirming our eco-friendly credentials, we’re sponsoring the Sustainable Cities Programme for the UK’s Commission for Architecture and the Built Environment, CABE. The programme aims to cut through the complexities of the climate change debate to provide expert advice, offer priorities for action and describe good practice in sustainable urban design and management. Business and Financial reviewBusiness Financial and Governance statements Financial For further information log on to www.dialight.com/News/InvestorDetails/cabe_programme 06 Dialight Annual report 2009 Our proven strategy in action Industrial and commercial applications: Helping a green company go greener. Frontline International produces equipment for recycling oil as an alternative renewable fuel. Dialight’s highly energy efficient LED High Bay lighting fixtures are helping them meet customer expectations for environmentally responsible sustainable practices. Compared with the 400W fixtures needed to provide the same light output, each Dialight LED fixture delivers an annual energy saving of more than $300. Combined energy and maintenance savings result in a payback of less than a year. 07 Dialight Annual report 2009 Overview Our proven strategy in action Lower maintenance. Lower profile. Zero maintenance. A vast reduction in energy consumption. A simple retrofit to existing applications, our Durosite Series LED High Bay fixture, replacing traditional lighting, brings important benefits. For further information log on to www.dialight.com/News/Details/frontline_case_study Business and Financial reviewBusiness Financial and Governance statements Financial Product comparison Left: Non Dialight Traditional 400 watt High Pressure Sodium High Bay Unit Right: Dialight’s new 150 watt LED High Bay fixture 08 Dialight Annual report 2009 Our proven strategy in action Hazardous locations: Safer for the planet. Safer for people. Safer for profits. It’s a WIN, WIN, WIN situation for the rapidly growing array of customers specifying Dialight LED lighting. The environment gains, as LED installations cut CO2 emissions markedly below the levels of traditional incandescent lighting. The workforce gains, as our LED lights shine brighter and last longer, creating safer working conditions and reducing the need for maintenance in hazardous locations. Crucially, the bottom line gains, as long-lasting LED lighting cuts energy and replacement costs. Power station cuts power consumption A large Australian power station has dramatically cut its operating and maintenance costs and achieved better illumination by switching to Dialight LED fixtures. Our Durosite™ Series LED Linear Lighting fixtures are being installed on walkways, gantries, workshops and storerooms, while Dialight SafeSite® Series fixtures are being used for specific worksite tasks. Apart from lower running costs and fewer health & safety risks, the power station has made major cuts in its greenhouse gas emissions. For further information log on to www.dialight.com/News/Details/australian_power_station 09 Dialight Annual report 2009 Overview Our proven strategy in action Brighter, whiter light for a quarter of the energy cost. Henkel, world leader in adhesives and sealants, has cut energy costs by 75% after installing Dialight LED lighting at its Puerto Rico water treatment plant. Replacing 16 High Pressure Sodium 250 watt lights with just 12 Dialight 100 watt SafeSite® LED fixtures, the company has cut power consumption and gained a brighter, more natural, less yellow reviewBusiness Financial and Governance statements Financial lighting system. For further information log on to www.dialight.com/News/Details/henkel_case_study Before Dialight LED lighting was installed 10 Dialight Annual report 2009 Our proven strategy in action Compared to the equivalent conventional bulbs being replaced, our LED traffic signals stopped approximately 90 million metric tons of CO2 emissions entering the atmosphere and gave the go-ahead to more than $13 million of energy savings. The acknowledged leader in LED-based traffic signals, we moved forward rapidly during 2009, supplying almost half a million units across 3 continents. Using 90% less energy and lasting 10 times longer than conventional lamps, our devices are cutting customers’ costs while making an environmental impact. LED Traffic signals: Putting a brake on lighting costs. Pushing ahead with low carbon. Figures based on calculations provided by the US Department of Energy. 11 Dialight Annual report 2009 Overview Our proven strategy in action Business review Governance statements Financial US confirms commitment