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Dialight Descends Into Gloom

There is a mystery about the  2015 results for Dialight (DIA) in that revenue rose slightly from £159.8m to £161.4m whilst everything else nosedived and no real explanation is being given for a disaster which affects both shareholders and employees.

The best that the company can, or will say, is that the year to 31st December was a difficult one because of operating challenges which it does not bother to specify but which it claims were exacerbated by downturns across a number of its markets.

The result is devastating for shareholders and employees.  No final dividend is being paid. Even worse the company is closing its UK manufacturing plant after 40 years, with all UK staff at risk of redundancy, except of course for the directors who are allowing themselves to continue to preside over the fiasco, save for two board members whose heads are to roll. Manufacturing will be transferred to a global manufacturing partner whose location and identity the board thinks should be kept a closely guarded secret.

Now for the statistics. Underlying operating profit plunged by 66% and a strategic review imposed additional costs of £9m. Statutory earnings per share were transformed  from 29.4p to a loss of 6.4p. whilst another major transformation saw statutory profit fall from £15.5m to a loss of £3.9m and net cash of £0.6m., become debt of £3.8m. Underlying operating margins declined from 11% to 4%

At least the board  tried a new strategy during the year with a new 3 year plan but remains silent on whether that was alleviated the problems or added to them. What the board does say is that it only has confidence in the medium to long term outlook which indicates that the short term outlook could be fairly grim.

Another mystery is the company’s October trading update which made it fairly clear that the third quarter had not been good but gave no cause for concern  about quarter 4 which by then had of course, already started. In fact the shares which had halved to 400p in the year to February 2016, had since rallied strongly  to 516p at yesterdays close. This morning they have, so far, shed over 5% to 488p.

They had peaked in September 2013 at 1402p, before starting their long decline which now seems likely to continue further.

One can only wonder who, if anyone, will shed light on, or even accept a modicum of responsibility for what is a very sad and disturbing story.

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