DIALIGHT PLC

ANNUAL REPORT

AND ACCOUNTS

2025

BUSINESS OVERVIEW

Performance at a glance 01

Our business at a glance 02

STRATEGIC REPORT

Chair’s statement 04

Chief Executive Officer’s review 05

Our business model 07

Our transformation plan at a glance 08

Key performance indicators 10

Sustainability at Dialight 12

Non-financial and sustainability report 19

Risk management 22

Principal and emerging risks and uncertainties 24

Chief Financial Officer’s review 28

Going concern statement 32

Viability statement 34

GOVERNANCE

Chair’s introduction to governance 36

Compliance statements 37

Section 172 statement 38

Governance overview 42

Board: leadership 44

Governance structure and division of responsibilities 46

Leadership and engagement 50

Board composition, succession and evaluation 52

Nominations Committee report 53

Audit Committee report 55

Remuneration Committee report 60

2024/25 Annual report on remuneration 74

Implementation of the remuneration policy for 2025/26 78

Directors’ report 80

Directors’ responsibility statement 83

FINANCIAL STATEMENTS

Independent auditor’s report to the members of Dialight plc 85

Consolidated income statement 98

Consolidated statement of comprehensive income 99

Consolidated statement of changes in equity 100

Consolidated statement of financial position 101

Consolidated statement of cash flows 102

Notes to the consolidated financial statements 103

Company balance sheet (prepared under FRS 102) 143

Company statement of changes in equity 144

Notes to the Company financial statements 145

OTHER INFORMATION

Directory and shareholder information 154

Contents

GROUP REVENUE

$183.5M

2024: 15-months: $226.0m

2024: 12-months: $182.1m*

EARNINGS PER SHARE

(34.4)cents

2024: (91.1)cents

NET BANK DEBT*

$17.8M

2024: $16.4m

UNDERLYING EBIT*

$4.2M

2024: 15-months: $(4.6)m

2024: 12-months: $(1.9)m*

UNDERLYING EBITDA*

$10.7M

2024: $8.9m

PROFIT/(LOSS)

$(13.6)M

2024: $(32.5)m

INVENTORY

$46.6M

2024: $49.1m

FINANCIAL PERFORMANCE* NON-FINANCIAL PERFORMANCE

REDUCTION IN SCOPE 1 & 2

EMISSIONS PER $M OF REVENUE

11%

2024: 13%

RECORDABLE INCIDENTS

2024: 5

* 2024 figures refer to the 15-month period ended 31 March 2024. 2025 refers to the 12-month period ended 31 March 2025.

Certain financial information set out in the annual report and accounts is not defined under International Financial

Reporting Standards. These key Alternative Performance Measures represent additional measures in assessing

performance. These are reconciled in note 27 to the financial statements.

Performance at a glance

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Dialight plc Annual Report and Accounts 2025

Our business at a glance

At Dialight we are committed to

reducing customer carbon emissions

and we are planning to be a net

zero Company by 2040. We see the

transition as both an opportunity and

an obligation to help drive meaningful

change in the industrial sector.

Dialight has been an LED company

for over 50 years, with all our products

developed in‑house. We offer the

largest selection of cutting‑edge

LED lighting products to suit virtually

any industrial application. Our 10‑year

replacement warranty for our industrial

lighting products is market leading.

WHO WE ARE

WHAT WE DO

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Dialight plc Annual Report and Accounts 2025

Our business at a glance continued

OUR CORE VALUES OUR TWO DIVISIONS

Our business at a glance continued

WE ARE CUSTOMER‑CENTRIC

It’s easy to work with Dialight. We build trust through

integrity and transparency, engaging witheachcustomer

tounderstand and help themachievetheir goals.

LED INDUSTRIAL LIGHTING

Our range of LED industrial lighting is aimed

atamarketstilldominated by older, more

inefficient technologies. With low levels of

conversion toLED,thecatalyst for mass conversion

isincreasedenergysavings, lower maintenance

costsandincreasedregulation to phase

outolder technologies.

SIGNALS & COMPONENTS

This division has a diverse range of products

withextendedlife-cycle opportunities

inbothmaturemarkets and fast-growing

markets for medicalandwearable technology.

This division uses LEDlights in a variety of safety

productsandasperformance status indicators.

DELIVERING VALUE IN EVERYTHING WE DO

We are accountable for delivering value by mitigating

risk and identifying opportunities for improvement.

We simplify and connect processes to improve efficiency

and productivity, and are building a sustainable supply

chaintomeet stakeholder expectations – improving

service and quality, and reducing waste.

CREATING STAKEHOLDER VALUE

We optimise access to capital, capital efficiency, and

working capital. We analyse our finances thoroughly,

toimprove margins and drive smarter business decisions

than in recent times. We provide reportingbased on

integrity and transparency.

EMPOWERMENT AND ACCOUNTABILITY

We expect accountability for delivery from our people

and those we work with. We treat each other with respect,

care and empathy – supporting a culture of innovation,

collaboration, continuous learning and professional

development. We listen, learn from mistakes, and

contribute – acting as a team with a single goal.

DRIVING TRANSFORMATIONAL CHANGE

We are adaptable in the face of change, with a long-term

view. We are open to new ideas, have the courage to

express them, and question conventional ways of doing

things – always looking for better, more sustainable

approaches that increase value for our business.

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Dialight plc Annual Report and Accounts 2025

Chair’s statement

“ THIS IS A NEW DIALIGHT – ONE

THAT IS PREPARED TO LISTEN AND

ACT. IF PEOPLE PUT THEIR HANDS

UP, ENGAGE AND ASK QUESTIONS,

WEWILL TAKE NOTICE.”

Neil Johnson

Group Chair

2025 was a better financial year for Dialight as the business

returned to underlying profitability following a turbulent few

years. The cost of the Sanmina litigation settlement and legal

fees has resulted in non-underlying costs of $21.6m, which

has resulted in a loss before tax of $14.1m. We made good

progress on the transformation plan introduced last year to

get Dialight back on its feet, and entered into a full and final

settlement with Sanmina – which represents a significant

weight lifted for the whole Group.

Despite the continuing uncertainty of the macroeconomic

landscape, and while it remains to be seen just how negatively

US tariffs on Mexican imports will impact our margins, Dialight

can now begin to plan for its long-term future, above and

beyond the day-to-day running of the business.

Under the leadership of Steve Blair, our CEO, and supported

by the rest of the senior team, who have led by example,

we now think of the four pillars of our transformation plan

– outlined in last year’s annual report, and on which Steve

goes into greater detail on page 05 – as simply part of

Dialight’s DNA.

You can see and hear that progress for yourself, whether that’s

at our headquarters in Farmingdale or equally on our factory

floors. Even six months ago, I would come away from visits

to our sites feeling a little disheartened. There was no buzz

about the place – people would be working hard, but with

their heads firmly down and with little desire to engage.

But by doing what we said we would – and achieving genuine

tangible results – there has been a noticeable turnaround.

There’s enthusiasm and passion wherever you look. A good

example was a recent town hall meeting, where dozens of

hands went up immediately when asked if anybody had any

questions for the Board. Not long ago we’d have been met

with silence.

Our employees have also told us how reassured they are by

the fact we have engineers in charge of the business. There is

now a real, senior-level understanding of the work happening

around the Company – which means we can properly interact

with, and understand, our people and their needs.

Now, we can allow ourselves to begin to look at new products

and services, new technologies and long-term strategy.

We recently launched the Strategy and Innovation Committee,

chaired by world-renowned expert in photonics John Lincoln

– a new appointment to the Board in 2024 as an independent

Non-Executive Director – who I was thrilled to be able to

attract to the business.

In other changes to the Board, we welcomed Mark Fryer, who

was Chief Financial Officer at Dialight a decade ago, back

to the Company in the same role, with former CFO Carolyn

Zhang leaving the business. Rizwan Ahmad, who has been an

influential member of the Dialight Executive team for many

years, was promoted to Chief Operating Officer.

This is a new Dialight – one that is prepared to listen and act.

If people put their hands up, engage and ask questions, we

will take notice – and, even if it’s a tough call, we will deal with

it rather than sweeping it under the carpet.

Board members and employees across the Company, from

engineering and manufacturing to customer service and

finance, have worked extremely hard to get to this point.

That is something I’m both grateful for and very proud of –

and they all should be too.

To our customers, suppliers and shareholders, thank you

on behalf of the Board for your continued support and

patience. Many of you are clearly very engaged in Dialight

and its long-term success, and we will continue to put in the

hard work, with the transparency required, to make good

onyour commitment.

Neil Johnson

Group Chair

23 June 2025

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Dialight plc Annual Report and Accounts 2025

Chief Executive Officer’s review

“ WE ARE DRIVING WHAT IS WITHIN

OUR CONTROL AND ARE CAUTIOUSLY

OPTIMISTIC ABOUT WHAT WE CAN

ACHIEVE ON BEHALF OF CUSTOMERS,

EMPLOYEES, SHAREHOLDERS AND

INDEED OTHER STAKEHOLDERS IN

THE CURRENT FINANCIAL YEAR

ANDBEYOND.”

Steve Blair

Group Chief Executive Officer

The financial year under review was one of continued

improvement across Dialight as we made good progress

against the four pillars of our transformation plan (outlined

below). It was a case of strengthening the business by doing

what we said we would – and, ultimately, returning it to

underlying profitability.

While we’re performing well when it comes to the things

directly under our control, the macroeconomic climate

remains a challenging one. The tariffs imposed by the

United States Government at this point in time, only impacts

component procurement from Asia, are not significant, and

we have successfully offset this by modestly increasing prices.

The import into the United States of our Lighting and Signals

& Components from Mexico are exempt from tariffs under the

USMCA (‘United States, Canada, Mexico trade agreement’).

This situation continues to evolve, and there remains a risk that

it may influence our customers’ purchasing behaviour. We are

monitoring this closely and we continue to scenario plan and

strategise to help manage this.

That said, the 12-month period to 31 March 2025 was positive

– Group revenue increased to $183.5m compared to $182.1m

for the 12-month period to 31 March 2024. Dialight also made

an underlying operating profit of $4.2m, compared with an

underlying operating loss of $1.9m in the previous 12 months,

and our underlying gross margin improved to 35.6% (versus

31.0% in the previous 15-month period).

PLANNING FOR THE LONG TERM

With the business starting to return to good health, we

now have the opportunity to look at Dialight’s long-term

future; to start to think and talk positively about what comes

next. To support this, we’ve launched a fifth pillar “creating

a platform for future growth”, supported by our new

Strategy and Innovation Committee. With the Committee

in place, it is our goal to get back to what made Dialight

successful originally.

Chaired by John Lincoln, who joined the Board this year as

an independent Non-Executive Director, the Committee

will explore new technologies and applications in lighting,

signals and components, building a strategy that protects

and supports Dialight’s future growth. Alongside our internal

expertise, the Committee will also bring together a range of

external advisors who can provide insights and capability that

may not currently exist within the Company.

A YEAR OF POSITIVE TRANSFORMATION

Our transformation plan, as detailed in last year’s annual

report, has begun to deliver positive results as we hoped it

would – indeed, the four key pillars we have focused on are

now embedded in everything we do.

On 31 March 2025, we settled our long-standing litigation with

Sanmina for $12.0m to be paid in instalments. This required

payment of $4.0m on 31 March 2025 and eight quarterly payments

of $1.0m per quarter with the final payment due on 27 March

2027. This ends a period of uncertainty for the Group and

successfully concludes this matter.

The cost of the Sanmina litigation settlement and legal fees

has resulted in non-underlying costs of $21.6m, which has

contributed to a loss before tax of $14.1m.

WINNING HEARTS AND MINDS

As our Group Chair Neil Johnson has already discussed,

day-to-day teamwork around the business is greatly improved

versus this time last year. There’s renewed cooperation,

enthusiasm and engagement. People are no longer waiting

to be told what to do, but stepping forward with ideas

pro-actively solving problems.

SALES TRANSFORMATION

We have improved governance and control, especially around

the sales team’s use of Salesforce – putting emphasis on

training our people to use it more effectively. We’ve also

supported sales personnel to better understand our products

and where Dialight makes money – as well as, equally, where

we don’t – empowering them to think differently, make the

right decisions for the business, and focus on generating

higher margins.

We’re also engaging with product management and

engineering teams to ensure sales can offer the right solution

for a customer at a price that makes sense. This joined-up

thinking is a fundamental shift in how our sales teams have

historically operated.

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Dialight plc Annual Report and Accounts 2025

Chief Executive Officer’s review continued

OPERATIONAL TRANSFORMATION

Driven by the efforts of our COO Rizwan Ahmad – a

long-standing senior leader within Dialight who was rightly

promoted to this role in May 2024 – we have streamlined

andoptimised operations throughout the Company, including

reducing sub-assembly SKUs to 10% of our original offering.

By reducing variability we’re also able to improve productivity

in the manufacturing process as a whole.

In addition, we’re investing in our factories – significantly

improving the canteen and toilet facilities at our site in

Ensenada, Mexico, for example. Even during a period

where we’ve been focused predominantly on getting the

business back on track, we have still invested in making the

environment much better for our people.

MARGIN IMPROVEMENT AND CASH GENERATION

We’re building a more commercial approach back into

the business. That includes introducing key performance

indicators to ensure everyone understands how they can

contribute to Dialight’s commercial success – leading to

better profitability and better cash generation as we have

gained greater control of margins and costs. As part of this,

we’ve looked at costs throughout the Group and made sure

they’re appropriate for what we’re trying to achieve – aswell

as carefully considering the structure of the business.

That’s not to say we have cut all spending. Historically,

employees may have been told to keep their heads down and

get on with what they’re paid to do, but I want people talking,

meeting and collaborating. If that means spending to ensure

people can travel and get together then that’s what we’ll do –

but we expect a return on that investment.

We are continuing to make improvements and operational

progress by focusing on our four original pillars, while at the

same time beginning to accelerate our growth and build the

Dialight of the future through our fifth pillar.

Despite the uncertainties in the wider political and economic

background, we have made considerable progress in a

relatively short period of time, and slightly ahead of our own

expectations. We have resolved a large number of historic

issues and are now more focussed on better positioning the

Group for future progress.

We are driving what is within our control and are cautiously

optimistic about what we can achieve on behalf of customers,

employees, shareholders and indeed other stakeholders in

the current financial year and beyond.

OUTLOOK

Notwithstanding current geopolitical uncertainties,

inparticular US tariffs impacts, the Group’s trading has started

well in April and May. For the current financial year, we remain

confident in the Group making further progress and note that

the Group will also benefit from the one-off Covid-19 credit

received from the US IRS. We are excited about the Group’s

medium-term prospects.

Steve Blair

Group Chief Executive Officer

23 June 2025

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Dialight plc Annual Report and Accounts 2025

Our business model

WHAT WE DO

Dialight develops market-leading, sustainable LED products for the

industrialmarkets–helping our customers reducetheircarbon emissions

andprovideasafer working environment for their people.

Our revenue mainly derives from the sale of lighting fixtures,

bothviadistributionchannels and direct totheendcustomer,

usingourhighlytechnicalsales personnel.

Our factories operate lean processes supported by our robust

supplychainandrelationships with key suppliers, andwebuildstrong

relationshipswithourglobal distributor network and end customers.

We certify our products using EN 15804 with independently

verifiedEnvironmentalProduct Declarations.

• Our aim is to deliver long-term value for our shareholders

bydeveloping market-leading, sustainable products

in a market with very low penetration. We carefully

balance the need for investment, working capital and

shareholder returns.

• We provide a creative working environment for

ouremployees with scope for individual responsibility

andpersonal achievement. We help them develop

their skills andprovide competitive rewards linked

to performance.

• We work closely with our customers to understand and

meettheir objectives, including reducing their carbon

footprint by lowering their energy and maintenance costs.

• We create jobs for local communities around the world,

supporting local supplier development and delivering

economic benefits – as well as supporting disadvantaged

local people through the Dialight Foundation.

• We support local economies by creating employment,

payinglocaltaxesand stimulating local economic prosperity.

THE VALUE WE CREATE

We offer a 10-year warranty on the majority of our products

backedupbyreal worldoperational experience and, third party

verified,warrantydataand engineering approach.

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Dialight plc Annual Report and Accounts 2025

Our transformation plan at a glance

In September 2023, with the support

of the Board, Dialight announced its

transformation plan – reconfirming the

significant opportunities in the growing

industrial LED lighting market, and the

potential for the Group to realise increased

growth and improved profitability.

The plan was designed to address legacy issues associated

with excess cost and complexity within the organisation,

while at the same time focusing more resources on the

most attractive growth opportunities within the core LED

lighting market.

The transformation plan has demonstrated the ability

toincrease profitability materially, and through numerous

initiatives should deliver meaningful growth in the medium

term, structured around three key objectives: streamlining

the Group; resetting cost and productivity; and accelerating

growth in lighting. The transformation plan is now embedded

as “business as usual” within the operational management

ofthe business.

STREAMLINING THE GROUP

While our proprietary technology and commercial strategy

has enabled us to establish leading positions in a number

of attractive LED lighting markets, supporting high levels

ofgrowth over recent years, profitability and cash generation

has been poor.

The Board’s review of the Group’s strategy and operations

identified several underlying factors it believes have

contributed to disappointing historical performance:

• a fragmented organisation comprising five distinct

service offerings;

• a manufacturing footprint with lower-than-ideal levels

of automation;

• a product range that is too broad and complex; and

• an ageing product portfolio in certain areas.

To address each of these challenges, the Group has been

simplified and has become more focused on delivering

value for all stakeholders. We continue to review the Group’s

businesses, manufacturing operations and investments in

increased automation at key sites. We are also realigning

our cost base to befit a more streamlined business, reducing

and standardising our product range, and narrowing and

consolidating our supply chains.

RESETTING COST AND PRODUCTIVITY

Dialight’s footprint across Mexico, the US and Malaysia helps

support the international nature of our customer base, but

also gives rise to inefficiency at both a site and network level.

Reducing complexity in our product range and realigning the

flows through our site network continues to be our focus to

streamline the business.

We also see the potential for significant productivity and cost

benefits to be realised through increasing the automation

of our manufacturing processes. Today, many of our

manufacturing processes are excessively labour-intensive,

which has resulted in cost escalation in the past two years

as wage inflation has accelerated. Against this backdrop,

automation represents a significant improvement opportunity

that we are relentlessly pursuing.

ACCELERATING GROWTH IN LIGHTING

The industrial LED lighting market continues to be very

attractive, with the conversion from historic technologies

andan increasing focus on safety and sustainability

supporting long-term structural growth. Our historic focus

on the harsh and hazardous segment has helped achieve a

market-leading position in the US, with excellent customer

and distributor relationships.

We are seeing a rapid evolution in technology as customers

seek ever-increasing levels of productivity and efficiency from

their sites. We believe our key areas of product differentiation,

technology expertise, open architecture and excellent

customer relationships make us well-placed to be a leader

in this technological evolution – and we are expanding our

commercial strategy to capitalise on this opportunity.

Further, we continue to see scope to monetise our specific

technology expertise by selling component elements of this

– power supply topology, for example – as separate products

into markets where we do not currently operate. And we

are focusing additional resources into identifying short and

long-term growth opportunities through the fifth pillar of our

transformation plan.

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Dialight plc Annual Report and Accounts 2025

CREATING A PLATFORM FOR FUTURE GROWTH

With the first phases of Dialight’s transformation plan making

a positive impact on operational efficiency and margins, the

Board have added a fifth transformation pillar “creating a

platform for future growth”, which will drive additional growth

through innovation, strategic planning and external insights.

To support this, the Board have approved the formation of

anew Strategy and Innovation (‘S&I’) Committee.

Focusing on long-term growth, the S&I Committee will

identify salient market and technology trends that offer

potential for substantial growth through new markets and/

or developing new product portfolios above and beyond

extending our industrial lighting and component portfolio.

The S&I Committee will augment Dialight’s five decades of

industrial lighting experience with globally leading external

expert input in applications, markets, channel strategy

and technology.

The S&I Committee compliments the near-term focus

onimmediate growth opportunities generated from

cross-company, cross-functional internal, and customer

consultation, undertaken in early 2025.

In combination, the S&I Committee and internal growth

teamwill provide balance in exploration of near and

long-term opportunities and provide a foundation for

long-term sustainable growth.

TRANSFORMATION FOCUSED AROUND FIVE KEY PILLARS:

Winning

hearts

and minds

Engaging

the team

A good business with potential

to unlock greater value

Sales

transformation

Feed the

machine

Operations

transformation

A well-oiled

machine

Margain

improvement

and cash

generation

Cost control/

self-help

Creating

a platform

for future

growth

Building the

future path

Our transformation plan at a glance continued

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Dialight plc Annual Report and Accounts 2025

Key performance indicators

GROUP REVENUE

($M)

$183.5M

2024 – 15-months

2024 – 12-months

226.0m

182.1m*

Description

Revenue from sales.

Definition

Revenue from continuing operations

and organic growth.

Remuneration linkage

Revenue growth is a key element

in achieving short and long-term

incentive targets.

Target

Year-on-year revenue growth.

Link to strategy

Profitable revenue growth is essential

to long-term success.

* 2024 figures refer to the 15-month period ended

31 March 2024. 2025 refers to the 12-month period

ended 31 March 2025.

** Certain financial information set out in the annual

report and accounts is not defined under International

Financial Reporting Standards. These key Alternative

Performance Measures represent additional measures in

assessing performance. These are reconciled in note 27

to the financial statements.

LIGHTING REVENUE

($M)

$138.0M

2024 – 15-months

2024 – 12-months

171.1m

137.9m*

Description

Revenue recognised for

Lighting products.

Definition

Total revenue recognised for Lighting

products in the year.

Remuneration linkage

Sector growth drives Group revenue,

which in turn drives operating

profit, which forms part of the

remuneration targets.

Target

Year-on-year growth.

Link to strategy

Lighting sector growth is a lead

indicator of the financial strength of our

end markets.

LIGHTING UNDERLYING GROSS

PROFIT/GROSS MARGIN ($M/%)**

$54.1M 39.2%

2024 – 15-months

2024 – 12-months

57.6m 33.7%

46.9m 34.0%*

Description

The gross profit related to the

performance of the underlying

Lighting business.

Definition

Gross profit of the Lighting business

excluding items that are considered not

reflective of the underlying performance

of the business (see note 6).

Underlying gross margin is underlying

gross profit divided by revenue.

Remuneration linkage

Lighting gross profit and gross margin

expansion is a key part in achieving

increased operating profit and short and

long-term incentive targets.

Target

We target year-on-year expansion of

Lighting gross profit and gross margin.

Link to strategy

One of the key near-term strategic

goals is to build a robust and scalable

operational platform. Lighting gross

profit/gross margin is a good indicator

of the success of this target.

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Key performance indicators

continued

UNDERLYING OPERATING PROFIT

($M)**

$4.2M

2024 – 15-months

2024 – 12-months

(4.6)m

(1.9)m*

Description

The underlying operating profit

related to the performance of the

underlying business.

Definition

Operating profit of the business

excluding items that are considered

as not reflective of the underlying

performance of the business (see

note 6).

Remuneration linkage

Underlying operating profit is one of

themain measures used in short and

long-term incentive targets.

Target

For 2025, the target was consensus

underlying operating profit at the start

of the year, which was $1.0m.

Link to strategy

The key measure of the success of our

near-term strategic goals is growth in

underlying operating profit.

CASH GENERATED BY OPERATIONS

($M)

$12.4M

2024 – 15-months 13.3m

Description

The ability to turn profits into cash.

Definition

Cash generated by operations is

defined as the operating cash flow after

working capital movements.

Remuneration linkage

Cash generation does not directly link

to remuneration but impacts net debt,

which is directly linked.

Target

Year-on-year growth.

Link to strategy

Cash generation is critical to support

our growth ambitions.

NET BANK DEBT

($M)**

$17.8M

2024 16.4m

Description

To manage the Group’s borrowings

within the available facilities.

Definition

Long and short-term bank debt less

cash in bank.

Remuneration linkage

Net bank debt is directly linked to

remuneration to ensure the business

maintains adequate headroom against

its bank facilities.

Target

For 2025, the target was consensus net

bank debt at the start of the year, which

was $24.7m.

Link to strategy

Net bank debt is a critical measure

to ensure the business has sufficient

liquidity to support growth ambitions.

* 2024 figures refer to the 15-month period ended

31 March 2024. 2025 refers to the 12-month period

ended 31 March 2025.

** Certain financial information set out in the annual

report and accounts is not defined under International

Financial Reporting Standards. These key Alternative

Performance Measures represent additional measures in

assessing performance. These are reconciled in note 27

to the financial statements.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight

ENVIRONMENTAL

RESPONSIBILITY

We are a sustainability business not just in our own operations

but by providing the products that enable our customers

to make their businesses sustainable and achieve net zero.

Today, the emissions avoided by customers switching to

our highly efficient LED lighting (compared to inefficient

legacy lighting) more than outweigh the emissions from

production and use of our lighting. The more lights that

we sell, the greater the overall benefit to society through

avoided emissions.

ENVIRONMENTAL IMPACT

The largest environmental impact comes from the emissions

avoided by our customers, so the more efficient we can make

our lights; the greater the benefit will be to society.

The next largest element relates to the size of the lighting

fixtures and the types of materials used. The smaller the

fixture, the lower the materials emissions.

The impact of logistics inbound and outbound is largely

outside our control, until there is a widely available portfolio of

decarbonised freight transport. We look to localise the supply

chain where possible and review our operating locations,

but this also brings the risk of disrupting manufacturing and

therefore impacting the quantum of avoided emissions.

Our internal operations are not very resource intensive and

therefore the benefits from reductions will be quite small.

ENVIRONMENTAL REPORTING

Over the past few years we have invested time in

understanding our existing carbon footprint and looking

at reduction plans. We used 2020 as our baseline year and

performed our first full Green House Gas (‘GHG’) inventory

(excluding the emissions from customer usage). Our figures

for the 12-month period ending 31 March 2025 have been

externally verified to a limited level of assurance in accordance

with ISO 14064.

Streamlined Energy and Carbon Reporting (‘SECR’)

To comply with the UK Government’s Streamlined Energy

and Carbon Reporting (‘SECR’) requirements, we present our

energy performance in the emissions disclosures and intensity

ratios tables below.

The basis of the emission calculations varies depending on

the emission type. Scope 1 and 2 emissions relate primarily to

electricity and gas usage and the quantities used were mainly

extracted from utility bills with a relevant emission factor by

geography applied to derive the emissions.

Scope 3 emissions usage by customers relate to the impact

ofelectricity usage at customer sites while using the product

over the current reporting year. Scope 3 emissions usage

by suppliers have been excluded. This is a highly subjective

calculation as we do not have access to the electricity usage

of our customer base. The calculated impact is derived

from internal calculations, and due to its subjectivity, it is

not possible to get assurance over this number. In order

toestimate the impact we have to make assumptions about

key variables:

• the number of hours that lights are in use during the

year. Dialight sells to industrial customers across a broad

range of markets. Some customers have facilities that

are run 24/7 such as oil and gas refining; others such as

power generation may run 18/7 and food and beverage

could run 12/6. Because of this, we have taken a simple

average of the outcomes based on 24/7 and 12/6 usage

asan approximation;

• the use of control systems by customers. Control systems

reduce the number of hours that lights are in use, which

inturn reduces electricity usage;

• the use of green energy by customers. As green energy

becomes more available, customers will be able to utilise

this to reduce their emissions impact and we have no way

totrack the emissions reduction impact; and

• emission factors vary by country and can vary significantly

by state within countries. We would need to monitor sales

on a very granular basis to track this usage and apply the

correct emissions factor.

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Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

EMISSIONS DISCLOSURES

12-month period

ending 31 March

2025

15-month period

ending 31 March

2024

12-month period

ending 31

December

2022**

12-month period

ending 31 March

2025 vs 2024

Scope 1 Emissions from combustion of fuel Tonnes 1,002 1,388 1,663 28%

Scope 2 Emissions from location based

purchasedelectricity

Tonnes 3,435 4,728 4,876 27%

Scope 3*** Emissions from all other activities

except customer usage

Tonnes 120,147

Total excluding customer-

relatedemissions

Tonnes 4,437 6,116 126,686 27%

Scope 3**** Emissions from customer usage Tonnes 103,227 1,099,000

Total emissions using GHG Protocol Tonnes 107,664 1,225,686

Emissions if customers did not convert

toLED

Tonnes 302,444 3,189,000

Scope 4**** Emissions avoided by customers Tonnes (199,216) (2,090,000)

Net emissions impact Tonnes (194,780) (1,963,314)

Consumption

12-month period

ending 31 March

2025

m’s

15-month period

ending 31 March

2024*

m’s

12-month period

ending 31

December

2022**

m’s

Variance

m’s

Electricity kWh 9.1 12.2 12.1 3.1

Water litre 14.4 14.3 14.2 (0.1)

* There were some minor changes to the 2023/24 water reported number during the verification process after the annual report.

** There were some minor changes to 2022 reported numbers during the verification process after the annual report.

*** Scope 3 emissions from all other activities except customer usage have not been calculated for 2023/24 and 2025.

**** Scope 3 emissions from customer usage and Scope 4 were not calculated for 2023/24. For 2025, they have been calculated as usage over the current reporting period,

in prior years they were calculated over a 10-year life-cycle.

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Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

EMISSIONS AVOIDED BY CUSTOMERS

One of the major advantages of LED lighting is that it is up

to 80% more efficient than traditional lighting and therefore

generates significant electricity savings and reductions in

emissions. These avoided emissions are known as Scope

4 emissions.

The calculation is very subjective and is internally generated

– it has not been verified. The basis used is to compare with

the major product categories sold with the most common

non-LED products that they replace.

By doing this, we can calculate the electricity usage with LED

and without LED and the wattage saving by product. We then

apply the same assumptions as Scope 3. As the assumptions

used for both the usage with LED and without LED are the

same, some of the subjectivity is mitigated and the emissions

avoided is based on the efficiency of LED and quantum of

fixtures sold.

In order to provide a better understanding of the

environmental impact of the business, we include Scopes

1 to 3 and a calculation of avoided emissions (Scope 4)

inour reporting.

TARGETS

Our targets for the 12-month period ending 31 March

2025 were to reduce Scope 1 and 2 (combined) by 3% p.a.

(per $m of revenue). Our other target was to reduce water

consumption by 5% per $m of revenue. The Scope 1 and

2 combined target was exceeded in the 12-month period

ending 31 March 2025. The water target was not met in the

reporting period, as a result of higher than normal usage

at one of our Mexico production sites in part due to the

climate-related risk remedial work which was undertaken,

seepage 21.

INTENSITY RATIOS

Our actual intensity ratios for the 12-month period ending

31 March 2025 showed improvements over 2024 for gas

consumption (Scope 1) and for electricity (Scope 2), however,

there was an increase in water usage – refer to the targets

section above for further information.

Consumption per $m of turnover

12-month period

ending 31 March

2025

15-month period

ending 31 March

2024*

12-month period

ending 31

December

2022** Variance

Revenue 183.5 226.0 209.8 (19%)

Scope 1 Tonnes/$m revenue 5.5 6.1 7.9 11%

Scope 2 Tonnes/$m revenue 18.7 20.9 23.2 11%

Scope 1 and 2 combined Tonnes/$m revenue 24.2 27.1 31.2 11%

Electricity MWh/$m revenue 49.6 54.2 57.7 8%

Water Kilo litre/$m revenue 78.4 63.2 67.7 (24%)

* There were some minor changes to the 2023/24 water reported number during the verification process after the annual report.

** There were some minor changes to 2022 reported numbers during the verification process after the annual report.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

SOCIAL

There are three main groups of people we consider

inour operations:

1 – SAFETY AND WELLBEING OF OUR PEOPLE

We have a moral obligation to ensure the safety

andwellbeingof all our staff.

As a business at the leading edge of industrial LED

technology, people are at the heart of our business.

We support all our people by creating a safe, inclusive

environment, where every individual is able to work and

contribute to the development of the business.

Having engaged, motivated, empowered and appropriately

skilled employees is integral to our success. Developing a

high-performing and inclusive culture is a key enabler in our

ability to deliver strategic growth.

Safe working environment

Our target is zero recordable incidents at all our sites as

a morally responsible business objective. As a producer

of lighting that is used in heavy industrial and hazardous

locations, our safety focus extends beyond our own staff to

those of our customers.

All new staff receive safety briefings in local languages before

commencing work. Safety is reinforced through the use of

bulletin boards and videos in communal areas.

PPE is provided for all operational sites. We have created

aculture that has a strong focus on safety.

All near misses are investigated and reported to leadership,

to establish root cause and implement actions to

prevent recurrence.

Accident rates

In the 12-month period ending 31 March 2025, there were

unfortunately two recordable incidents (2024: five) and 199

near misses (2024: 300). We take these incidents very seriously

and have the following in place:

• safety footwear is compulsory at all operational sites;

• eye protection is mandatory on the production floor; and

• hi-vis clothing is obligatory in warehouses and any locations

where moving vehicles are present.

2 – OUR PEOPLE AND THE COMMUNITIES

INWHICHWEOPERATE

In order to have a sustainable business, we must protect

local communities.

Engaging with our people

As a global business operating across different time

zones, weuse a range of formal and informal channels

tocommunicate with staff.

These include a monthly all employees updates from the CEO,

all-hands meetings, smaller team briefings, employee forums,

and direct email addresses. In addition, the factory sites also

use notice boards and TV screens in communal areas that play

corporate updates in local languages.

Development and training

As a business that relies heavily on R&D, we understand that

development is the cornerstone of the drive to continuously

improve the quality of our business.

Our colleagues are involved in performing a huge number of

often complex processes and procedures and work continues

to ensure high levels of operator competence throughout

the organisation. Individuals across the organisation

are encouraged to undertake continuing professional

development to ensure that their expertise and knowledge

remains up to date. Outside of technical competence,

our focus is on the development of management and

leadership skills.

Diversity

We are committed to ensuring that we have an inclusive

and diverse culture across the Group, which reflects

the communities we operate in, as well as providing an

environment where all our people are able to attain their

potential at work. Different expertise and experiences

contribute positively to Dialight’s development and to

abroader and better basis for decision making.

At operational sites, the labour pools vary depending on

the characteristics of the region. Our operations in Mexico

are staffed 100% by local staff. Our operations in Malaysia

predominantly comprise local labour but also use some

migrant workers that supplement the local labour pool.

These employees are directly contracted by Dialight on

a full-term contract and we ensure they are treated equally

with the local workers.

Employees in North America are from diverse backgrounds

with sales staff located all around the US, Canada and Mexico.

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Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

3 – PEOPLE IN THE SUPPLY CHAIN

Our moral obligations to people extend back through the

supply chain to ensure sustainable production.

Supply chain and human rights

Dialight is committed to conducting its business in an ethical

and responsible manner at all times, and in full compliance

with all applicable laws and regulations.

All employees and all third parties who act on the Group’s

behalf are required to comply with our standards of behaviour

and business conduct, as set out within the Code, and

applicable laws and regulations in all of the countries in which

we operate.

We have an up-to-date Modern Slavery statement on the

Company website and are fully compliant with the legislation

in this area.

We expect our employees and suppliers:

• to behave with honesty and integrity at all times and

to comply with our zero tolerance policy on bribery

and corruption;

• to ensure they do not engage with suppliers in countries

that are subject to sanctions or embargoes;

• to ensure that they only engage with suppliers that adhere

to Anti-Slavery and Human Trafficking legislation;

• to ensure that all staff have a safe and secure working

environment that is free from discrimination; and

• to ensure all staff are paid a fair wage and do not have

towork beyond the legal requirements.

Community engagement

We recognise that each of the Group’s operations has an

important role to play in its local community. In challenging

times, it is not just about Dialight supporting its own staff by

being a good employer but also about giving back to the

communities in which we operate. This was the background to

forming the Dialight Foundation. The aims of the Foundation

are to promote, operate and manage charitable grants, with:

• Dialight Foundation targeted donations;

• employee volunteer actions;

• targeted donations in communities where we do business;

• community causes and support; and

• matching funds for employee giving.

GOVERNANCE

Introduction

This section deals with governance in relation to ESG and

the main corporate governance section is located on pages

36 to 83. We adhere to strict governance practices and our

structure puts a priority on ethical behaviour, transparency,

and accountability. The Board is committed to developing

and monitoring progress against Dialight’s ESG strategy and

performance, with primary oversight in Board meetings where

ESG is a standing agenda item.

Our approach

We are committed to promoting a culture within Dialight

where everyone does the right thing and takes personal

responsibility for their actions. Our Operational Framework

and Code of Conduct set out the standards of business

conduct and behaviours we expect of all of our businesses,

our employees and all third parties who act on our behalf.

Operational Framework

Our Operational Framework incorporates a broad range

of policies and procedures. The Operational Framework

implements a robust governance and compliance

framework to enable us to operate in a safe, consistent and

accountable way.

• Every employee, at every level of the organisation, has

access to and understands the requirements of the

Operational Framework.

• Appropriate training and monitoring processes are

in place to ensure proper implementation of the

Operational Framework.

• Local procedures and processes are adopted to implement

the requirements of the Operational Framework.

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Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

Ethics and business conduct

At Dialight, we are committed to doing business the right way.

This means acting professionally, morally, ethically and lawfully

in our dealings with all of our colleagues, business partners,

customers and shareholders. Our Code of Business Conduct

explains what we really mean by this. It provides guidance

and sets out key company principles that apply to everyone at

Dialight. We also expect our business partners to uphold the

same commitment and principles.

Terms and conditions

Our terms and conditions of purchase set out the

requirements of our suppliers including compliance with:

• Anti-slavery and human trafficking legislation

(including the UK Modern Slavery Act 2015);

• Anti-slavery and human trafficking legislation in the

supplier’s supply chain;

• Anti-bribery and anti-corruption legislation;

• Occupational Safety and Health Act 1970; and

• Equal Employment Opportunity Act 1964.

Human rights

The Group is committed to respecting human rights in the

countries in which we do business. Our Code of Conduct and

other applicable policies under the Operational Framework

support our commitment to ensuring, as far as we are able,

that there is no slavery or human trafficking in any part of our

business or in our supply chain. We see compliance with local

legislation as a minimum requirement and strive to operate at

a higher level.

Anti‑bribery and corruption

Dialight has a zero-tolerance policy in respect of bribery

and corruption. This extends to all business dealings and

transactions, and includes a prohibition on offering or

receiving inappropriate gifts or making undue payments to

influence the outcome of business dealings. Compliance with

the policy is checked as part of the half-year and year-end

process. All employees have been trained on anti-bribery and

corruption policies.

At a corporate level, the Group:

• does not make political donations; and

• does not make payments to lobbyists.

Information security

The level of information security should be appropriate for the

nature of the information and systems, and the risk and impact

that breach, disclosure or loss could cause for one or more

individuals, businesses or Dialight.

This means that only authorised personnel should have access

to information. We are also mindful about how computers

and mobile devices are secured, when used by the mobile

workforce or by staff working from home. This has created

additional hazards for protecting information where personnel

work outside the traditional protected office boundary.

Any such personnel can still transport paper documents, and

these require the same level of security. Dialight expects staff

to apply the same standards whether in the office or not as it

is still responsible for customer information, even if it is being

handled or processed outside of Dialight offices.

Whistleblowing

We have a whistleblowing policy and procedures in place

which enable all employees to raise concerns, in confidence,

about possible improprieties or wrongdoing within the

business. We received nothing on the official whistleblowing

hotline during the year.

Third‑party agency

We use a third-party agency who provide a 24-hour ethics

reporting service, which can be accessed by telephone,

email or by an external website. Whistleblowers can remain

anonymous and all reported issues are investigated and

reported to the Audit Committee.

Due to our workforce diversity, posters are displayed at

operational sites in local languages and the third party uses

multi-lingual staff.

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Dialight plc Annual Report and Accounts 2025

Sustainability at Dialight continued

NON‑FINANCIAL AND SUSTAINABILITY INFORMATIONSTATEMENT

Produced in compliance with Sections S414CA and S414CB of the Companies Act. Information incorporated by cross reference.

Requirement Relevant policies and standards Additional information Page

Environmental matters Sustainability Data and Reporting Policy

Quality and EHS Policy

Supplier Code of Conduct

Sustainability 12 to 14

Climate-related risks

andopportunities

Non-financial and sustainability report Non-financial and sustainability report 19 to 21

Employees Code of Business Conduct

Health & Safety Policy

Whistleblower Policy

Health, safety and wellbeing

Ethics and compliance

Stakeholder value: employees

15 to 17,

and 41

Social and

communitymatters

Sustainability Data and

Reporting Policy

Community Engagement Policy

Code of Business Conduct

Social value reporting

Ethics and compliance

Stakeholder value: communities

15 to 17,

and 39

Human rights Code of Business Conduct

Modern Slavery Policy

Ethics and compliance 16 and 17

Anti-corruption and

briberymatters

Code of Business Conduct

Anti-Corruption & Bribery Policy

Sanctions & Export Policy

Supplier Code of Conduct

Ethics and compliance 16 and 17

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Non‑financial and sustainability report

As a sustainability solution provider to our

customers, our business is primarily focused

on the opportunity that arises from the

transition of the industrial market away

from traditional lighting and towards LED

asan alternative.

We report in line with the FCA Listing Rule UKLR 6.6.6R(8),

which requires us to report on a “comply or explain” basis

against the TCFD Recommendations and Recommended

Disclosures in respect of the financial period ended 31 March

2025. We have not yet fully complied with the FCA listing

rule UKLR 6.6.6R(8) but we have considered relevant and

material elements of the recommended TCFD disclosures,

and are aligned with The Companies Act Regulations 2022,

414CB (2A). This report uses the four thematic areas and 11

recommended disclosures, as set out in the Implementing

the Recommendations of the Task Force on Climate-Related

Financial Disclosures. We consider our climate-related

financial disclosures to be consistent with ten of the 11

recommended disclosures. The one recommended disclosure

the Group is not currently compliant with relates to metrics

and targets. We continue to work to establish relevant longer-

term net zero ambition metrics and targets, and we expect to

continue to finalise our net zero plan in future annual reports

and thereby enhancing our reporting and further integrate

climate disclosures.

GOVERNANCE

The Board of Directors is responsible for the oversight of

climate-related risks and opportunities as part of the strategy

and risk management of the Group. The Board monitors and

oversees the Group’s GHG emissions (actual and avoided)

andany targets related to them, see page 13 for further

details. The Board is responsible for approving the content

ofthe Group’s climate-related financial disclosures.

The executive management level oversight of climate-related

issues at Dialight is performed by the CEO, with the support

of a dedicated ESG Committee. The ESG Committee is led

by the VP of Operations and is supported by other functions

and project teams, they meet on a monthly basis to maintain

a thorough and consistent review of climate-related risks

and opportunities, as well as ensuring compliance with

reporting requirements.

The ESG Committee has delegated responsibility for the

various disclosure areas to sub-groups and individuals across

different business functions so those with the appropriate

expertise and site-specific information are well positioned

to provide what is required. They have responsibility for

implementing the underlying sustainability framework actions

including the day-to-day management of climate-related

issues, and reporting any relevant data, progress or issues

timely to the ESG Committee.

The ESG Committee ensure that the Board is aware of the

activities relating to the key disclosure areas, and risks and

opportunities relating to sustainability and climate-related

issues. Oversight is maintained through the visibility provided

by a periodic ESG report and via the risk register, which

is under regular review and informs the description of the

principal risks and uncertainties facing the Company, which

include any risks relating to climate or sustainability issues.

STRATEGY

In preparing the consolidated financial statements, the

Directors have considered the impact of climate change,

particularly in the context of risk identified. There has been

no material impact identified on the financial reporting

judgements and estimates. The CEO has visibility of all of the

issues impacting strategy inthis area and will be supported

bythe global teams.

In particular, the Directors have considered the impact of

climate change in respect of the following areas:

• impairment reviews and useful economic lives of assets; and

• Going Concern, viability statements and budgets/forecasts.

Given no material risks have been identified as per the

assessment outlined in the report, no climate change-related

impact was identified. The Directors are, however, aware of

the changing nature of risks associated with climate change

and will regularly assess these risks against judgements

and estimates made in the preparation of the Group’s

financial statements.

With customers in almost many industries across the world

the adoption of LED lighting remains one of the most energy

efficient means to reduce carbon emissions and move

towards net zero. We thus have a climate change beneficial

impact meaning that our business is resilient that will remain

relevant across different climate-related scenarios. As part

of our annual viability assessment, we annually undertake

scenario risk modelling focusing on stress testing the

income statement and cash flow projections to determine

the resulting impact on the Group’s debt covenants and

liquidity headroom, to ascertain the potential revenue or

adjusted operating profit impacts that could arise from one,

or a combination, of the Group’s principal risks. As part of

this review, we have taken into account scenario analysis for

a2°C warming scenario. This includes predominantly physical

risks such as flooding, fire and heat stress and this includes

physical risk exposure on the Group locations (office and

manufacturing) as well the major/critical Group suppliers.

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Dialight plc Annual Report and Accounts 2025

Non‑financial and sustainability report continued

CLIMATE-RELATED OPPORTUNITIES

Regulatory pressure to reduce emissions andbanolderlighting technologies

Medium–long term

Link to strategy Description Financial impact

The business strategy is growth from replacing

olderinefficient lighting technology with

high-performance LED lighting so changes in the

regulatory environment areconsistent with the

business strategy.

There is increasing regulatory pressure at a

national and international level to ban older

lighting technology. These often use hazardous

materials in their manufacture and generate up to

60% more carbon emissions than LED lighting. In

addition, customers who have set their own net zero

targets need to find carbon reduction initiatives

and conversion to LED is one of the quickest

ways to have a substantial impact on a company’s

carbonfootprint.

We have not quantified the

financial impact at this stage.

Energy usage optimisation

Short term

Link to strategy Description Financial impact

Reduce cost base in parallel with an environmentally

friendly solution to energy optimisation. This is

consistent with that aim.

Reverse osmosis water treatment installed in the

Tijuana plant, this has reduced the need to buy

clean water for the paint system. The water not

used for the paint cleaning process is stored and

then used in the bathroom and mopping, reducing

supplier cost and water usage.

Reduced cost by c.$20k per year

and water usage by c.20,000

gallons per year.

Packaging improvement

Short–medium term

Link to strategy Description Financial impact

One of the growth enablers is to reduce the

transportation cost per fixture. This is consistent

withthat aim.

Packaging improvement of fixtures and brackets of

some products. Packaging the items unattached,

increased improvement for customer installation.

This has resulted in an increased amount of pieces

fitting on pallets for transportation and has led to

reduced package cost. Downstream transportation

cost reduction and emissions.

Reduced package cost by c.15%

and overall, potential savings per

year of c.$0.1m for the area light.

This in turn leads to a downturn

intransport-related emissions.

RISK MANAGEMENT

Dialight considers climate-related risks and opportunities in all

physical and transition risk categories, current and emerging,

whether they occur within our own operations, upstream and

downstream of the Group and whether they occur within the

short (1 to 3 years), medium (3 to 10 years) or long-term (10+

years) time horizons.

Risks and opportunities relevant to Dialight are identified

and refined through consultation with the ESG and Risk

Committee and senior management. The Risk Committee

evaluates climate-related risks and opportunities on the

Company’s five-point risk management scale for likelihood

(Remote to Likely) and impact (Low to High).

A substantial financial risk is one that would have an

underlying EBIT impact of more than 25% in any one year.

A strategic risk is one that would have a similar impact

p.a. over at least three years and could severely impact

theongoing business.

The risks identified relating to climate-related disclosures

aresubsets of the Group risks (see pages 24 to 27).

METRICS AND TARGETS

The Group reports on greenhouse gas (‘GHG’) emissions,

Scope 1 (direct emissions), Scope 2 (indirect emissions),

Scope 3 (emissions from customer usage), Scope 4 (emissions

avoided by customers), carbon intensity and water usage.

Scope 3 emissions from suppliers have been excluded.

Emissions are calculated using the GHG Protocol. Scope 1,

Scope 2 and water usage are verified through

third-party audits.

We continue to work to establish relevant longer term net zero

ambition metrics and targets.

Our specific emissions reporting is on page 13 and targets

areon page 14.

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Dialight plc Annual Report and Accounts 2025

Non‑financial and sustainability report continued

CLIMATE-RELATED OPPORTUNITIES

Consolidated shipping programme

Short–medium term

Link to strategy Description Financial impact

One of the growth enablers is to reduce the

transportation cost. This is consistent with that aim.

Launched a programme with a major casting

supplier to minimise air shipment and optimise

ocean consolidation, of a full container load

shipment. Further improvement to this with the

containers arriving in Ensenada port instead of

LAX port, reducing the transportation from LAX to

Mexico. Downstream transportation reduced costs

and emissions.

Reduced air and ocean shipping

cost, potential savings per year

of c.$0.1m. This in turn leads to

a downturn in transport-related

emissions.

CLIMATE-RELATED RISK

Landslide

Short–long term

Description Mitigation Financial impact

Our facility in Ensenada Mexico has a very steep

unstable slope, which increased the risk of facility

flooding and risk to health and safety. A study

concluded that actions were required to reduce

the probability of landslide to avoid the risk of

geotechnical instability of the slope. This potentially

unstable area, could collapse in the event of

anearthquake.

Shotcrete and lining for water channeling was

undertaken. According to the geotechnical study

this technique improves the condition of the

slope and prevents the instability condition from

worsening in the future.

The overall work cost c.$37k,

however, the financial

impact to Dialight, if this

preventive measure had not

been undertaken, would be

considerably more dependent

on the scale of any damage.

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Dialight plc Annual Report and Accounts 2025

Risk management

STRATEGIC RISK APPROACH AND RISK CULTURE

Dialight’s approach to effective risk management involves

ourpeople, at all levels in the organisation, being empowered

to manage risks and take advantage of opportunities as

an integral part of their day-to-day activities – creating an

entrepreneurial organisation with a high level of risk-literacy.

Our risk awareness culture allows management to make better

commercial decisions and helps to maximise the benefits of

our business model.

RISK MANAGEMENT PRINCIPLES

The effective understanding, acceptance and management

of risk is fundamental to the long-term success of the

Group. The Group has developed specialist knowledge

inproducts, services, processes and regions, which allows

us to understand the associated risks and accept them

inaninformed way. Our approach is encapsulated in the key

principles of our risk management process:

• to understand the nature and extent of risks facing

the Group;

• to accept and manage within the business those risks, which

our employees have the skills and expertise to understand

and leverage;

• to assess and transfer or avoid those risks which are beyond

our appetite for risk; and

• by consideration of materiality, establish the authority layers

within the Group at which decisions on acceptance and

mitigation of levels of risk are taken.

A RAPIDLY CHANGING WORLD

Embedding internal controls and risk management further

into the operations of the business is an ongoing process

and we continually strive for improvement. This is not a

static process with an end-point, but a continuously evolving

process as we adapt to a changing business environment.

Our integrated approach to risk, our simple and flat corporate

structure, and our flexible and adaptable ways of applying

our risk framework, enable the Group to respond quickly, and

identify opportunities, in emerging challenges to our supply

chain, product development and production operations, and

our end markets.

RISK GOVERNANCE AND CONTROLS

The Risk Committee is responsible for overseeing the

risk management processes and procedures. It primarily

comprises the members of the Executive Committee and

reports to the Board through the Audit Committee on the

key risks facing the Group. It monitors the mitigating actions

put in place by the relevant operational managers to address

the identified risks. The Board has approved the acceptance

of certain risks which are considered appropriate to achieve

the Group’s strategic objectives. The degree of risk to be

accepted within the business is managed on a day-to-day

basis through the Board-delegated authority levels. These are

the framework for informed risk taking within the businesses

and the route for escalating decision making up to the Board.

Further details on the governance structure in the Group

areprovided on pages 46 to 49. This governance structure

provides the framework for the Group’s approach to,

and management of, risk, and provides the structure for

changes in current and emerging risks to be highlighted

and addressed.

Risk summary

FUNCTIONAL AND FRONT LINE CONTROLS

ASSURANCE ACTIVITIES

MONITORING AND OVERSIGHT CONTROLS

ETHICAL AND CULTURAL ENVIRONMENT

RISK MANAGEMENT FRAMEWORK

Our complementary approach is based on utilising

atop-downplusa bottom-up process:

Top-down

• Group risk policy and strategy

• Group risk appetite

• Principal risk oversight

• Group compliance oversight

DIALIGHT PLC BOARD

OPERATIONAL/ESG

COMPLIANCE

CHIEF EXECUTIVE AUDIT COMMITTEE

RISK COMMITTEE

EXECUTIVE COMMITTEE COMPANY SECRETARY

SENIOR MANAGERS REGIONAL FINANCE STAFF

GROUP FINANCE STAFF

Bottom-up

• Business risk appetite policy

• Assessment and mitigation of specific risks

• Upward reporting of key residual risks

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Risk management continued

GROUP RISK CONTROL AND VISIBILITY CASCADE

The key areas of the Group’s system of internal controls

areas follows:

• The key component in any risk management system

ispeople. Dialight invests heavily in its people, recruiting

capable and adaptable individuals and focusing on the

retention of our skilled workforce. It is our employees that

maintain our high standards of risk control and create a

culture in which risk can be managed to the advantage

ofthe Group.

• Functional reviews (e.g. finance, operational, legal and

compliance reviews) are hard-coded into our approvals

systems. All cash payments from the Group are reviewed

and approved at a supplier level by Group Finance and

the CFO. Cash forecasting has been enhanced to be at

a more granular level and rolling 13-week forecasts are

updated regularly. Manufacturing operations, including

relevant supply chain, inventory and production metrics are

reviewed daily. Sales and orders reports are reviewed daily

in order to assess any changing risk profile on sales activity

by geographic location. The Board approves the annual

budget, strategic plan and in-year forecasts and tracks

their progress.

• A comprehensive financial reporting package is received

from all operating units on a monthly basis, with

comparisons against budget, forecast and prior-year

performance. Each operating unit is required to submit

aquarterly self-certification on compliance and controls.

• Each month the CEO and CFO report to the Board.

The CEO report outlines the Group’s operations and

provides analysis of significant risks and opportunities.

The paper covers progress against strategic objectives

and shareholder-related issues. The CFO report sets out

progress against internal targets and external expectations

– including routine reporting on liquidity risk and

covenant compliance.

• The CEO and CFO report to the Audit Committee

periodically on all aspects of internal control. The Board

receives regular reports from the Audit Committee, and

thepapers and minutes of the Audit Committee are used

asa basis for the Board’s annual review of internal controls.

• The Board reports annually to shareholders on its risk

management framework, providing shareholders with

anopportunity to challenge Group strategy, including

inrespect of the Group’s risk mitigation.

PRINCIPAL AND EMERGING RISKS AND UNCERTAINTIES

The Board has conducted a robust assessment of the

Company’s principal and emerging risks. The risks outlined

in this section are the principal risks that we have identified

as material to the Group. They represent a “point-in-time”

assessment, as the environment in which the Group operates

is constantly changing and new risks may always arise.

Risks are considered in terms of probability and impact, and

are based on residual risk rating of: high, medium and low.

Mapping risks in this way helps, not only to prioritise the risks

and required actions, but also to direct the required resource

to maintain the effectiveness of controls already in place and

mitigate further where required.

The risks outlined in this section are not set out in any order

of priority, and do not include all risks associated with the

Group’s activities.

Additional risks not presently known to management,

orcurrently deemed less material, may also have an adverse

effect on the business.

READ MORE ON PAGES 24 TO 27

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Principal and emerging risks and uncertainties

Impact on strategy Description

Impact on viability, reputation

and health andsafety Mitigation Time horizon

Short

<2 yrs

Medium

<2–5 yrs

Long

>5 yrs

INTELLECTUAL PROPERTY

Low

• Revenue

• Underlying

operating profit

Intellectual property

infringement risk –

byDialight or against

Dialight. Security

of protectable

intellectualproperty.

• Proprietary

technology used by

competitors leading

to loss of market share

and revenue

• Unforeseen liabilities

Core Group IPR is protected by

patents (where applicable) and

potential violations will be pursued

through legal action. Byensuring

internal technical IPRexpertise

and the use of third-party patent

specialists in the production

development process, the risk

of infringing third-party IPR is

minimised. In-house product

development and purchase-in

ofcomponents will also mitigate

risk further.

MARKET: SALES AND GROWTH

High

• Revenue

• Underlying

operating profit

Risk having regard to

Group concentration on

North American markets

for growth, particularly

having regard to US

Government imposition

of tariffs. Risk impact:

possible sales downturn

and/or delayed sales.

• Reduced financial

performance

• Lack of growth

Implement price rise to cover

tariff impact and impact of

raw materials cost from China,

reflected in a blended tariff rate

increase. Request partial or full

down payments to cover the tariff

cost so Dialight avoids absorbing

upfront cost.

Generate product diversity

appropriate for each region.

Greater diversity in product

portfolio mix (S&C, obstruction).

FUNDING

Medium

• Revenue

• Underlying

operating profit

The Group has a net debt

position and there is a risk

related to liquidity.

The Group has not paid

adividend since 2015.

Capital and debt

funding adequacy and

servicing, including

covenant compliance and

relationship with the bank.

• Covenant

compliance

• Volatile financial

performance arising

from translation

of profit from

overseas operations

Improved financial performance

materially reduces the

potentialimpact.

The business is managed within

cash flow and covenants. Under

the stewardship of the Group CFO,

there is a transparent approach

and careful management of

covenant compliance, which

reaffirms a solid and long-standing

relationship with the bank.

The Group’s revolving credit

facility has been extended recently

to July 2027 but a longer term

facility will be required.

Change in year Magnitude of impact (pre-mitigation)

Increased Decreased No change New

Low Medium High

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Principal and emerging risks and uncertainties continued

Impact on strategy Description

Impact on viability, reputation

and health andsafety Mitigation Time horizon

Short

<2 yrs

Medium

<2–5 yrs

Long

>5 yrs

CYBER AND DATA INTEGRITY

High

• Revenue

• Underlying

operating profit

• On-time delivery

• Order growth

• Business

disruption

• Loss of sensitive data

• Damage to reputation

Disruption to business

systems would have an

adverse impact on the

Group if our systems

suffered a cyber attack

(including ransomware,

phishing, DDOS attack).

Upgrade needed to

IT systems at some

Groupfacilities.

• Inability to

supply customers

• Loss of revenue

and significant

business disruption

• Loss of commercially

sensitive information

Group to spend $0.5m upgrading

the IT infrastructure, hardware

and software. This will include

state-of-the-art firewall protection,

resilience and backup.

Educational training support for

all employees, this is increasing

in frequency with standardised

training packages for all

employees with access to email.

Continuous internal monitoring

isalso in place.

PEOPLE: CORE CAPABILITY AND KNOWLEDGE

Medium

• Revenue

• Retention

Group performance is

dependent on attracting

and retaining high-quality

staff across all functions.

There is also a reliance

on a key nucleus of staff.

Succession planning is a

key delivery for the Group

HR function. Consideration

of rewardsstructure.

• Without good-calibre

staff, the Group will

find it difficult to

expand and achieve

itsstrategic goals

The Global VP of HR has improved

HR systems and retention tools.

Greater emphasis on employee

health, safety and welfare systems.

Return to profitability will aid

retention through an adequate

rewards system. Talent

management focus will involve

detailed succession planning

andexecution.

GEO-POLITICAL AND MACROECONOMIC IMPACTS

High

• Revenue

• Underlying

operating profit

Risk attaching to

macroeconomic

uncertainty. Global

economic/political

uncertainty has sharply

increased due to the

on/off imposition of

US Government tariffs.

This could impact the

Group’s business given its

manufacturing presence

in Mexico and Malaysia,

and primary downstream

market in the US.

Geo-political risk has

increased across Europe

and Asia, specifically

having regard to

uncertainty around the

Ukraine/Russia conflict.

• Reduced financial

performance

• Lack of growth

Implementation of price increases

should mitigate tariff and

inflationary pressures.

Diversifying supply chain reduces

exposure to supply chain

interruptions, especially given

the global political instabilities

currently.

Group to increase focus on APAC

to mitigate risk around primary

downstream market. Embedding

Middle East presence into APAC

region to utilise Dialight Australia

JV network to better penetrate the

eastern markets.

Change in year Magnitude of impact (pre-mitigation)

Increased Decreased No change New

Low Medium High

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Principal and emerging risks and uncertainties continued

Impact on strategy Description

Impact on viability, reputation

and health andsafety Mitigation Time horizon

Short

<2 yrs

Medium

<2–5 yrs

Long

>5 yrs

LITIGATION

Medium

• Cash flow

• Revenue

Dialight and Sanmina have

entered into a settlement

agreement, under which

Dialight will pay Sanmina

$12m in full and final

settlement of all claims

between the parties on

a deferred basis. Risk

attaches to “trigger

events” and/or a failure

to meet the settlement

cash liability as it falls due.

Failure to meet liability

would lead to the full $22m

award falling due.

• Liabilities

• Trading as a

going concern

The Group can manage cash

appropriately to meet payment

obligations under the settlement

agreement as they fall due based

on the projected operating

cashflow.

The Directors do not classify the

trigger events as a material risk.

TRANSFER PRICING AND FINANCIAL COMPLIANCE

Medium

• Revenue

• Underlying

operating profit

• Tax liability

Risk attaches to existing

transfer pricing policy

around the world.

Risk of tax liability

due to challenge by

taxauthorities.

• Reduced financial

performance

• Unforeseen

liabilities

Group transfer pricing is reviewed

annually by external professional

advisors. Enhanced internal due

diligence around tax compliance.

INBOUND/OUTBOUND SUPPLY CHAIN AND MANUFACTURING

High

• Revenue

• Underlying

operating profit

Extended supply chain risk

including China impact on

raw materials.

Logistics risk due to

imposition of cross border

US Government tariffs

which will impact the

Group due to location

of key manufacturing

locations in Mexico

andMalaysia.

• Reduced financial

performance

• Loss of market share

Negotiation of better credit terms

with shipping agents to mitigate

pass through of tariff cost to

customer.

Improvements in financial position

and inventory management will

enable greater Finished Goods

safety stock.

Change in year Magnitude of impact (pre-mitigation)

Increased Decreased No change New

Low Medium High

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Principal and emerging risks and uncertainties continued

Impact on strategy Description

Impact on viability, reputation

and health andsafety Mitigation Time horizon

Short

<2 yrs

Medium

<2–5 yrs

Long

>5 yrs

PRODUCT: COMPETITION AND PRODUCT DEVELOPMENT

Medium

• Revenue

• Underlying

operating profit

Risk attached to

translating market

requirements into: (a)

product specifications;

and (b) profitable product.

Challenge to drive

innovation of new

competitive products.

Managing post-sales risk.

• Reduced financial

performance

• Loss of market share

Diverse product/business

portfolio across product types

andsectors.

New product development

including cost-out re-design and

process improvements focused

ongross margin improvement.

Catastrophic failure protections

designed-in. Use of clearly

defined specifications – against

third party certified product.

In-house development and

production. TheGroup also relies

on standardised contractual

protections and insurance to

manage post-salesrisk.

New-product development cycle

extended (5–10 years) and current

product portfolio well established.

Recruitment of new product

marketing capability to address

market needs and requirements,

especially in new markets.

Change in year Magnitude of impact (pre-mitigation)

Increased Decreased No change New

Low Medium High

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Chief Financial Officer’s review

“ AFTER A DECADE AWAY, I WAS

SURPRISED HOW POORLY DIALIGHT

HAD PERFORMED. I AM ENERGISED

BY STEVE’S AMIBITIONS TO

RETURN DIALIGHT TO ITS FORMER

PROFITABILITY AND BE PART OF

THE TRANSFORMATION.”

Mark Fryer

Group Chief Financial Officer

I was previously Chief Financial Officer from 2010 to early

2014. This was a period when there was a significant increase

in revenue, operating profit, cash from operations, and the

Group was debt free. Significant share price appreciation was

achieved as the Group rapidly grew its market position in the

hazardous LED lighting market across the globe.

Over the past decade, the Group has not capitalised on the

initial position established in this market. Overall, sales have

not increased, profitability has significantly reduced, the

Group has moved from being debt free to indebted and the

overall level of working capital employed in the business has

significantly increased.

Dialight has been through a true reset over the past two

years, with an almost completely new Board and new

management in place. We are resetting and rebuilding

relationships with all our external stakeholders and seeking

to rebuild relationships with our shareholders. This started

with Neil Johnson and then Steve Blair joining the business

and initiating the Transformation Plan in 2023 and I rejoined

Dialight in January 2025, motivated by Neil and Steve’s

strategic plan to restore the Group to sustainable profitability.

Their disciplined approach – focused on operational

streamlining, cost reduction, margin enhancement, robust

cash flow management, and accelerating growth in industrial

lighting – provided a clear roadmap to unlock long-term

shareholder value.

Dialight is a business with high ambitions. We made strong

progress throughout the year, particularly in the final quarter.

During this period, we restructured the finance team,

enhanced our cash and net debt reporting, and strengthened

financial controls and discipline. We also gained a clearer

understanding of the drivers behind variability in our results,

rebuilt key relationships with our banking partners and

shareholders, and delivered performance ahead of our

forecasts and expectations. The strong financial performance

in the final quarter was driven by the successful execution of

our Transformation Plan, underpinned by a renewed financial

focus. This progress led the Group to upgrade market

expectations in March.

As a Board and a management team, we are committed

to delivering further on the Transformation Plan, reducing

the cost base, reducing working capital and reducing net

debt. We will focus on the core lighting business with a

streamlined operation and sales structure, focus on reducing

the numberof stock keeping units (‘SKUs’), selling the most

profitable products and return the Group to earning historic

double-digit return on sales margin.

We are rebuilding shareholder and market confidence and

gradually getting the business back to where it once was,

inahealthy financial position.

FINANCIAL REVIEW

FINANCIAL PERFORMANCE

Group revenues of $183.5m for the 12-month period ended

31 March 2025 (15-month period ended 31 March 2024:

$226.0m) generated a gross profit of $66.5m (15-month period

ended 31 March 2024: $67.1m), giving a gross margin of 36.2%

(15-month period ended 31 March 2024: 29.7%) – a significant

increase driven by selling more profitable products, product

cost down, purchase savings on components and better

financial discipline on pricing/margin. Distribution costs of

$29.0m, administrative expenses of $52.8m and impairment

losses of financial assets of $2.1m resulted in an operating

loss of $11.6m (15-month period ended 31 March 2024: loss

of $30.2m) after a $5.8m gain on disposal of a business

(15-month period ended 31 March 2024: $nil). The operating

loss for the period of $11.6m (15-month period ended

31 March 2024: operating loss $30.2m) was after $21.6m

(15-month period ended 31 March 2024: $25.6m) of

non-underlying costs were recognised.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Chief Financial Officer’s review continued

Underlying performance (unaudited)

The Group generated an underlying gross profit of $65.3m

(15-month period ended 31 March 2024: $70.1m), giving an

underlying gross margin of 35.6% (15-month period ended

31 March 2024: 31.0%) – for the reasons discussed above.

Distribution costs of $29.0m (15-month period ended

31 March 2024: $36.8m) and underlying administrative costs

of $32.1m (15-month period ended 31 March 2024: $37.9m)

resulted in an underlying operating profit of $4.2m (15-month

period ended 31 March 2024: loss of $4.6m).

12-month comparison (unaudited)

Group revenues for the 12-month period ended 31 March

2025 were $183.5m, a 0.8% increase against $182.1m in the

12-month period ended 31 March 2024.

Underlying gross margin for the 12-month period increased

significantly to 35.6% (2024: 31.5%), with improvements

in material costs through cost reduction projects and

negotiation with suppliers as well as the results of the

Transformation Plan starting to feed into the gross margin.

We expect upward momentum to continue in 2025–26.

Distribution costs of $29.0m in the year to 31 March 2025 were

marginally lower (2024: $29.2m) and administration expenses

of $32.1m (including credit losses of $2.1m) increased (2024:

$30.1m) due to inclusion of bonus and credit loss provision

for the year. Going forward we will be focusing on carefully

managed reductions in administration costs.

This combination of marginally higher revenue and higher

gross margins contributed to a significant increase in Group

underlying operating profit from operating activities to $4.2m

(2024: $1.9m loss).

Lighting before central costs

The Lighting (Lighting and Obstruction) segment represents

approximately 75% of the Group’s revenue and consists of

two main revenue streams: large capex projects; and ongoing

Maintenance, Repair and Operations (‘MRO’) spend. For the

12-month period to 31 March 2025, Lighting revenue was flat

at $138.0m compared to $137.9m in the 12-month period to

31 March 2024.

12-month

period ending

31 March 2025

15-month

period ending

31 March 2024

Revenue 138.0 171.1

Underlying gross profit 54.1 57.6

Underlying gross profit margin 39.2% 33.7%

Underlying overheads (41.2) (50.8)

Underlying operating profit

before central costs

12.9 6.8

Underlying gross margins significantly improved during

the period, following the launch of cost-reduction projects

and improvements in procurement costs. The Group

has also concentrated on selling a reduced number of

SKUs and focusing on the sale of a better mix of more

profitable products.

Signals and Components before central costs

Signals and Components is a high-volume business operating

within highly competitive markets. There are three main

elements: traffic lights; Opto-Electronic (‘OE’) components;

and vehicle lights.

12-month

period ending

31 March 2025

15-month

period ending

31 March 2024

Revenue 45.5 54.9

Underlying gross profit 11.2 12.5

Underlying gross profit margin 24.6% 22.8%

Underlying overheads (7.9) (12.3)

Underlying operating profit

before central costs

3.3 0.2

Overall, Signals and Components revenue increased from

$44.3m in the 12-month period to 31 March 2024 to $45.5m.

While the overall gross margin in Signals and Components has

increased marginally, the overall impact of the traffic light sale

to Leotek on July 2024 has been to reduce the level of gross

margin percentage generated by OE and vehicle. Traffic light

contract manufacturing to Leotek is currently loss making and

this activity will cease at the end of quarter three 2025–26

when gross margins will improve for this segment.

Central costs

Central overheads comprise costs not directly attributable to

a segment and are shown separately. In the 12-month period

to 31 March 2025 unallocated costs were $33.6m representing

$12.0m of central costs and $21.6m of non-underlying cost.

This compares to the 15-month period ending 31 March 2024,

which reported $37.2m in total costs – comprising $11.6m

of central costs and an additional $25.6m in non-underlying

costs. Underlying costs primarily relate to head office costs

and professional fees with non-underlying costs relating to the

Sanmina settlement, legal fees and transformation project.

In the prior 15-month period these costs primarily related

to transformation, goodwill impairment, development cost

impairment, Sanmina legal cost and business disposal cost.

NON-UNDERLYING COSTS

12-month

period ending

31 March 2025

15-month

period ending

31 March 2024

Transformation Plan 4.1 4.5

Goodwill impairment – 11.2

Development cost impairment – 4.1

Sanmina settlement

and litigation costs

17.8 2.3

Business disposal (income)/costs (0.9) 3.5

Other 0.6 –

Total 21.6 25.6

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Chief Financial Officer’s review continued

To give a full understanding of the Group’s performance and

aid comparability between periods, the Group reports certain

items as non-underlying to normal trading.

The Group has incurred $4.1m of non-underlying costs

relating to the Transformation Plan. This is a significant

multi-year change programme for the Group which is

designed to address legacy issues associated with excess

cost and complexity within the organisation, while at the

same time focusing more resources on the most attractive

growth opportunities within its core industrial LED lighting

market. Implementation of the Transformation Plan is

expected to be complete by 31 March 2026. The multi-year

Transformation Plan is a material, infrequent programme and

is not considered to be part of the underlying performance

of the business. Of these costs, $2.9m relates to general

management reduction and consulting, $0.9m to operational

transformation and $0.3m to finance transformation.

During the 12-month period to 31 March 2025, costs of

$17.8m have been expensed in relation to the settlement

with Sanmina (legal costs in the 15-month period to 31 March

2024: $2.3m). Please refer to note 26 for further details of

this settlement. The total settlement of $12.0m includes

an initial payment of $4.0m made on 31 March 2025, with

the remaining balance to be paid through eight deferred

quarterly instalments of $1.0m, concluding on 31 March 2027.

The amount of any outstanding deferred instalments will

be automatically increased from $1.0m to $1.5m if Dialight’s

market capitalisation exceeds £100m for 30 consecutive

days, subject to total cumulative instalment payments not

exceeding $8.0m. The Group is confident that the deferred

instalments totalling $8.0m will be met from the operational

cash flow of the business and that the Group has sufficient

headroom to meet its ongoing business needs. In the highly

unlikely event of payment default under the settlement

agreement following the initial payment, Sanmina will be

entitled to enforce the full judgement (less payments already

made) in the ordinary course following a 90-day cure period.

The discounted cash flows of the future settlement with

Sanmina is $11.3m, with an escrow account of $5.2m no longer

considered to be collectible so written off, legal costs of

$5.6m in year and write off of unpaid invoices of $4.3m giving

a total settlement cost of $17.8m.

Business disposal income/costs relate to the disposal of the

Traffic business and onerous contract with Leotek and other

cost relates to value added tax written offon aged inventory.

INVENTORY

Inventory of $46.6m decreased by $2.5m from $49.1m

in March2024, which itself had reduced from $64.8m in

December 2022. The Group is targeting further reductions

ininventory in 2025–26.

31 March 2025

31 March 2024

Raw materials 20.0 18.8

Sub-assemblies 10.7 13.4

Finished goods 15.7 16.7

Spare parts 0.2 0.2

Total 46.6 49.1

The aged inventory provision has increased to $5.1m in March

2025 compared with $3.6m in March 2024.

An additional provision of $3.0m was recognised in 2024 for

specific inventory relating to the traffic business that was not

expected to be sold. Of that provision, $2.2m was released

in 2025 to leave a provision of $0.8m. This results in a total

inventory provision of $5.9m (2024: $6.6m).

CASH AND BORROWINGS

The Group ended March 2025 with net bank debt of $17.8m,

an increase of $1.4m from the March 2024 balance of $16.4m.

Net bank debt excludes right-of-use asset liabilities of $10.0m

(2024: $10.1m) and the Sanmina liability, which are excluded for

covenant testing purposes. The roll-forward of net bank debt

was as follows:

Net bank debt $m $m

Opening balance at 1 April 2024 (16.4)

Decrease in inventories 2.6

Increase in trade and other payables 2.2

Decrease in trade and other

receivables

1.9

Proceeds on disposal of business 5.2

Operating cash flows before

movements in working capital

14.6 26.5

Sanmina and legal costs (8.5)

Capital expenditure including

intangible assets

(8.0)

Interest and tax paid (4.5)

Transformation costs (3.9)

Repayment of lease liabilities (2.3)

Pension contributions (0.7) (27.9)

Closing balance at 31 March 2025 (17.8)

Gross bank debt of $25.7m was offset by cash in hand of

$7.9m – see note 23 for further details on bank borrowings.

The interest expense of $2.5m is analysed in note 8.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Chief Financial Officer’s review continued

BANKING AND COVENANTS

The Group’s funding includes a revolving credit facility

(‘RCF’) of $28.8m from HSBC, which was extended on 5 June

2025 to 21 July 2027 on the same terms as the original

agreement. Aligned with the Group’s robust commitment

toenvironmental, social, and governance (‘ESG’) principles,

theRCF facility operates as a sustainability-linked loan.

The RCF facility is subject to quarterly covenants

encompassing maximum leverage and minimum interest

cover. The covenants require a leverage ratio maximum

target of less than 3x EBITDA, and an interest cover minimum

target of 4x EBITDA. The interest cover for the quarter to

31 December 2024 was amended to minimum 2.5x and then

reset to 3x for all future periods. Covenants were met for

all four quarters of the year and at 31 March 2025 there was

$2.4m of headroom on the interest cover covenant and $4.6m

on the leverage covenant.

See note 2(b) of the consolidated financial statements for

details of how this has been considered as part of the going

concern assessment.

TAX

Based on a loss before tax of $14.1m for the 12-month period,

the Group had an effective tax rate of 3.5% (2024: 5.2%)

resulting in a tax credit of $0.5m (2024: $1.8m).

In the period the Group made a net cash tax payment of $1.7m.

PENSION COSTS

The Group has two defined benefit schemes that are closed

to new entrants. The aggregate surplus on both schemes is

$2.2m, a decrease of $3.2m from 31 March 2024. The income

statement income of $0.1m is made up of $0.2m of current

service costs expense offset by $0.3m of interest income.

Actuarial losses of $4.0m recognised in other comprehensive

income, were offset by cash contributions of $0.7m. The last

actuarial valuations were completed as at April 2022, with

future cash contributions agreed at the current levels through

to December 2028 and July 2029 for each scheme.

The main scheme, (which is the larger of the two), purchased

a bulk annuity policy covering the majority of its liabilities on

4 July 2024 with an insurer. This “buy-in” is the primary reason

for the actuarial loss in the year. The trustees of the scheme

and their advisors are working on various steps to cleanse

the scheme membership data, and complete calculations

in respect of the impact of Guaranteed Minimum Pension

(‘GMP’) equalisation. These steps are not expected to be

completed for around 18 months. Until this work has been

completed, the Trustee of the scheme will not be in a position

to move from a buy-in to a buy-out (where the bulk annuity

policy is converted into a series of individual policies, which

are then assigned to members). In light of this, the buy-in

should be viewed as an investment transaction, with the

impact recognised through other comprehensive income

(‘OCI’) andnote 16 presents this as such.

PARENT COMPANY

The Parent Company has carried out a review of the

carrying value of investments in subsidiaries as well as the

recoverability of intercompany account balances at 31 March

2025. This is a requirement of Financial Reporting Standard

102 where there is objective evidence of impairment or

indicators of potential impairment. It should be noted that

such impairment review would not impact the Group reported

results. Having completed the impairment reviews the

Parent Company has booked a total impairment of £17.6m

(£2.0m relating to investment in Dialight Europe and £15.6m

impairment of inter-company loan and trading balances

from Dialight Europe and Dialight Malaysia). It should be

noted the functional currency of the Parent Company is

Sterling with the functional currency of the Group being US

Dollars. The significance of this is that the Parent Company

distributable reserves impact the Group ability to pay

dividend. As a result of this impairment, Parent Company

distributable reserves have reduced from £31.3m as at

31 March 2024 to £8.3m.

CAPITAL MANAGEMENT AND DIVIDEND

The Board’s policy is to have a strong capital base to maintain

customer, investor, and creditor confidence and to sustain

future development of the business. The Board considers

Group consolidated total equity as capital, which as at

31 March 2025 equated to $47.3m (31 March 2024: $63.9m).

The Board is not declaring a dividend payment for the period

ended March 2025 (2024: nil).

The Group has a clear capital allocation discipline and is

committed to returning excess funds to shareholders via

future dividend or share repurchase.

POST BALANCE SHEET EVENTS

The Group’s multicurrency revolving credit facility of

$28.8m with HSBC was extended on 5 June 2025 to 21 July

2027 on the same terms as the original revolving credit

facility agreement.

In May 2025, the Group received an Employee Retention

Credit (‘ERC’) of $1.4m. An ERC is a US refundable tax credit

for certain eligible businesses that had employees and were

affected during the COVID-19 pandemic. This government

grant income has not been included in this annual report

and accounts since as at the balance sheet date it was not

known that the credit was reasonably certain to be received.

The claim was filed in 2023.

Mark Fryer

Group Chief Financial Officer

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Going concern statement

The Group’s business activities, together with the factors

likely to affect its future development, performance and

position are set out in the Strategic report on pages 04 to 34.

The financial position of the Group, its cash flows, liquidity

position and borrowing facilities are discussed in the Chief

Financial Officer’s review on pages 28 to 31.

The Directors’ assessment of the viability of the Group is set

out in the Viability statement on page 34. In addition, note 24

to the financial statements includes the Group’s objectives,

policies and processes for managing its capital; its financial

risk management objectives; details of its financial instruments

and hedging activities; and its exposures to credit risk and

liquidity risk.

The Group’s bank facility comprises a revolving credit facility

(‘RCF’) of $28.8m from HSBC. A balance of $5.2m was repaid

in August 2024 using the proceeds received from the disposal

of the Traffic business after which the facility was reduced by

a corresponding amount from $34.0m to $28.8m. The facility

was extended to 21 July 2027 on the same terms as the

original agreement on 5 June 2025.

Net debt increased to $17.8m at 31 March 2025 (31 March

2024: $16.4m) and comprised $25.7m borrowings with $7.9m

cash in hand.

The covenants are tested quarterly and are as follows:

Ratio Calculation Threshold

Leverage ratio Net bank debt:

Proforma unaudited EBITDA

<3.0x

Interest cover Proforma unaudited EBITDA:

Interest expense

>4.0x

The interest cover was temporarily reset from 4.0x to 2.5x

for the quarter period ending 31 December 2024 only and

was reset to 4.0x thereafter. Covenants were met in all

four quarters.

In assessing the going concern assumptions, the Directors

have prepared three main scenarios over the going concern

period which the Directors have assessed as a 15-month

period to 30 June 2026, being:

• the base case;

• a plausible downside case in relation to revenue and

margin; and

• a reverse stress test (break-even assessment).

Various upside scenarios also exist, but those result in positive

outcomes and have not been included here given the focus

of the Directors, and its auditors, is on the risk to the going

concern basis of preparation to the financial statements.

Nonetheless, the Directors consider these upside scenarios

as realistic outcomes and continue to drive the Group’s

performance and other activities to seek to achieve those

positive results.

The downside scenarios reflect the risk of lower than expected

organic revenue growth in core Lighting markets, lower gross

margins than forecast and cost savings not being realised to

the full extent forecasted.

BASE CASE

The base case is derived from the Board approved year to

31 March 2026 Budget, which assumes that the margin will

improve over the going concern period through various

Group initiatives. The base case is driven by material cost

reduction projects and tight control over the cost-base.

In this scenario, the Directors consider that the Group will

continue to operate within its available committed facilities

of $28.8m with sufficient headroom and covenant compliance

throughout the forecast period.

The key assumptions in the base case include:

• Decline in net revenue in the year to 31 March 2026 mainly

due to the expected disposal of Traffic and Rail in October

2025 (end of MSA).

• No growth in Lighting net revenue in the year to 31 March

2026 due to the current macroeconomic climate and the

uncertainty surrounding global tariffs.

• Net revenue for the quarter to 30 June 2026 is forecast

to increase by 2.4% compared to the same quarter in

2025. This is driven by a combination of factors including

increasing, benefits from strategic relationships, price

increases, and increased source and sell product

range sales.

• Gross margin improvement as component price premiums

continue to reduce and supply becomes more readily

available; freight costs normalise, and the benefits from

cost reduction and automation programmes are delivered

resulting in a gross profit margin improvement of 1.9% in the

year to 31 March 2026 and a further 4.2% in the quarter to

30 June 2026 respectively.

• Operating costs are expected to be 33.2% of revenue in the

year to 31 March 2026 and the quarter to 30 June 2026.

PLAUSIBLE DOWNSIDE CASE

The Directors have assumed:

• Year to 31 March 2026: reduction of Budget revenue by

5%across Lighting, Obstruction, OE and Vehicle.

• Quarter to 30 June 2026: no growth in core revenue and

a 75% reduction of the forecast product cost savings and

discounting decrease.

• No mitigating actions are assumed apart from the removal

of a bonus provision for the year to 31 March 2026 and the

quarter to 30 June 2026.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Going concern statement continued

REVERSE STRESS TEST (BREAK-EVEN ASSESSMENT)

The Directors have assumed:

• Year to 31 March 2026: reduction of Budget revenue by

9%across Lighting, Obstruction, OE and Vehicle.

• Quarter to 30 June 2026: no growth in core revenue and

a 85% reduction of the forecast product cost savings

anddiscounting decrease.

• No mitigating actions are assumed apart from the removal

of a bonus provision for the year to 31 March 2026 and the

quarter to 30 June 2026.

As indicated above, the downside and reverse stress testing

scenarios do not consider any mitigating actions apart from

the removal of a bonus provision. In all these scenarios, the

Group has a series of controllable mitigating actions that can

be taken swiftly, including various temporary and permanent

cost and cash saving measures.

All scenarios include the settlement payments to be made

toSanmina. An initial $4.0m has been paid in March 2025

with a further $1.0m to be made per quarter until March 2027,

rising to $1.5m if Dialight’s market capitalisation rises above

£100m for 30 consecutive days. Cumulative total payments

to Sanmina under this scenario will not exceed $12.0m.

The Directors are confident the payments will be funded out

of operating cash flows, with sufficient headroom to meet

business needs.

In the base case and downside scenarios, the Group is

forecast to have sufficient liquidity and not breach any

covenants in the going concern period. In the reverse stress

test, the leverage covenant ratio is forecast to breach in the

quarter to 31 March 2026 and the quarter to 30 June 2026.

The interest cover is expected to breach in the quarter

to30 June 2026.

Whilst the Directors believe the Group will deliver on its plan,

the Directors recognise that the results in recent years have

fluctuated from the forecast. In the reverse stress test, whilst

core revenue is forecast to decrease from the year to 31 March

2025 to the quarter to 30 June 2026, gross profit margin is

forecast to increase by 1.3% in the same period. As a result,

the Group will require a gross profit margin increase more

than this to avoid breaching covenants. The Directors have

therefore concluded that while the scenario itself is unlikely

given the mitigating actions that can be implemented,

thereisa plausible risk of a covenant breach.

Accordingly, the Directors have identified circumstances

which give rise to a material uncertainty which may cast

significant doubt on the entity’s ability to continue as a

going concern, meaning itmay be unable to realise it

assets and discharge its liabilities in the normal course of

business. Notwithstanding this material uncertainty, the

Directors consider it remains appropriate to continue to

adopt the going concern basis in the preparation of the

financial statements. The HSBC facility was extended on

5 June through to 21 July 2027, which covers the going

concern period.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Viability statement

The Directors have assessed the Group’s longer-term

prospects, primarily with reference to the Board approved

year to 31 March 2026 Budget and strategic plan.

This is driven by the Group’s business model and strategy

as detailed on pages 07 to 09, which are fundamental to

understanding the future direction of the business, while

factoring in the Group’s principal risks detailed on pages

24to 27.

The Board has assessed the viability of the Group over a

two-year period, considering the Group’s current position and

the potential impact of the principal risks and uncertainties.

Whilst the Board has no reason to believe that the Group

will not be viable over a longer period, it has determined

that two years is an appropriate period. The Board believes

that this approach provides an appropriate alignment with

the annual awards under the share-based incentive plan

andourexternalbanking facilities.

In making their assessment, the Board carried out a

comprehensive exercise of financial modelling and

stress-tested the model with various scenarios based on the

principal risks identified in the Group’s annual risk assessment

process. The scenarios modelled used the same assumptions

and mitigations as for the going concern statement.

These scenarios included lower-than-expected growth in our

core Lighting markets, delayed recovery from the short-term

cyclical downturn in the opto-electronic market and efficiency

improvements not fully realised. In each scenario, the effect

on the Group’s KPIs and remaining borrowing covenants was

considered, along with any mitigating factors.

Steve Blair

Group Chief Executive Officer

23 June 2025

In reviewing the Company’s viability, the Board has

identified the following factors which they believe support

their assessment:

• continued strong market drivers for LED adoption due to

the increasing focus on sustainability and high utility costs;

• legislation banning the sale of fluorescent lighting being

introduced in a number of countries;

• the Group operates in diverse end markets, with no material

individual customer concentration;

• positive customer and distributor feedback and invitations

to bid on large projects;

• structural changes in key areas such as sales and operations

which will drive improved planning;

• new product development to close portfolio gaps and

support expansion into new verticals;

• operational leverage as volumes increase, combined

with investment in manufacturing automation and

component standardisation;

• continued strengthening of the balance sheet and

strong cash generation through divestment of non-core

businesses; and

• the Group’s long-term, strong relationship with HSBC and

its $28.8m revolving credit facility signed in July 2022, now

extended to 21 July 2027.

Based on this assessment, the Board confirms that it has

a reasonable expectation that the Group will be able to

continue in operation and meet its liabilities as they fall due

over the two-year period to 31 March 2027.

As set out on pages 32 to 33, the Board have identified a

material uncertainty in relation to going concern during the

going concern period to 30 June 2026. As the going concern

period falls in the two-year viability period, the Board has also

identified the same material uncertainty in the viability period.

Mark Fryer

Group Chief Financial Officer

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

GOVERNANCE

Chair’s introduction to governance 36

Compliance statements 37

Section 172 statement 38

Governance overview 42

Board: leadership 44

Governance structure and division of responsibilities 46

Leadership and engagement 50

Board composition, succession and evaluation 52

Nominations Committee report 53

Audit Committee report 55

Remuneration Committee report 60

2024/25 Annual report on remuneration 74

Implementation of the remuneration policy for 2025/26 78

Directors’ report 80

Directors’ responsibility statement 83

Dialight plc Annual Report and Accounts 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Chair’s introduction to governance

Neil Johnson

Group Chair

DEAR SHAREHOLDERS

On behalf of the Board, I am pleased to report on Dialight’s

corporate governance during the past financial year.

This part of our annual report explains Dialight’s governance

framework and outlines how it was applied, on a practical

basis, in the year under review.

OVERVIEW

The Board’s role in setting the Group’s culture and core

values is a significant one and the Executive Directors and

Non‑Executive Directors (‘NEDs’) are required to work as

a team to ensure the success of the Group. Steve Blair and

Ispeak frequently with each other, and I am very grateful

to each of my Board colleagues who have given so much of

their time generally over the last year and in particular across

thelast few months in supporting the necessary changes

tothe Group’s management.

LEADERSHIP AND BOARD CHANGES

In summer 2024 the Non‑Executive team was strengthened

with the arrival of John Lincoln – who brings very specific

technical and strategic experience of the LED lighting market.

In January 2025 we welcomed Mark Fryer, ahighly experienced

FTSE CFO into the interim CFO role, whichbecame permanent

on 1 May 2025. Mark has previously worked at Dialight and

brings with him an in‑depth knowledge of manufacturing in

general, and Dialight in particular. The Board is now confident

that the Executive team are well positioned to deliver on our

ambitious growth strategy.

I would like to thank all the former Directors who have

departed in the reporting year for their past commitment

to the Group. Further details on Board composition and

leadership can be found on pages 44 to 45.

BOARD FOCUS AREAS IN 2024/25

The Board’s focus across the reporting year has been

four‑fold: reinforcing shareholder and bank engagement;

delivering sound finance and operational performance

toachieve annual performance objectives for the business;

ensuring delivery of an ambitious strategic plan and the

appropriate level of capitalisation to deliver on that plan;

and, dealing with a number of headwinds that we have faced

(theSanmina litigation and geo‑political developments).

STAKEHOLDER ENGAGEMENT

As a Board, we are accountable to all our shareholders and

must have regard to other stakeholders such as employees,

customers, suppliers, and the environment. We maintain an

active dialogue with shareholders, and while Steve Blair and

I lead on shareholder engagement generally, all of our Board

engage actively on remuneration and other matters, andwe

welcome the active participation of our shareholders in

informing the strategic direction of the Group.

DIVERSITY

As a Board we continue to prioritise cognitive and experiential

diversity as a key indicator of independence and Board

strength, and to enable robust challenge in Board discussions

on the range of challenges and opportunities facing the

Group. Further details of Board composition are on page 42

and pages 44 to 45.

BOARD PRIORITIES

Our priorities for 2025/26 are very much focused on

supporting the now stable leadership at a Board level and

providing support and challenge to the Executive team, to

enable significant improvements in operational performance

and to ensure that the Executive management deliver on our

strategic objectives.

Neil Johnson

Group Chair

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Compliance statements

UK CORPORATE GOVERNANCE CODE 2018

Throughout the reporting period ended 31 March 2025,

theCompany has applied the principles and complied with

the provisions as set out in the 2018 UK Corporate Governance

Code (‘2018 Code’), with the exception of provision 32

requirement that the Remuneration Committee Chair

should have served on the Committee for 12 months prior

toappointment. As noted in the 2024 annual report, the chair

had not served on the Remuneration Committee for at least

12 months before assuming the role; however,Lynndoes

have extensive experience of listed environments and

remuneration matters in a UK PLC context. From 1 April 2025,

the 2024 UK Corporate Governance Code (‘2024 Code’)

came into effect. This section reports on backward‑looking

compliance across the 2024/25 reporting year. An additional

statement is incorporated in each individual Committee

report with regards to ongoing compliance against the 2024

Code. A summary of compliance against the 2018 Code is

includedon this page.

RISK MANAGEMENT AND INTERNAL CONTROL

The Group’s approach to risk management and internal

control is set out on pages 22 to 23.

SECTION 172 COMPANIES ACT 2006 STATEMENT

Section 172 (‘s172’) of the Companies Act 2006 imposes

oncompany directors a duty to act in the interests of a broad

range of stakeholders including shareholders, employees,

suppliers, and local communities. A statement in respect

ofcompliance with s172 is on pages 38 to 41.

BOARD CERTIFICATION

The strategic report, and this annual report generally,

hasbeen reviewed and approved by the Board. The Board

confirms that it considers that the annual report and accounts,

taken as a whole, are fair, balanced and understandable and

provide the information necessary for shareholders to assess

the Company’s position and performance.

UK CORPORATE GOVERNANCE CODE 2018:

COMPLIANCE STATEMENT:

This governance report details, in its various sections, how

the Company has applied the 2018 Code principles and code

provisions in respect of the reporting year, seebelow for

details of this.

Section 1: Board leadership and Company purpose

Compliant See page(s)

1. Opportunities and risks/sustainability

of business model/governance

delivering strategy

Yes 04–34

2. Board activities/investment

in workforce

Yes 51

3. Communication with shareholders Yes 50

5. s172 statement Yes 38

6. Mechanism for workforce concerns 17

7. Management of conflicts of interest Yes 52

Section 2: Board division of responsibilities

Compliant See page(s)

9. Chair independence on appointment

(current Chair)

Yes 52

10. Statement on Non‑Executive

independence

Yes 52

11. 50% of Board to be independent Yes 42

12. Identification of Senior

Independent NED

Yes 45

13. Board review process

and independence

Yes 52

14. Division of responsibilities Yes 46

Section 3: Board composition, succession and evaluation

Compliant See page(s)

18. Annual re‑election of Directors Yes 52

20. Use of external search agency

(during 2024/25)

Yes 53

21. Formal and rigorous annual evaluation Yes 54

23. Report on work of the

Nominations Committee

Yes 53

Section 4: Audit, risk and internal controls

Compliant See page(s)

26. Report on work of the Audit Committee Yes 55

28. Emerging and principal risks Yes 24 to 27

30. Going concern statement Yes 32 to 33

31. Viability statement Yes 34

Section 5: Remuneration

Compliant See page(s)

32. Chair 12‑month service requirement No 37

36. Post‑employment

shareholdingrequirements

Yes 68

37. Use of discretion to override

formulaicoutcomes

Yes 61

38. Executive Director pension alignment

with workforce

Yes 64

41. Description of work of the

Remuneration Committee:

Yes 60

50. Engagement with shareholders

Alignment of Executive Director

remuneration with wider pay policy

Application of discretion on outcomes

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Section 172 statement

OUR APPROACH

The Board has a duty to promote the long‑term, sustainable

success of the Company and of the wider Group. The baseline

duty is set out in s172 of the Companies Act 2006, but in

reality, the breadth of factors considered by the Board in its

decision‑making process is far wider – including a range of

statutory and other factors.

Board decision making will always encompass:

• the likely consequences of any decision in the long term

andthe risks to the Group and its stakeholders;

• the interests and wellbeing of our people and of the

communities where we have a presence;

• the impact of our products and businesses on the

environment and the need, over time, to decarbonise

our inbound and outbound supply chains and our

manufacturing and other operations;

• the Group’s relationships with its customers and suppliers; and

• the importance of our reputation for integrity and high

standards of business conduct.

Dialight believes that a key mechanism in ensuring that it

makes good long‑term and sustainable decisions is open,

two‑way dialogue with all our key stakeholders. We believe

that understanding the perspective and needs of our

stakeholders is vital to the Group’s success.

Good governance and our business ethics and integrity are

essential for Dialight to continue to be an attractive Company

for our investors, employer for our employees, partner for our

suppliers and distributors, and manufacturer of our long‑life

products for our customers.

This s172 statement signposts some of the main ways in which

we have engaged with stakeholders across 2024/25 and built

confidence in the sustainability of their relationship with the

Group. It should be read in conjunction with:

• Group Chair’s statement on page 04;

• the Group Chief Executive’s review on pages 05 to 06;

• the ESG reports on pages 12 to 21;

• risk management on pages 22 to 23;

• the Group Chief Financial Officer’s review on pages 28

to31;and

• the governance and related reports on pages 36 to 83.

By order of the Board.

Laura Walker

Company Secretary

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Section 172 statement continued

Why it is important to engage

with this stakeholder group

Board decision-making impact

and how we engage generally

Board decision-making impact

and what we did in 2024/25

COMMUNITIES

Dialight has a long‑standing presence

through our manufacturing plants in

Mexico; Roxboro, NC US; and, Penang,

Malaysia. As a responsible employer,

we want to contribute to the economic

development and sustainability of these

communities as part of our efforts to

secure a loyal and motivated workforce

with high levels of training, health and

welfare, and employee satisfaction.

Sponsorship and volunteering

opportunities for employees.

Membership of local trade associations

and industry bodies.

Enhanced benefits for employees,

such as transport to and from factory

locations and food vouchers.

Maintenance of the Dialight Foundation

– with a management board headed

by the Global VP, HR and staffed

by employee representatives from

around the world and tasked with

fund‑raising and dispensing Group

provided funds on charitable projects

in the communities adjacent to our

manufacturing locations.

Establishment of a hardship fund to

which any employee can apply for

one‑off financial and other assistance

inarange of hardship situations.

Continuing support for the Dialight

Foundation and its continued

fund‑raisingwithin our employee and

partner communities.

Dispersal of funds to local community

charities by the Dialight Foundation.

Support for dedicated volunteering

day across the whole Group to

encourage employee involvement

inlocal communities.

Continuing focus on raising base pay

levels for the lowest‑paid workers within

the Group.

CUSTOMERS

Dialight operates in highly

differentiated but competitive

markets. To maintain our best‑in‑class

differentiation we are reliant upon a

constant pipeline ofnew technical

innovation and of new products.

The clarity and precision with which we

listen to the “voice of the customer”

and map these needs across to

new product innovation, design,

functionality and pricing is a key

determinant of the future success

of the Group.

The Strategy and Innovation

Committee includes external advisers

who bench‑test internally generated

strategy and innovations and contribute

towards the overarching direction of

strategy and innovation. These advisors

are experts and represent the views of

customers and report other changes

that are occurring in the industry.

Sales proximity to our end users

through direct sales force and indirect

distribution partners.

Dedicated product management

specialists integrated within our sales

and marketing functions.

Detailed product planning and

innovation pipeline bringing together

product, application and technology

specialists from our dedicated in‑house

product innovation teams.

Detailed new product development

management and review process

integrated with sales and

commercial reviews.

Strategy and Innovation Committee.

Incremental improvements in existing

best‑practice, monitoring new product

development management and

review process.

Embedding of process engineers in

manufacturing operations to ensure

realisation of programmed NPD

production efficiencies.

Extension of post‑launch product and

commercial review cycle.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Section 172 statement continued

Why it is important to engage

with this stakeholder group

Board decision-making impact

and how we engage generally

Board decision-making impact

and what we did in 2024/25

ENVIRONMENT

Dialight can contribute to the

long‑term decarbonisation of

industrial facilities’ construction and

building/facilities management, by

promoting the success of sustainable

GHG‑neutral products and services.

We see an absolute confluence of

interest in promoting GHG‑neutral

products and the interests of all

our key stakeholders (not least our

shareholders) – as we believe that

knowledge of the low GHG density

of our products, the inherent power

efficiency of our technology (including

LED light generation generally) and

our extended product life‑cycle, will,

over time, be key drivers of the future

success of the Group.

Dialight products already benefit from

high power efficiency (through design

and utilisation of LED technology) and

extended life‑cycles (typically 10‑year

warranties on solid state lighting

(‘SSL’) products). This inherently

positive impact on the environment

is recognised with our FTSE Green

Economy Mark certification.

Supply chain codes of conduct

and screening in respect of raw

material tracing and impacts

(e.g.conflict minerals).

Embedding of Environmental Product

Declarations that comply with ISO 14025

and EN 15804 standards on our key new

product types – enabling customers to

make informed decisions on the GHG

potential of all our products (expressed

askg CO

equivalent per unit of product).

Maintenance of ISO 14064 and internal

GHG audit control environment as part

of the enhanced efforts at decarbonising

our products and corporate operations

and reporting to investors and other

stakeholders on progress against

carbon‑neutrality objectives.

Ongoing commitment to net zero with

SBTi (the Science Based Targets initiative)

and setting outline plans for scientific

targets to achieve this.

PARTNERS

Our key commercial partner

relationships are spread across

the inbound supply chain and our

outbound distribution networks.

With our high‑SKU product range, we

are highly reliant upon the integrity and

efficiency of our supply chain. We were

a first‑mover in the introduction of

long‑warranty products (typically

10 years for SSL), but this in turn

requires high levels of assurance

over the consistency and reliability of

component parts for our manufacturing

operations. Our sales model is a hybrid

of active direct selling, active indirect

selling and indirect product supply.

Supplier and distributor onboarding

due diligence (financial, quality,

business integrity and compliance,

component supply, Modern

Slavery,etc.).

Supplier Code of Conduct.

Audits and inspections of suppliers.

Ongoing management of

supplier relationships.

Further rationalisation and localisation

(where possible) of our supply chain

to mitigate the risk of supply chain

disruption and strengthen product

quality, production efficiency,

inventory management and supplier

relationships generally.

Further strengthening of supply chain

team and processes.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Section 172 statement continued

Why it is important to engage

with this stakeholder group

Board decision-making impact

and how we engage generally

Board decision-making impact

and what we did in 2024/25

EMPLOYEES

Dialight has a diverse mix of employees

across four continents ranging from

manufacturing production operatives

to highly skilled design engineers.

We are entirely reliant upon our

workforce for our differentiating

innovation, efficient and high‑quality

manufacturing production, and for

sales of our product in our end markets.

We need to retain our skilled staff as

well as attract highly skilled talent to

new roles.

Ongoing focus on communications

with, and policies for, employees

relating to employee health, safety,

and welfare.

Training and development.

Site visits by members of the Board

(conducted physically and online).

Update newsletters from the Group

Chief Executive.

Whistleblowing hotline.

Monthly all‑employee updates

fromthe CEO.

Specific welfare precautions for

employees at our manufacturing plants

including additional food supplies,

paidleave(for high‑risk individuals),

andin‑house medical care.

INVESTORS

As a Company with a premium listing

on the London Stock Exchange’s

Main Market and a borrower of bank

debt, we need to communicate clearly

and effectively with our existing and

prospective shareholders and lenders

to develop their understanding of how

the Group’s businesses are managed

to generate sustainable returns and

long‑term success.

Meetings with current and potential

shareholders, current and potential

lenders, and analysts.

Addressing enquiries from institutional

and retail investors.

Annual General Meeting

(‘AGM’), annual report and

accounts, and preliminary and

interim announcements.

Regulatory announcements.

Corporate website.

More frequent discussions with existing

shareholders and lenders.

High level of shareholder satisfaction with

governance standards evidenced by 2024

AGM voting levels.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Governance overviewGovernance overview

This report aims to provide shareholders and other

stakeholders with an understanding of how our Group

ismanaged and the governance and control framework

withinwhich we operate.

Dialight, as a smaller company with a focused product

portfolio, benefits from having a lean and agile management

structure. Our governance and controls are integral to

AS AT 31 MARCH 2025

the organisation’s operating culture and provide good

visibility of the performance of the business. The Board

isfocused on getting the right balance between robustness

and pragmatism in its oversight of governance, controls

and risk management, as the best means of delivering

the Group’s strategic aims of growth, customer relevance

and differentiation.

Key

Executive 50%

Non-Executive 50%

EXECUTIVE/NON-EXECUTIVE

INDEPENDENT NEDs

Executive 50%

Independent 50%

DIRECTORS (TERM PROFILE)

0–3 years 100%

4–6 years 0%

7+ years 0%

DIRECTORS (NATIONALITY)

Key

UK 83%

US 17%

SENIOR ROLES* (GENDER)

Key

Female 20%

Male 80%

DIRECTORS (GENDER)

Female 17%

Male 83%

EXECUTIVE COMMITTEE (GENDER)

Female 25%

Male 75%

ALL EMPLOYEES (GENDER)

Key

Female 51%

Male 49%

* Note: Senior roles = Chair, CEO, CFO, SID and Committee Chairs.

The Group acknowledges that it is currently not compliant with the board diversity targets set out in UK Listing Rule 6.6.6R

in that fewer than 40% of Board members are women and the Board does not currently include a member from a minority

ethnic background.

The Board recognises the importance of diversity in delivering effective governance and decision making. Efforts are underway

to address these gaps through improved succession planning, inclusive recruitment practices and the development of a

long‑term strategy to strengthen representation at Board level.

The Company remains committed to making progress in this area and will report annually on developments and outcomes.

HOW THE BOARD AND GOVERNANCE SUPPORTED STRATEGY

WINNING HEARTS AND MINDS

READ MORE ON PAGE 09

The Strategy and Innovation Committee has been

established to support the fifth pillar of Dialight’s

Transformation Plan and foster further growth through

innovation, forward‑looking strategy and external

market insights.

• Identification of key market and technology trends.

• Development of new product portfolios.

• Expansion of existing industrial lighting and component offerings.

• Inputs from leading global external experts.

NED SKILLS AND EXPERIENCE MATRIX

Skills/experience

Direct

experience

Indirect

experience

Industry/sector:

– Manufacturing (general)

  

– Manufacturing (high‑mix, low volume)

  

– Lighting

  

– Heavy industrial

  

CEO role



Strategy

  

UK plc

 

Skills/experience

Direct

experience

Indirect

experience

Industry/sector:

Accountancy

 

Sustainability

  

Finance/private equity

  

People/social

  

Territories:

– Non‑US markets

  

– US markets

  

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

NEIL JOHNSON

Independent on appointment as

Non Executive Group Chair

Appointed Executive Group Chair

on20 March 2025

Chair of NomCo

Appointed

17 May 2023.

Background and career

Neil has considerable experience in

international business development and

a varied range of strategic corporate

activity in multiple sectors and

geographies. He has held a number of

senior Board roles, including Chairman

of Tenon Group, Hornby, Cybit, Umeco,

Synthomer plc, Motability Operations

Group plc, e2v technologies plc, Electra

Private Equity Plc and Centaur Media

Plc. He was formerly Chief Executive

Officer of the RAC and chaired

telematics company Cybit Holdings Plc

through IPO and ultimate sale to a US

private equity firm in 2010.

He has been advisor to the Prime

Minister on the Citizen’s Charter,

amember of a Ministry of Defence

Advisory Board, and was formerly

an Independent member of the

Metropolitan Police Authority.

Current external appointments

Chair and Chair of Nominations

Committee of QinetiQ plc.

STEVE BLAIR

Group Chief Executive Officer

Appointed

15 February 2024.

Background and career

Steve is a qualified electronic engineer

with considerable experience in

international business development –

with particular focus on North American

markets. He held senior roles at Invensys

Process Systems as President of IPS’s

North American operations and as

chief operating officer of Spectris plc’s

instrumentation and industrial controls

divisions. Steve was CEO of e2v Plc,

steering the group through a complex

organisational transformation through

to its acquisition by Teledyne Inc in 2017.

Steve was then CEO of The Ordnance

Survey until retirement in 2021.

Steve has also held a non‑executive

director role at Oxford Instruments plc

where he was the senior independent

director and a member of the audit,

nominations and remuneration

committees prior to stepping down in

September 2021.

Current external appointments

None.

MARK FRYER

Group Chief Financial Officer

Appointed

6 January 2025 as Interim CFO.

1 May 2025 as CFO.

Background and career

Mark is a qualified Chartered

Accountant and experienced CFO

with extensive plc also add private

equity (‘PE’), PE and private company

experience in global manufacturing and

industrial service companies.

Mark was previously Dialight CFO from

2010 to 2014 and has previously held

roles as a director of Augean Limited

(previously Augean plc), Manganese

Bronze Holdings plc, Franchise Brands

plc and Anexo Group plc.

Current external appointments

None.

Board: leadership

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

NIGEL LINGWOOD

Independent NED – SeniorIndependent

Director, Chair of AuditCo, member

ofNomCo and RemCo

Appointed

1 November 2022.

AuditCo Chair effective 12 January

2023. Senior Independent Director

effective 17 February 2024.

Background and career

Between 2001 and 2020, Nigel was

Group Finance Director at Diploma

PLC until his retirement in September

2020. Nigel brings extensive, relevant

and recent financial and accounting

expertise together with international

listed public company experience.

Current external appointments

Chair of Volution Group Plc.

Chair of Innasol Limited.

Chair of Forterra Plc from 20 May 2025.

JOHN LINCOLN

Independent NED, member of AuditCo,

NomCo, and RemCo. Also chairs the

Strategy & Innovation Committee.

Appointed

1 August 2024.

Background and career

John has 30 years’ experience of

the photonics industry across the

supply chain from components to

systems with a focus on business and

product development. He has a broad

experience of international markets and

developing technologies and has been

based in both the UK and US.

Current external appointments

John is currently CEO of the Photonics

Leadership Group which brings

together academic and industry leaders

in the £15bn UK photonics sector.

He also chairs the steering board of

the EPSRC centre for doctoral training

in photonic integration and advanced

data storage, and is European Strategic

Director for SPIE, the international

society for optics and photonics.

LYNN BRUBAKER

Independent NED, Chair of RemCo,

member of AuditCo and NomCo,

Workforce Engagement Director

Appointed

1 July 2023. WENED effective

1 July 2023. RemCo Chair effective

1 November 2023.

Background and career

Lynn is based in North America and

has spent her executive career in the

aerospace industry, most latterly as

Vice President and General Manager of

Commercial Aerospace at Honeywell

International. Prior to that she held

senior roles at Honeywell International

(Allied Signal) and at McDonnell

Douglas (Boeing). Lynn has also

held non‑executive roles at: QinetiQ

Group plc, the UK‑listed integrated

global defence company focused

on mission‑led innovation; Hexcel

Corporation, the US‑listed high‑end

advanced composites manufacturer

supplying into the industrial, defence

and aerospace sectors; Nordham

Group, one of the world’s largest

independently owned aerospace

companies; and FARO Technologies

Inc, the US‑listed 3‑D measurement,

imaging and realisation solutions

provider for engineering, design and

manufacturing processes where she

chaired the Nominating, Governance

&Sustainability Committee.

Current external appointments

None.

KEY

Appointments and Committee

membership

Nominations Committee

Audit Committee

Remuneration Committee

Workforce Engagement NED

Senior Independent Director

Committee Chair

BOARD DEPARTURES IN THE YEAR

Carolyn Zhang

Board: leadership continued

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Governance structure and division of responsibilities

The Board of Directors is the principal decision‑making body

of the Company. The Company’s governance framework

is structured to maintain good oversight and control over:

finance and management reporting; compliance/regulatory

matters; risk management; and, approval of material

decisions. Except for those Matters Reserved to the Board,

it operates through delegating much of its detailed review

work to sub‑committees and other committees incorporating

a wide spectrum of senior Dialight management. Within the

operations of the Board itself, responsibilities are allocated

toindividual roles as shown below.

CHAIR:

As announced by the Company on 20 March 2025 the Chair

assumed the role of Executive Chair. There are no changes

in the Chair’s responsibilities as a result of this change

from Non‑Executive to Executive. The change in role from

Non‑Executive to Executive to Executive Chair results from

his participation in the Company’s Value Creation Plan (VCP),

as approved by shareholders at the Company’s 2024 AGM.

Further details about the VCP can be found on page 65.

NON-EXECUTIVE:

Governance:

• Promoting high standards of corporate governance

• Leading, chairing and managing the Board.

• Ensuring all Board Committees are properly structured

andoperate with appropriate terms of reference.

• Regularly considering the composition and succession

planning of the Board and its Committees .

• Ensuring that the performance of the Board and

itsCommittees is evaluated on a regular basis.

• Ensuring adequate time is available for all agenda

items and that the Board receives accurate, clear and

timely information.

• Ensuring that there is effective communication with

major shareholders.

Strategy:

• Leading the Board in developing the strategy of the

business and setting its objectives.

• Promoting open and constructive debate in Board meetings

• Ensuring effective implementation of Board decisions

withthe support of the Chief Executive Officer.

• Ensuring that the Board manages risk effectively.

• Consulting, where appropriate, with the Senior

Independent Director (‘SID’) on Board matters.

People:

• Chairing the Nominations Committee.

• Identifying and meeting the induction and development

needs of the Board and its Committees.

• Developing a strong working relationship with the

ChiefExecutive Officer.

• Ensuring a strong working relationship between Executive

and Non‑Executive Directors.

• Setting clear expectations concerning the Company’s

culture, values and behaviours that will support its

long‑term sustainable success.

• Ensuring effective relationships are maintained

withallkeystakeholders in the business.

SID:

• Acting as a sounding board for the Chair.

• Serving as a trusted intermediary for the other Directors.

• Providing an alternative channel for shareholders to raise

concerns, independent of Executive management and

the Chair.

Independent NEDs:

• Contributing independent thinking and judgement,

andproviding external experience and knowledge,

totheBoard agenda.

• Scrutinising the performance of management in delivering

the Company’s strategy and objectives.

• Providing constructive challenge to the Executive Directors.

• Monitoring the reporting of performance and ensuring that

the Company is operating within the governance and risk

framework approved by the Board.

Workforce engagement NED (‘WENED’):

• Direct engagement with workforce through site visits,

one‑on‑onediscussionswith managers and other

employees selected by the WENED, and larger

engagements with selected groups of employees from

different Company locations without management present.

EXECUTIVE:

CEO:

• With the Chair, providing coherent leadership and

management of the Company.

• Developing objectives, strategy and performance standards

to be agreed by the Board.

• Providing input to the Board’s agenda.

• Ensuring the health and safety, and general wellness

oftheGroup’s workforce.

• Providing effective leadership of the Executive Committee

to achieve the agreed strategies and objectives.

• Securing an Executive Committee of the right calibre,

withspecific responsibility for its composition, and ensuring

that its succession plan is reviewed annually with the Chair

and the Non‑Executive Directors.

• Monitoring, reviewing and managing emerging and

principal risks and strategies with the Board.

• Ensuring that the assets of the Group are adequately

safeguarded and maintained.

• Building and maintaining the Company’s communications

and standing with shareholders, financial institutions and

the public, and effectively communicating the Dialight

investment proposition to all stakeholders.

• Ensuring the Board is aware of the view of employees

onissues of relevance to Dialight.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Governance structure and division of responsibilities continued

Executive Directors:

• Implementing and delivering the strategy and operational

decisions agreed by the Board.

• Making operational and financial decisions required

intheday‑to‑day management of the Company.

• Providing executive leadership to senior management

across the business.

• Championing the Group’s values and reinforcing

thegovernance and control procedures.

• Promoting talent management, encouraging diversity

and inclusion.

Company Secretary:

• Acting as a sounding board for the Chair and

other Directors.

• Ensuring clear and timely information flow to the Board

andits Committees.

• Providing advice and support to the Board on matters

ofcorporate governance and risk.

The Board

• Principal role is to provide effective leadership, within

aframework of controls, to promote the interests of the

Company sustainably over the long term – generating value

for its shareholders as well as benefiting other stakeholders.

• Sets the Group’s purpose, values and strategy and has

ultimate responsibility for the Group’s management,

direction and performance.

• Governed by the Company’s Articles of Association and

accountable to shareholders at least annually at shareholder

general meetings.

BOARD COMMITTEES

Audit Committee Nominations Committee Remuneration Committee Disclosure Committee*

Monitors the integrity of

the financial statements,

formal announcements

relating to the Company’s

financial performance

and the Company’s

narrative reporting.

Oversees risk management

and internal controls.

Considers the requirement

foran internal audit function.

Reviews external auditor

independence and leads

theaudit tender process.

Reviews the structure, size and

composition ofthe Board.

Oversees the Board’s

succession planning.

Keeps under review the

leadership needs of, and

succession planning for,

the Company.

Sets and keeps under

review the framework and

policy on Executive Director

and senior management

remuneration (including

pension arrangements).

Evaluates the advice

ofexternal remuneration

consultants when reviewing

remuneration structures

for Executive Directors and

senior management.

Approves the design and

targets framework for share

incentive plans.

Manages compliance

with public reporting

and announcement

requirements.

Formalised as required from

time to time by the Board.

* Non‑regulatory committees.

MANAGEMENT COMMITTEES

Risk Committee Executive Committee Dialight Foundation ESG Committee Strategy and Innovation Committee

Management

Committee chaired

by the Group

General Counsel.

Manages the periodic

reviewof Group risks.

Maintains the Group

risk register.

Management

Committee (with

senior functional

heads from across the

Group), Chaired by

the CEO, which meets

weekly and reviews

operational matters and

business performance.

Reinforces the

operational and

governance structures

inplace across

the Group.

Acts as a forum

for management

decision making.

Chaired by the CEO,

with the remainder of

the Board comprised

of employee

representatives from

across the Group.

Dispenses central

funds, andengages

in fundraising, for

charitable purposes

inthe communities

where weare based.

Maintains an employee

hardship fund.

Chaired by CEO.

Acts as a cross‑

functional forum

for ESG matters.

Chaired by John Lincoln,

Independent NED, with the

remainder of the Committee

comprised of senior functional

heads across the Group, as

well as inputs from leading

global external experts.

The Committee meets on

aquarterly basis and focuses

onthe development of

medium to long term strategy

of the Company through

innovation and strategic

planning as a key driver for

sustainable growth.

Periodic review of the strategy

and proposal to the Board,

from time to time, or any

material amendments to

the strategy.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Governance structure and division of responsibilities continued

DELEGATED AUTHORITIES

The Board delegates certain decision making and compliance

monitoring through formal delegated authorities. Each Board

Committee operates under written terms of reference –

approved by the Board and published at: www.dialight.com.

Powers delegated to management are managed by a clearly

defined Group‑delegated authorities’ matrix.

THE ROLE OF THE BOARD AND ITS COMMITTEES

DURING THE YEAR

The Board retains control over all matters formally reserved

to the Board, but delegates certain decision making and

monitoring activities to formal Board Committees and

Committees at an Executive level. The Chair of each Board

Committee reports to the Board on its decision making.

The Board also appoints ad hoc sub‑committees from time

totime as required.

The Board currently comprises six Directors, who bring

awide variety of skills and experience to the Boardroom.

With three Executive Directors (including the Chair) and

three Non‑Executive Directors all of whom have been judged

by the Board under Provision 10 of the 2018 Code to be

independent. There continues to be a strong independent

element to Dialight’s Board which encourages constructive

challenge. The Board considers the Board composition

tobeappropriate in terms of size, diversity and the balance

ofskills and experience; refer to page 42 on the Group’s

current non‑compliance with the board diversity targets set

out in UK Listing Rule 6.6.6R. Further details of recent Board

changes are set out in the Nominations Committee report

onpages 53 to 54.

2024/25 BOARD MEETING ATTENDANCE

Board member Scheduled meeting Ad hoc meeting Total

Neil Johnson 11/12 1/1 12/13

Steve Blair 12/12 1/1 13/13

Mark Fryer 3/3 –/– 3/3

Lynn Brubaker 12/12 1/1 13/13

Nigel Lingwood 11/12 1/1 12/13

John Lincoln 8/8 –/– 8/8

Carolyn Zhang

7/7 1/1 8/8

1 As announced on 11 November 2024, Carolyn Zhang stepped down as a Director with immediate effect.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Governance structure and division of responsibilities continued

BOARD RESPONSIBILITIES

Standing Board agenda items Matters reserved for the Board Independence

Review and approval of the

previous minutes.

Status update on any

matters outstanding from

previous meetings.

Updates from each Board

Committee on the activities

sincethe last Board meeting.

Health and safety review.

Report from the Group

Chief Executive.

Report from the Group Chief

Financial Officer.

Report from the Group General

Counsel/Company Secretary.

Investor relations report.

Setting the Group’s long‑term objectives

andcommercial strategy.

Approving annual operating and capital

expenditure budgets.

Ceasing all or a material part of the

Group’s business.

Significantly extending the Group’s activities

into new business or geographic areas.

Changing the share capital or corporate

structure of the Company .

Changing the Group’s management

andcontrol structure.

Approving half‑year and full‑year results

andreports, dividend policy and the

declaration of dividends.

Approving significant changes

toaccounting policies.

Approving key policies.

Approving risk management procedures

and policies, including anti‑bribery

and corruption.

Approving major investments, disposals,

capital projects or contracts (including

bankborrowings and debt facilities).

Approving guarantees and

material indemnities.

Approving resolutions to be put to the

AGM and documents or circulars to be

sentto shareholders.

Approving changes to the Board

structure, size or its composition

(following the recommendation

oftheNominations Committee).

Board has reviewed the independence of the

Chair and each Non‑Executive Director and

considers all of the Non‑Executive Directors

to be independent of management and

free from business or other relationships

that could interfere with the exercise of

independent judgement.

The Company meets the requirement under

Provision 11 of the 2018 Code that at least

half of the Board has been determined by the

Board to be independent.

The Board believes that any shares in the

Company held personally by a member of

the Board aligns their interests with those

ofthe shareholders.

The Value Creation Plan (‘VCP’) received

shareholder approval at the 2024 AGM

and options were granted to Neil Johnson

on 19 March 2025 and he was appointed

Executive Chair on 20 March 2025.

Notwithstanding this, the Board considers the

Chair to be independent of management and

free from any business or other relationships

that could compromise the exercise of

objective and impartial judgement.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Leadership and engagement

HOW THE BOARD ENGAGES

The Board engages with its various stakeholders in a number

of different ways and with responsibilities spread across the

Executive and Non‑Executive teams. The Executive members

of the Board have contact with all Executive Committee

members and make regular visits to Group sites. All new

Non‑Executive members of the Board will carry out Company

visits as part of their induction and routinely thereafter – with

at least one meeting a year normally taking place at a Group

location outside the UK. The Board members also engage

with our current and future business leaders working within

the Group on strategic and other matters. This regular

interaction between the Board and the businesses provides

a vital channel of communication and a forum for open

dialogue, which encourages the sharing of knowledge and

experience. Additionally, the role of Workforce Engagement

Non‑Executive Director (‘WENED’) is seen as a critical

function enabling the independent NEDs to have direct

interaction with, and reporting from, the wider workforce.

WENED meetings are conducted on the basis of strict

confidentiality and non‑attribution for employee comments.

The WENED reports back to the CEO and the Board on any

issues arising from WENED meetings.

WHAT WE DID IN 2024/25:

SHAREHOLDER ENGAGEMENT

General engagement with investors

Engagement with investors is led by the CEO but is

a collective responsibility of the Board. The Board is

committed to strengthening communications with investors.

Primary contact with shareholders, on a day‑to‑day basis,

is through the Executive Directors. Overall responsibility

for ensuring the effectiveness of communication with

shareholders lies with the Group Chair. The Group Chair and

the Group CEO had regular dialogue with key shareholders

throughout the year regarding significant business issues

andthe ongoing transformation of the Group.

Company announcements and website

The Company releases announcements via the regulatory

news service – all of which are publicly available and can be

accessed through the Company’s website www.dialight.com.

Copies of formal reports are released on the Company

website (and deposited with Companies House and the FCA’s

National Storage mechanism – both of which are publicly

accessible). Recordings of annual and interim results can be

accessed through the Company’s website www.dialight.com.

Shareholders can register on the website to receive

email alerts.

Annual and interim results

The Company is required to make half‑year and full‑year

formal announcements. These are released via the Regulatory

News Service and can be accessed through the Company’s

website www.dialight.com.

Meetings with large investors

In addition to scheduled meetings with the Executive

Directors (led by the CEO), Non‑Executive members of

the Board are available to meet with investors. The Chair

is generally available to shareholders and meets with

institutional and other large investors as requested.

The Senior Independent Director and the Chair of the

Remuneration Committee are also available to shareholders

as required.

Annual General Meetings

The 2024 Annual General Meeting (‘AGM’) took place on

Monday 23 September 2024 in person.

The AGM provides shareholders with an important

opportunity to engage with the Board, ask questions, and

vote on key matters relating to the Company’s governance

and performance. It is a central element of our commitment

to transparency and accountability. Shareholders are

encouraged to participate, either in person or by proxy,

to ensure their views are represented. The AGM includes

presentations on the Company’s financial results, strategy,

and outlook, and offers a forum for open dialogue between

shareholders and the Board. Full details of the resolutions

and voting procedures for the forthcoming AGM are provided

in the Notice of Meeting issued in advance of the AGM.

The 2025 AGM will take place on 1 September 2025.

COMMERCIAL ENGAGEMENT

Executive Directors

Commercial engagement is an Executive Director

responsibility and led by the CEO. The Executive Directors

have in the past prioritised proximity with customers and

distributors for themselves and product development teams,

facilitated by the direct sales personnel.

Reporting to the Board

The Executive team reports monthly to the Board on a range

of corporate, financial and commercial issues including

feedback from customers, suppliers and other partners.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Leadership and engagement continued

COMMERCIAL ENGAGEMENT

• Customers. The Executive Directors engage with

customers directly through site visits and assisting strategic

sales activity, and indirectly through monthly reporting by

the direct sales teams (both territorially‑based and with the

strategic accounts team).

• Distributors. Our indirect sales model (using distributors)

places great importance on maintaining good relations

with our distribution networks: attending distributor

conferences; attending meetings of purchasing groups and

other distributor bodies; and pursuing other opportunities

to support our indirect sales team.

• Suppliers. Relations with key suppliers is generally

managed indirectly through Executive Committee‑level

direct reports of the Executive Directors with operational

and supply chain responsibilities – i.e. through weekly and

monthly review meetings and formal reporting.

• Other commercial partners. The Group has a range

of other partners who are managed, on a case‑by‑case

basis, by the Executive Directors or other members of the

Executive Committee team.

ENGAGEMENT WITH EMPLOYEES

ANDOURLOCALCOMMUNITIES

Workforce Engagement NED

Direct engagement with workforce through site visits,

one‑on‑one discussions with managers and other employees

selected by the WENED. There will typically also be larger

engagements with volunteer groups of employees from

different Company locations without management present.

Executive Directors

Engagement with the Dialight workforce is an Executive

Director responsibility and led by the CEO – but viewed as

afundamental task of the entire Executive team. Board‑level

engagement is facilitated by periodic all‑employee calls and

blogs, frequent visits to manufacturing and other Group

sites by the Executive Directors and through reporting by

Executive Committee members and the HR function.

Dialight Foundation

The Dialight Foundation is the primary conduit for

engagement with local communities. Its membership is drawn

from all levels and localities of the Group – ensuring a direct

voice for all employees in decision making. The Foundation

is chaired by the CEO, enabling the CEO to directly

represent the voice and needs of our local communities in

Board discussions.

Whistleblower helpline

The Group operates a confidential whistleblower helpline,

facilitated by an independent third party. Reports are

reviewed confidentially by the Group General Counsel and

reported to the Chair of the Audit Committee (for control/

ethics and integrity issues) and to the CEO and Global VP,

HRinrespect of personnel issues/HR‑related complaints.

Reporting to Board

The Executive team reports monthly to the Board on people

and health and safety issues, as well as the activities of the

Dialight Foundation and other community engagement.

The WENED reports to the Board periodically on the

employee engagement programme and on feedback

received from employees.

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Dialight plc Annual Report and Accounts 2025

Board composition, succession and evaluation

2024/25 BOARD PERFORMANCE EVALUATION

In compliance with the 2018 Code (as applicable for the year

ending 31 March 2025), the Board has undertaken a formal

evaluation of its performance, and that of each Director,

on an annual basis. The principal Committees of the Board

also undertake an annual evaluation of their effectiveness,

in accordance with their Terms of Reference. The outcomes

of the 2024/25 review will inform Board administration,

agenda planning, strategy and succession planning.

The review process is typically phased and consists of a board

questionnaire and/or one‑on‑one director reviews, reviews

atCommittee level, and, finally, an end‑of‑year Board review.

Directors: independence

Neil Johnson was deemed independent upon appointment

as Chair – though it is noted that upon 20 March 2025 it was

announced that he would become the Executive Chair of

the Board. John Lincoln was deemed independent upon

appointment during the reporting year.

Directors: time allocation

The Board benefits from the wide variety of skills, experience

and knowledge that each of the Directors brings to their

roles. However, being available and committing sufficient

time to the Company is essential. Therefore, the number

of external directorships that a Non‑Executive Director

holds is an important consideration when recruiting and

when performing the annual evaluation of Non‑Executive

Director effectiveness.

Executive Directors are permitted to accept one external

appointment, subject to the prior approval of the Chair.

Approval will only be given where the appointment does

not create a conflict of interest with the Group’s activities

and where the role is considered to be beneficial to the

development of the individual (which will, in turn, benefit

the Company).

In addition to the scheduled Board meetings, Non‑Executive

Directors are expected to attend the AGM, the annual

strategy meeting and certain other Company events and

site visits throughout the year. A time commitment of at

least 20 days p.a. is the anticipated requirement for each

Non‑Executive Director and this was considerably exceeded

in 2024/25 (taking into account Transformation Committee

activities earlier in 2024/25, the changes to the Board and

other responsibilities).

The Chair and Non‑Executive Directors also meet twice

ayear without Executive Directors present to ensure

there is an opportunity to discuss potentially sensitive

matters. The Senior Independent Director meets with the

Non‑Executive Directors, without the Chair present, at least

once per year, to evaluate the Chair’s performance.

Directors: re-election

In compliance with the 2024 Code, all of the Directors in

place will stand for election/re‑election (as appropriate) at

the forthcoming AGM. Following the annual evaluation of the

Board and its Committees, the Board has determined that

all Directors standing for election or re‑election at the AGM

continue to be effective, hold recent and relevant experience

and continue to demonstrate commitment to the role.

Biographical details of each Director standing for election

orre‑election are set out in the notice of AGM.

Directors: succession planning

In addition to having responsibility for succession planning

of senior executive roles below Board level, the Nominations

Committee (and the Board generally) are responsible for

succession planning of Board Directors and the key Board

roles. The Board’s recent approach to succession planning

and recruitment has achieved a broad balance in terms

of cognitive approach, diversity, skills, knowledge and

experience, and length of service. This is maintained through

a combination of an open‑minded approach to recruitment,

use of external advisers, a thorough recruitment process for

allpotential appointees to the Board, and active management

of succession planning.

Directors: induction

Newly appointed Non‑Executive Directors follow a tailored

induction programme, which generally includes dedicated

time with Group Executives, time with Board advisers

(including legal briefings), inductions on Group products and

technologies, and visits to regional offices. There are tailored

induction materials which provide a comprehensive overview

of: the Group and its legal and organisational structure;

the governance framework; the role of the Non‑Executive

Director; key business contacts at the Company level; and

details of the Board’s external advisers. In addition to the

latest annual report and Company announcements, further

materials such as recent broker coverage and the last Board

evaluation are also provided.

Directors: liability insurance

Each Director is covered by appropriate Directors’ and

officers’ liability insurance, at the Company’s expense.

In addition, the Directors are entitled to be indemnified by the

Company to the extent permitted by law and the Company’s

Articles of Association in respect of all losses arising out of,

or in connection with, the execution of their powers, duties

and responsibilities.

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Dialight plc Annual Report and Accounts 2025

Nominations Committee report

Neil Johnson

Chair of the Nominations Committee

2024/25 HIGHLIGHTS

• Recruitment of new NED.

• Recruitment of new CFO.

• Stabilisation of the Board and transition to a steady state.

2025/26 PRIORITIES

• Further strengthen senior Executive team below Board level.

ROLE AND RESPONSIBILITIES

• Review the size, balance and composition of the Board and

its Committees and make recommendations for any changes,

and oversee Board and senior Executive succession planning.

• Periodically review any objectives for the implementation

of diversity on the Board and monitor progress towards

these objectives.

• Lead the process for Board appointments, including the

evaluation of skills, knowledge, experience and diversity

onthe Board and prepare role descriptions for any

particular appointment, and ensure all new Directors

receive appropriate induction training.

• Review the results of the annual Board performance evaluation

process that relate to the composition of the Board.

• Review senior Executive leadership requirements forthe Group.

TERMS OF REFERENCE

A copy of the Terms of Reference (‘ToR’) for the Nominations

Committee is available on the Company’s website or on

request from the Company Secretary at the registered office.

The ToR are reviewed annually by the Committee.

COMPOSITION AND ATTENDANCE

Committee member Joining date Leaving date Attendance

Neil Johnson 17/05/2023 N/A 3/3

Lynn Brubaker 01/07/2023 N/A 3/3

Nigel Lingwood 01/11/2022 N/A 3/3

John Lincoln 01/08/2024 N/A 1/1

DEAR SHAREHOLDERS

Both the Nominations Committee and the Board recognise

their crucial roles in ensuring that the Group has the right

talent at management and Executive levels at Dialight.

There were significant changes at Board level during the

previous reporting year, and I am pleased to say that we

have now successfully transitioned to a steady‑state with

the Executive and Non‑Executive members of the Board –

providing a very firm base upon which to build continued

growth and operational improvements across the Group.

The Nominations Committee exercised oversight across

all Board changes during the reporting period. It has

met to discuss proposed changes, manage recruitment,

appoint advisers and establish objectives, and make final

recommendations to the Board. Where key decisions

on Board membership were made by the full Board

that decision making followed ad hoc meetings of the

Nominations Committee.

BOARD CHANGES

Mark Fryer joined the Board on 6 January 2025.

Further biographical details are on page 44.

Carolyn Zhang left the Board on 11 November 2024.

John Lincoln joined the Board on 1 August 2024.

Further biographical details are on page 45.

On 20 March 2025, I became the Executive Chair of the

Group (having been a Non‑Executive Chair). This change was

primarily necessitated by provision 34 of the UK Corporate

Governance Code on non‑executive directors participating

in the Group’s share‑based remuneration plans, conflicting

with the stated desire of the major shareholders in the Group

that the Chair role should participate in the bespoke Value

Creation Plan that was approved by shareholders at the

2024 Annual General Meeting with 97% for (with 3% against).

Following my appointment as Executive Chair, a grant was

made under the VCP to myself and the CEO, Steve Blair,

and further details of the remuneration for the Executive

role are reported on page 74. I did not participate in any

decision around my appointment as Executive Chair, and all

deliberations in this regard were chaired by Nigel Lingwood in

his capacity as Senior Independent NED.

In 2024/25, the Nominations Committee received advice from

the following independent external search firms in respect

of various Board roles. None of these search firms had any

disclosable connections with any Board Directors or with

the Group:

• Sciteb – 23 Berkeley Square, London W1J 6EJ for the

recruitment of John Lincoln.

• Axel Monroe Limited – White Collar Factory, 1 Old Street

Yard, London EC1Y 8AF for the recruitment of Mark Fryer.

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Dialight plc Annual Report and Accounts 2025

Nominations Committee report continued

A thorough recruitment process was undertaken in advance

of Mark’s appointment as Interim CFO. A comprehensive

search took place, involving a wide pool of candidates

sourced through a number of external executive search firms.

Shortlisted candidates participated in a rigorous interview

process with me, the Senior Independent Director (SID) and

Chair of Audit Committee, and the CEO. As part of the due

diligence process, thorough references were taken to assess

Mark’s suitability and to ensure the right fit for the Company.

Mark was initially appointed on an interim basis, allowing for

a period of close evaluation. Following this interim period, a

further review and assessment were carried out before the

position was confirmed on a permanent basis on 1 May 2025.

NOMINATIONS COMMITTEE EVALUATION

The Committee reviews its own performance annually

including in respect of compliance with the applicable

UK Corporate Governance Code. It is satisfied that as

at the date of this report, it remains compliant with all

Code requirements.

DIVERSITY AND INCLUSION

The Board remains strongly committed to promoting diversity

and inclusion, recognising its importance to effective

decision‑making and good governance.

Whilst appointments will always be made on merit and with

careful consideration of the Company’s current context

and needs, the Board acknowledges that it is not currently

compliant with the diversity targets set out in UK Listing Rule

6.6.6R, with only one female Director (representing 17% of the

Board) and no current representation from an ethnic minority

background. The Board currently consists of six Directors,

comprising five British nationals and one American citizen.

The value of cognitive diversity in shaping a well‑rounded and

forward‑looking leadership team is also recognised (and we

report elsewhere in this annual report on pages 36 and 42 on

Board and workforce diversity).

The Board is focused on improving the gender, ethnic

and cultural diversity by developing pipelines of diverse

candidates for Board positions and is committed to tracking

progress, ensuring robust succession plans are in place, and

working to ensure that leadership more closely represents the

diverse communities the Group serves.

BOARD EVALUATION

The Nominations Committee and the Board conducted an

internal evaluation of each Director the Committees and the

Board. In light of the substantial changes to the Board during

the reporting period, it was considered that this internal

process was appropriate, albeit the Board will consider

externally facilitated reviews in the next reporting period.

COMMITTEE ACTIVITIES IN 2024/25

The activities of the Committee are summarised below:

Meeting Actions

22 July 2024 Annual Director reviews and NED

recruitment planning.

29 July 2024 Ratification of John Lincoln

as Board Director.

25 February 2025 Annual governance review.

PRIORITIES FOR THE COMING YEAR

Alongside ongoing review of the Board, the key priority for

the Committee across 2025/26 will be the stabilisation of

the senior Executive team and the strengthening of senior

management across the Group.

On behalf of the Nominations Committee.

Neil Johnson

Chair of the Nominations Committee

23 June 2025

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Dialight plc Annual Report and Accounts 2025

Audit Committee report

• Re‑establish an independent internal audit department

and focus the activity to cover principal Group locations

and functions.

• Continue to oversee and support the focus on working

capital management, particularly inventory levels

and ageing.

• Supporting Chief Financial Officer in developing

appropriate corporate tax structure and revised tax transfer

pricing policies.

• Continue to review and challenge the processes and

disclosures surrounding TCFD and environmental reporting

by the Group.

ROLE AND RESPONSIBILITIES

The role of the Committee is primarily to support the Board in

fulfilling its corporate governance obligations in so far as they

relate to the effectiveness of the Group’s risk management

systems, internal control processes and financial reporting.

Its key responsibilities include:

• reviewing the integrity of financial statements and any

announcements relating to financial performance;

• reviewing and challenging key accounting judgements and

narrative disclosures;

• monitoring internal control and risk management processes;

• performing a robust assessment of the Company’s principal

and emerging risks;

• monitoring and reviewing the effectiveness of internal

audit activity;

• considering the appointment of the new external audit

partner, and the audit teams reports, performance,

effectiveness and independence; and

• agreeing the external auditor’s terms of engagement and

the appropriateness of the audit fee.

COMPOSITION AND ATTENDANCE

Committee member Member from Attendance

Nigel Lingwood

(Chair)

Member from 1 November 2022

– Chair from 12 January 2023

6/6

Lynn Brubaker Member from 1 July 2023 6/6

John Lincoln Member from 3 July 2024 5/6

TERMS OF REFERENCE

A copy of the Terms of Reference (‘ToR’) for the Audit

Committee is available on the Company’s website or on

request from the Company Secretary at the registered office.

The ToR are reviewed annually by the Audit Committee.

Nigel Lingwood

Chair of the Audit Committee

2024/25 HIGHLIGHTS

• Ongoing implementation of Group Transformation Plan,

commenced in September 2023.

• Supported the Nominations Committee to recruit and

appoint a new Chief Financial Officer in January 2025 and

assisted with his induction into the Group.

• Worked closely with the new Chief Financial Officer in

concluding financial implications of legal settlement

with Sanmina.

• Supported Chief Financial Officer in restructuring and

strengthening finance departments across the Group.

• Challenged throughout the year the business forecasts

versus available banking facilities as part of going concern

and viability reviews and in light of Sanmina settlement.

• Reviewed and challenged management judgement in key

areas including going concern and annual impairment

reviews, inventory provisions, development capitalisation

and Sanmina litigation.

• Reviewed and oversaw the Group’s internal control and risk

management process.

• Reviewed and assessed the Group’s risks and concluded on

the principal risks to be disclosed in the financial statements

and how these should be mitigated.

• Worked closely with the Chief Financial Officer to assist with

onboarding the new Group external audit partner.

2025/26 PRIORITIES

• Support the Chief Financial Officer with his work to continue

to restructure and strengthen finance department resource

at both Group and operating levels.

• Support the Chief Financial Officer with project to assess

and implement appropriate reporting controls and

processes in connection with new attestation requirements

set out inProvision 29 of the 2024 Code.

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Dialight plc Annual Report and Accounts 2025

Audit Committee report continued

DEAR SHAREHOLDERS

Set out below is the Audit Committee Report for the year

ended 31 March 2025. This report provides an insight into the

activities undertaken or overseen by the Audit Committee

(the ‘Committee’), during which the Group’s finance resources

and processes stabilised and were substantially strengthened

by the end of the financial year.

Much of the first half of this financial year was taken up with

concluding on the challenges that arose during the previous

financial period and on finalising the audited accounts,

whichwere published on 29 July 2024. After a period of

reflection following publication of the previous period’s

annual report and accounts, the Committee, in conjunction

with the wider Board, determined that it would be in the best

interests of the Company to seek a new Chief Financial Officer

with relevant experience and skills more closely matched with

the challenges that faced the Group. Following an intensive

search process, led by the Group Chief Executive Officer and

supported by the Audit and Nominations Committees, the

Board appointed Mark Fryer as interim Chief Financial Officer

of the Company on 6 January 2025. The Committee and

Board was delighted to confirm his permanent appointment

as Group Chief Financial Officer on 1 May 2025.

Following the adverse judgement against the Company in

the Sanmina litigation in September 2024, the Committee

worked closely with the Board in seeking an outcome to

the judgement, which would allow the Company to both

meet the financial costs of the judgement and to continue

to successfully pursue the objectives of the Transformation

Plan. As part of this work, the Committee determined

that the financial settlement agreed with Sanmina was

appropriately accounted for and disclosed in the annual

report and accounts.

In the second half of the financial year the Committee

supported the Chief Financial Officer in restructuring and

strengthening the resources and processes in the Group’s

finance department, both operationally and at the plc head

office in London. This review was continued at pace, following

the appointment of Mark Fryer in January 2025 and concluded

and implemented during the final quarter of the financial year.

Throughout the year the Committee has continued to discuss

and challenge the assumptions and judgements made by

management in the preparation of the published financial

information, particularly with regard to the Group’s cash flows

and bank facilities and the carrying value of certain tangible

and intangible assets.

During this period of restructuring and refocusing,

boththe financial resources and processes of the Group,

the Committee agreed with Executive management

that the activities of internal audit would be paused until

this exercise had been concluded and implemented.

Certain self‑certification control reporting process to

senior finance personnel in plc continued to be undertaken

regularly by each of the operational finance locations and

the Committee continued to provide input and oversight of

the internal controls processes and risk management. It is

intended that a separate internal department, will be set up

during the new financial year, which will allow a full internal

audit programme of activities to recommence.

Committee meetings

The Committee met six times during 2024/25 and had a

programme of business that reflects the Committee’s Terms

of Reference and issues, including those outlined, that could

impact the effectiveness of the Group’s risk management

systems, internal control processes and financial reporting.

In addition to Committee members, meetings are also

attended by the: Chief Executive Officer; Chief Financial

Officer; Group General Counsel and Company Secretary;

GroupFinancial Controller; and the external auditor.

The Committee met separately with Grant Thornton who

were provided the opportunity at each meeting to discuss

any issues with the Committee without the presence

of management.

The Chair meets regularly with members of the Executive

and management teams as well as Grant Thornton, outside

of formal Committee meetings to discuss matters which fall

within the Committee’s Terms of Reference.

Governance

The membership of the Committee has been strengthened

this year, following the appointment of John Lincoln as a

Non‑Executive Director of the Company on 1 August 2024

and a member of the Committee. I am very grateful for the

support and advice I have received from my colleagues on the

Committee in undertaking the Committee’s work programme

this year.

All members of the Committee are independent

Non‑Executive Directors whose qualifications are outlined in

the Directors’ biographies on pages 44 and 45. Members of

the Committee have a detailed understanding of Dialight’s

strategy, business model and the Group’s culture and core

values together with significant knowledge and business

experience in financial reporting, risk management, internal

control, and strategic management. In addition, I meet the

requirement to bring recent and relevant financial experience

to the Committee and further information about my

experience can be found on page 45. The Board is satisfied

that the Committee has the resources and expertise to fulfil

its responsibilities and has competence relevant to the sector

inwhich the Company operates.

Internal control and risk management processes

The Board has overall responsibility for the risk management

framework, as explained on page 22. The Board delegates

responsibility for reviewing the effectiveness of the Group’s

systems of internal control to the Committee. This covers

all material controls including financial, operational and

compliance controls and risk management systems.

The Board sets the risk appetite that forms the basis of the

approach to risk management, accepting that some level

of risk‑taking is necessary to meet business objectives.

The Group has a risk management process, which is led by the

Group Risk Management Committee. This process identifies

risks and assesses the probability and impact from these risks

and assigns an owner to manage mitigation activities at the

operational level. During the year, the Committee received

reports that enabled them to maintain oversight and discuss

the risks and challenges to the Group.

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Dialight plc Annual Report and Accounts 2025

Audit Committee report continued

The structures within the Group that track and report on

controls include:

• a formally constituted Risk Committee that meets

periodically, made up of members of the Group Executive

Committee and representing each primary function of

the business;

• allocation of identified risks to a specific risk owner with

responsibility for monitoring and mitigating that risk;

• periodic, externally facilitated briefings on new and

emerging risk themes across our sector and generally;

• the Board of Directors and Audit Committee oversight

onthe risk register and risk review process;

• monthly operational and financial reporting;

• the control structure for delegated authorities; and

• external and outsourced “internal” auditors (see below).

The Committee also reviews the Group’s internal control

systems and their effectiveness prior to reporting any

significant matters to the Board. Internal controls are the

responsibility of the Chief Financial Officer. Confirmation that

the controls and processes are being adhered to throughout

the business is the responsibility of the relevant managers

and is continually tested by the work of Group Finance.

These controls include monthly management accounts,

balance sheet reviews, regular forecasting and investigation

ofvariances against budget/forecast.

The Committee also reviews the Group Risk Register at least

twice a year and assesses the actions being taken by senior

management to monitor and mitigate the risks. The Group’s

principal risks and uncertainties, the areas which they impact

and how they are mitigated are described on pages 24 to 27.

As explained above, during the reporting period of the

Company the role of Chief Financial Officer was unfilled from

11 November 2024 until 6 January 2025. During this short

period, senior members of the Group finance department,

supported by the Group Chief Executive carried out those

tasks ordinarily undertaken by the Chief Financial Officer.

These tasks, including the conclusion and publication of the

Group’s interim results were overseen by me.

The Committee also regularly reviews the Group

whistleblowing register to ensure investigations are brought

to the Board’s attention and properly completed, and that

any control implications or common themes are identified

and addressed.

Internal audit

The Group does not have a dedicated, stand‑alone

internal audit function. Historically the Group has relied

upon a combination of externally commissioned work

from independent accounting firms and work carried

out independently by senior Group finance personnel.

However in light of a constraint on available resources,

conflicting priorities and the challenges faced by the Group‘s

financial operations during the year, the work of internal

audit, was significantly curtailed. A detailed work programme

of internal audit work has now been proposed for the new

financial year in 2025/26. The Committee has also supported

the proposal from the Chief Financial Officer to recruit a

dedicated resource to undertake and manage the internal

audit programme.

Fair, balanced and understandable

One of the key compliance requirements of a Group’s financial

statements is for the annual report to be fair, balanced and

understandable. The coordination and review of Group‑wide

contributions to the annual report follows a well‑established

process, which is performed in parallel with the formal process

undertaken by the external auditor. A summary of the process

is as follows:

• The annual report and accounts is drafted by the

appropriate senior management with overall coordination

by a team comprising of the Company Secretary and the

Chief Financial Officer to ensure consistency.

• Comprehensive reviews of the drafts of the annual report

and accounts are undertaken by management, the Board

Chair and respective Chairs of each Committee to ensure

that (i) all key events and issues, which had been reported

to the Board in the Executive Board reports during the year

had been appropriately referenced or reflected within the

annual report; and (ii) the completeness and accuracy of

definitions of alternative performance measures used in

the annual report and accounts, their consistency of use,

relevance to users of the annual report and accounts and

balance with statutory metrics.

• A near‑final draft is reviewed by the Committee.

• A final draft is reviewed by the Board.

• Formal approval of the annual report and accounts is given

by a Committee of the Board.

This approach enabled the Committee, and then the

Board, to confirm that the Company’s 2024/25 annual

report and accounts taken as a whole is fair, balanced and

understandable, and provides the information necessary

for shareholders to assess the Company’s position and

performance, business model and strategy.

KEY JUDGEMENTS AND FINANCIAL

REPORTINGMATTERS

The Committee assesses and challenges whether during

the period suitable accounting policies have been adopted

and whether management has made appropriate estimates

and judgements. Key accounting judgements considered,

conclusions reached and their financial impacts during the

period under review are set out in the table below. These were

also the key judgements challenged by Grant Thornton

during their audit. Additionally, the Committee discussed with

the external auditor the significant issues addressed during

theyear, and the areas of particular focus, as described in the

Independent auditor’s report on pages 85 to 97.

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Dialight plc Annual Report and Accounts 2025

Audit Committee report continued

Key judgements and financial reporting matters 2024/25 Audit Committee review and conclusions

Going concern and viability statement

The Directors must determine that the business will continue

as a going concern for the 12‑month period from the date of

signing the accounts. Furthermore, the Directors are required

to make a statement in the annual report as to the longer‑term

viability of the Group. This has been analysed in detail,

particularly the downside scenarios modelled in the viability

statement, in light of the current economic environment and

worldwide commodity and logistics challenges.

The Committee conducted an annual assessment pursuant

to which the Directors concluded that there was a “material

uncertainty” with regard to certain assumptions used in the

financial projections to determine whether the Group can

prepare the financial statements on a going concern basis, as

set out in more detail in note 2(b) of the consolidated financial

statements. The Committee also evaluated management’s

work in conducting a robust assessment of the Group’s

longer‑term viability, affirmed the reasonableness of the

assumptions, considered whether a viability period of three

financial years remained most appropriate, and confirmed

that it was as part of a recommendation to the Board.

Theseconclusions were subject to robust challenge from

theexternal auditors. Further detail can be found on page 85.

Inventory valuation and absorbed overhead costs

The Committee reviewed the nature of the costs absorbed

into inventory, the level of production over which these costs

were absorbed, the variances, including in respect of material

usage and purchase price, between standard cost and actual

cost, and the reasons for movements in inventory value period

to period. The basis for, and level of, provisioning, including for

aged, and obsolete product, which are judgemental or require

a high degree of estimation, were presented to the Committee

by management.

The Committee and the external auditors discussed and

assessed the information provided by management and

concluded, after appropriate challenge, that the valuation

ofinventory and level of provisioning were reasonable.

The Committee approved the continued application of the

two‑year provisioning policy (see note 2(c)).

Capitalised development costs

Data in relation to historic and current year development cost

capitalisation was reviewed and the appropriate application

of the development costs capitalisation policy in line with

accounting standards was considered. The adequacy of

Dialight’s disclosures was reviewed with management,

including the judgement involved in assessing the carrying

amount and degree of estimation involved in assessing the

recoverable amount of capitalised development costs.

The Committee and the external auditors challenged the

assumptions used to determine development department

capitalisation and concluded that no additional impairment

charge was required as at 31 March 2025.

Impairment review

For indefinite‑life assets, the Group performs an annual

impairment review. In addition, the Group reviews assets

that are subject to amortisation or depreciation for events or

changes in circumstances that indicate that the carrying amount

of an asset or cash‑generating unit may not be recoverable.

Ifan asset has previously been impaired, the Group considers

whether there has been a change in circumstances orevent that

may indicate the impairment is no longer required.

The Parent Company performs an annual impairment

assessment for the investments held in subsidiaries, loans to

subsidiaries by the Company and assesses whether amounts

due from subsidiary undertakings are recoverable.

The Committee and the external auditors reviewed

management’s impairment review process including, where

applicable, thepotential indicators of impairment and/or

reversal, cashflow projections, growth margin and discount

rates used to derive a value in use as well as the sensitivity

toassumptions made and consistency with the prior year.

The Parent Company recognised for investments in

subsidiaries, a provision for impairment of £2.0m, for loans

to subsidiaries, a provision for impairment of £5.6m and for

amounts due from subsidiary undertakings, a provision for

impairment of £10.0m has been recognised.

Non-underlying items

The Group separately discloses certain costs and income that

impair the visibility of the underlying performance and trends

between periods. The separately disclosed items are material

and infrequent in nature and/or do not relate to underlying

business performance. Judgement is required in determining

whether an item should be classified as non‑underlying or

included within the underlying results.

The Committee and the external auditors reviewed the

presentation treatment of non‑underlying items and agreed

that the items listed innote 6 are appropriately classified

anddisclosed.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Audit Committee report continued

Key judgements and financial reporting matters 2024/25 Audit Committee review and conclusions

Deferred tax assets

The Directors must determine the extent to which deferred tax

assets can be recognised and this determination is based on an

assessment of the probability that future taxable income will be

available against which the deductible temporary differences

and tax loss carry‑forwards can be utilised. In addition,

significant judgement is required in assessing the impact

of any legal or economic limits or uncertainties in various

taxjurisdictions.

The Committee and the external auditors discussed and

assessed the information provided by management and

concluded, after appropriate challenge, that the amount of

deferred tax assets recognised was reasonable.

EXTERNAL AUDIT EFFECTIVENESS ANDINDEPENDENCE

The shareholders confirmed the appointment of Grant

Thornton UK LLP as external auditor at the AGM on

23 September 2024. The year ended 31 March 2025 will

be the second financial reporting period in which Grant

Thornton has reported on the Company’s financial statements.

The lead partner for the current financial year was Mark

Overfield. Other than this role, Mark has not had any previous

involvement with the Group.

The Company confirms that, during the year under review,

it has complied with the provisions of The Statutory

Audit Services for Large Companies Market Investigation

(Mandatory Use of Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014.

Grant Thornton is engaged to express an opinion on the

financial statements. They review the disclosures contained

in the financial statements to the extent necessary to express

its opinion. It discusses with management the reporting of

operational results and the financial position of the Group

and presents findings to the Committee. The Directors in

office at the date of this report are not aware of any relevant

information that has not been made available to Grant

Thornton and each Director has taken steps to be aware

of all such information and to ensure it is available to Grant

Thornton. Grant Thornton’s audit report is published on pages

85 to 97.

During the year the Committee assessed the effectiveness

of the external audit process for the period ended 31 March

2024. As part of this review feedback was sought from

members of the Committee and senior management of

the business areas subject to the audit. The feedback was

considered, discussed and summarised by management and

reported to the Committee and Board. Having conducted

such review, and reviewed overall performance, the

Committee concluded that the audit effectiveness and

independence of the external auditor, and the audit process

applied to the audit of the financial statements for the

15‑month period ended 31 March 2024 was satisfactory

and effective.

NON-AUDIT SERVICES

The Committee agrees the fees paid to the external auditor

for its services as auditor. The Committee also oversees

the nature and amount of all non‑audit work undertaken by

the external auditor to ensure that it remains independent.

When seeking external accounting related advice in

relation tonon‑audit matters, the Group’s policy is to invite

competitive tenders where appropriate. In 2024/25, EY

provided taxation advice and support services to the Group

in connection with overseas transfer pricing and more general

corporate tax matters, including accounting for tax in the

annual report and accounts. It is the Group’s policy to balance

the need to maintain audit independence with the desirability

of taking advice from the leading firm in relation tothe matter

concerned and being efficient.

Non‑audit fees of $25k relating to assurance related services

were paid to Grant Thornton during the period under review.

AUDIT COMMITTEE EVALUATION

The Board is required to carry out a formal review of the

effectiveness of the Committee during each reporting period.

This review was accomplished through an internal evaluation

process carried out at the March 2025 meeting and the results

were reported and discussed with the Board at their meeting

in June 2025. The results of this evaluation process were

positive and concluded that the Committee had fulfilled its

role effectively. The Board also recognised that a more stable

finance function going into the new financial year provided

an opportunity to make further progress in developing the

Group’s internal systems of internal control.

In concluding this report and on behalf of the Committee,

Iwish to thank the Dialight management and finance teams

and Grant Thornton for their commitment and valuable

contributions during what has been another challenging year

but from which has emerged a stronger and more effective

financial operation.

I will be available to answer any questions in relation to this

Audit Committee report before the Annual General Meeting.

Please email your questions to the contact details in the

AGM notice.

Nigel Lingwood

Chair of the Audit Committee

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report

Lynn Brubaker

Chair of the Remuneration Committee

ROLE AND RESPONSIBILITIES

The primary responsibilities of the Remuneration Committee

are to:

• set the Remuneration Policy for all Executive Directors

(including interim roles) and the Company’s Chair

including, where appropriate, bonuses, incentive

payments, share‑based incentive schemes and post‑

retirement benefits;

• determine the remuneration packages for the Executive

Directors (including interim roles), the Company’s Chair and

the Company Secretary, within the terms of the policy;

• recommend and monitor the structure of the remuneration

of the senior management group as defined by the Board;

• approve the design of, and determine targets for, any

performance‑related and share‑based incentive schemes

operated by the Company and approve the total annual

payments made under such schemes (in accordance with

the Provisions of the UK Corporate Governance Code

2018 (in respect of the FY2024/25 and the UK Corporate

Governance Code 2024 in respect of FY2025/26)); and

• review the design of all share incentive plans requiring

approval by the Board and shareholders (for any such plans,

the Remuneration Committee shall determine each year,

taking into account the recommendations of the Chief

Executive Officer, whether awards will be made and, if

so, the amount of such awards to the Executive Directors,

Company Secretary, members of the Executive Committee

and other senior Group employees from time‑to‑time

as nominated by the Chief Executive Officer, and any

performance targets to be used).

STATEMENT OF SHAREHOLDER VOTING (2024 AGM)

There was very strong support for the remuneration‑related

resolutions at the 2024 AGM as shown in the table below.

The Committee is grateful to shareholders for their support.

% votes for % votes against Votes withheld

Directors’

Remuneration

Report FY2023

99.99 0.01 3,727

(out of 33,977,307

votes cast)

Remuneration

Policy

96.63 3.37 2,171

(out of 33,979,863

votes cast)

Value Creation

Plan

96.63 3.37 2,315

(out of 33,978,719

votes cast)

COMPOSITION AND ATTENDANCE

The names of those who served on the Remuneration

Committee during the year and through to the report date

can be found in the table below.

Committee member Member from/until Attendance

Lynn Brubaker

(Committee Chair)

From 1 July 2023

(Chair from 1 November 2023)

9/9

Nigel Lingwood From 1 November 2022 9/9

John Lincoln From 1 August 2024 6/6

Neil Johnson From 1 July 2023 until

20 March 2025

7/9

All members of the Remuneration Committee are considered

independent within the definition set out in the 2018 Code.

None of the Remuneration Committee has any personal

financial interest in Dialight (other than as shareholders),

conflicts of interests arising from cross directorships,

orday‑to‑day involvement in running the business.

To reflect the additional independent supervisory and

oversight responsibilities agreed between the Board and

Nigel Lingwood, in respect of the period between the

departure of Carolyn Zhang and the appointment of Mark

Fryer, Nigel received additional remuneration of £12,500

per calendar month from 1 October 2024 to 28 February

2025. This arrangement was put in place to acknowledge

the increased commitment required during this period

and was approved by the Board in line with its governance

and remuneration policies. Nigel Lingwood was not

present when these arrangements were discussed by the

Remuneration Committee.

During the year, the Remuneration Committee met nine times.

Of these, four meetings were formal scheduled meetings

and the other five were meetings held to deal with the review

and approval of specific technical remuneration matters.

Attendance by individual members of the Remuneration

Committee is disclosed in the table above.

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Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

Only members of the Remuneration Committee have the right

to attend Remuneration Committee meetings. The Executive

Chair, Chief Executive Officer and the Company Secretary

attend the Remuneration Committee’s meetings by invitation

but are not present when their own remuneration is discussed.

The Remuneration Committee also takes independent

professional advice as required. In addition, and in respect

of the period when he was still a member of the Committee,

Neil Johnson was not present when the proposed VCP

was discussed.

TERMS OF REFERENCE

A copy of the Terms of Reference (‘ToR’) for the

Remuneration Committee is available on the Company’s

website or on request from the Company Secretary at the

registered office. The ToR are reviewed annually by the

Remuneration Committee.

REMUNERATION COMMITTEE EVALUATION

The Committee reviews its own performance annually

including in respect of compliance with the applicable

UK Corporate Governance Code. It is satisfied that as

at the date of this report, it remains compliant with all

Code requirements.

DEAR SHAREHOLDERS

On behalf of the Board, I am pleased to present the

Directors’ Remuneration Report for the 12‑month period

ended 31 March 2025. As in previous years, this report is

split into three sections: this Annual Statement (pages 60

to 62); the2024 Remuneration Policy (pages 63 to 73); and

the annualreport on the implementation of the 2024/25

Remuneration policy during 2024/25 (pages 74 to 77).

IMPLEMENTATION OF THE 2024 REMUNERATION

POLICY DURING THE YEAR

Following extensive consultation with major shareholders,

the Remuneration Committee proposed a strengthened

Remuneration Policy at the 2024 AGM. This policy was passed

with the support of 96.63% of voting shareholders.

The Remuneration Committee’s activities during 2024/25

were primarily focused upon the implementation of that Policy

(and its predecessor) with regards to the Board changes,

the introduction of the 2024 Value Creation Plan, the annual

cycle of review of reward structures across the Group and

bonus setting.

BOARD CHANGES IN 2024/25

Carolyn Zhang stepped down as CFO and as an Executive

Director on 11 November 2024. Details of Carolyn’s

remuneration during the reporting period are set out on

page 77. It includes the payment of salary and contracted

benefits through to 11 November 2024 and thereafter a

payment in lieu of notice payable in 13 bi‑weekly instalments,

together with pay in respect of untaken holiday. Following her

departure, Carolyn has not retained any rights in relation to

share incentives.

Neil Johnson was appointed as Non‑Executive Chair on

17 May 2023. As part of that recruitment process, the

Committee received advice from its remuneration consultants

(Mercer Limited). That advice was focused on the appropriate

level and structure of remuneration for the role taking

account of prevailing governance standards, market practice

and the context of the specification for the role (including

the anticipated time commitment associated with the

implementation of the Group’s transformation and strategic

plan). The fee level for the Chair role was set at £250,000 in

recognition of the anticipated considerable demands of the

role. As will be apparent from the level of reported Board and

Committee activities, the role has indeed been demanding

in terms of time and effort. The Remuneration Committee

has kept this fee level under periodic review and, if and when

it feels appropriate, will consider re‑basing it to a lower fee

if there is a material reduction in the demands of the role.

On 20 March 2025 it was announced that Neil’s role would be

that of Executive Chair (inplace of the Non‑Executive role he

held previously). As set out in the announcement, there have

been no changes in Neil’s responsibilities resulting from this

role change. The change in role from Non‑Executive Chair

to Executive Chair results from Neil’s participation in the

Company’s Value Creation Plan, as approved by shareholders

at the Company’s 2024 AGM. The salary payable to Neil in

respect of his Executive Chair role is the same as the fee

level he was entitled to as Non‑Executive Chair. Neil will not

be entitled to any other benefits, pension contributions,

nor participation inthe Company’s Restricted Share Plan or

Annual Performance Bonus Scheme.

NED fees were increased in line with standard average annual

increments for Group employees in respect of the 2024/25

reporting period at 3%, but no increase was applied in respect

of Neil Johnson’s fees.

EXERCISE OF DISCRETION

The Remuneration Committee has not exercised any

discretion during the reporting year in terms of incentive

plan outcomes.

IMPLEMENTATION OF THE VALUE CREATION

PLAN(‘VCP’)

During the consultation process relating to the appointment

of Neil Johnson as Chair, the Board received various

representations from a significant number of major

shareholders with regards to the Chair role and potential

remuneration structures that they believe would be most

appropriate in the current context. These representations

from shareholders included a suggestion that the

Remuneration Committee considers a VCP for the Chair role

and for Executive management.

The plan is intended to deliver significant rewards to

participants if there is a substantial increase in shareholder

value with no payout below a stretching hurdle.

Over 2023 and early 2024, the Committee, in consultation with

Mercer Limited, worked on proposals for the VCP and there

was an iterative consultation process in respect of the VCP

design with major shareholders. The proposed plan, which

will be operated on a time limited basis during which it will

replace regular RSP grants (for VCP participants) under the

2023 Dialight Restricted Share Plan (‘DRSP’), was developed

to address shareholder representations that the Company

should pursue an ambitious growth strategy and delivering

significant additional benefit for shareholders.

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Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

The principal terms of the VCP were set out in the notice

of the 2024 Annual General Meeting and approved at that

meeting with 96.63% of votes in favour. An award of Units

were granted to Neil Johnson and Steve Blair under the VCP

on 19 March 2025 and further details are provided on page77.

Prior to the grant, the Committee satisfied itself that both

recipients had met the shareholding requirement (acquisition

of at least £150,000 worth of Dialight shares by 31 March 2025)

foreligibility for VCP payouts.

CHAIR REMUNERATION

As noted above, there was no increase in Chair’s fees

in FY2025 and no change in fees paid when Neil’s role

became an Executive role in March 2025. The Remuneration

Committee continues to review Neil’s fees on a regular basis.

CEO REMUNERATION

There was no increase to the CEO’s salary in FY2025.

2024 REMUNERATION POLICY

The Company’s triennial remuneration policy was approved

atthe 2024 AGM with 96.63% of votes in favour.

POST YEAR-END ACTIVITIES

Except for the implementation of the matters set out above,

there are no material post year‑end activities to be reported.

Under the 2024 APBP, the performance thresholds for the EBIT

and Net Debt metrics were reached and the CEO is eligible

for a bonus of £301,646, payable in July 2025. Further details

of the APBP can be found on page 75.

MATTERS TO BE CONSIDERED AT THE 2025 ANNUAL

GENERAL MEETING

Aside from the routine resolution relating to this

Remuneration Report, there are no further remuneration

resolutions for consideration at this years AGM.

Lynn Brubaker

Chair of the Remuneration Committee

23 June 2025

COMMITTEE ACTIVITIES IN 2024/25

29 April 2024

• Review and approval of COO benchmarking, engagement

terms and remuneration package.

15 May 2024

• PSP outcomes – 2021 award.

• VCP outline and shareholder consultation.

22 July 2024

• 2023 remuneration outcomes – 2024 remuneration

report review and approval – 2024 bonus structure and

DRSP administration.

• VCP – approval of scheme rules.

• Committee review.

• NED fees.

13 August 2024

• 2024 RSP grants – approval of structure and awards.

25 September 2024

• Committee review – RSP leaver status awards.

21 November 2024

• Interim CFO remuneration terms.

03 December 2024

• Interim CFO remuneration terms.

• EBT administration.

• DRSP administration.

• VCP adoption.

11 February 2025

• Chair terms.

• VCP approval.

• 2022 DRSP outcomes and EBT administration.

25 February 2025

• Remuneration timetable planning and Committee review.

• NED fees.

EXTERNAL ADVICE TO THE REMUNERATION COMMITTEE

The Remuneration Committee has access to the advice of the

Chief Executive Officer, Company Secretary and the Global

VP, HR as well as external advisers as required. During the

reporting period ended 31 March 2025, the Remuneration

Committee consulted Mercer Limited, a business of Marsh

McLennan Inc, which provided independent advice (for a

total fee of £90,450 excluding VAT) on CFO salary, benefits

and variable remuneration packages, implementation of the

VCP, other Board and general remuneration matters; and

corporate governance best practice and disclosure (including

the drafting of this report). The Remuneration Committee

retains the responsibility for the appointment of remuneration

advisers and their associated fees and undertakes due

diligence periodically to ensure that its advisers remain

independent, and that the advice provided is impartial and

objective. Mercer Limited is a signatory to the Remuneration

Consultants Group Code of Conduct and abides by its

requirements to provide advice that is transparent and

impartial. Mercer Limited does not provide any other services

to the Group.

COMPLIANCE STATEMENT

This Remuneration Report (inclusive of this introduction

and statement by Lynn Brubaker, the policy outlined on

pages63to 67 and the report on the implementation of the

policy on pages 78 to 79) has been prepared in accordance

with the provisions of the Companies Act 2006 and Schedule

8 of the Large and Medium‑sized Companies and Groups

(Accounts and Reports) (Amendment) Regulations 2013. It also

meets the requirements of the FCA Listing Authority’s Listing

Rules and the Disclosure Guidance and Transparency Rules.

The sections of the Remuneration Report that are subject

to audit are marked as Audited Information. The remaining

sections of the Remuneration Report are not subject to audit.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

DIRECTORS’ REMUNERATION POLICY

This section of the report details the Remuneration Policy for

Executive and Non‑Executive Directors (the ‘2024 Policy’).

The Policy was approved at the September 2024 AGM

(approved by 96.63% of votes cast on the resolution) and

is effective for up to three years from the date of approval.

The new Policy significantly strengthened the linkage between

pay and performance and the alignment between the pay

of Executive Directors and the shareholder experience, and

introduced a VCP for a limited period.

BACKGROUND AND OVERVIEW OF THE POLICY

The Committee has a clear policy on remuneration – that

base salary and benefits for Executive Directors should

represent a fair return for employment but that the majority of

remuneration should be dependent on the continued success

of the Company and be aligned with delivery of Dialight’s

strategic plan and the creation of shareholder value.

The 2024 Policy was designed and reviewed to reinforce

those principles, in particular to offer significant rewards for

a substantial increase in shareholder value with no long‑term

incentives being earned if total shareholder return is below

a stretching threshold. The Committee consulted very

extensively with major shareholders in late 2023 and early 2024

prior to implementing the 2024 Policy. It also took into account

prevailing best practice investor expectations, along with

remuneration made generally to employees of the Group.

As noted in the introduction, Neil Johnson has become

Executive Chair and is eligible to receive his base fee and to

participate in the VCP. He is not eligible for the Restricted

Share Plan, Annual Performance Bonus Plan, pension

contributions or taxable benefits.

REMUNERATION POLICY TABLE

Link to strategy Operation Opportunity Performance metrics

Base salary/fees

To recruit, retain and

motivate individuals of

high calibre, and reflect

the skills, experience

and contribution of the

relevant Director; to

ensure that fixed pay

represents a fair return

for employment.

The Remuneration Committee

sets base salary with reference

to relevant market data and

an individual’s experience,

responsibilities and performance.

Base salary is considered by the

Remuneration Committee on an

individual’s appointment and then

generally reviewed once a year

or when an individual changes

position or responsibilities. When

making a determination as to the

appropriate level of remuneration,

the Remuneration Committee

firstly considers pay and conditions

for employees across the Group,

the general performance of the

Company and the wider economic

environment. The Committee

may also undertake periodic

benchmarking for similar roles in

comparable organisations.

Any base salary increases are

applied in line with the outcome of

the review. In respect of existing

Executive Directors, it is anticipated

that salary increases will generally

be in line with the broader

employee population. In exceptional

circumstances (including, but not

limited to, material increases in role

size or complexity), the Committee

has discretion to make appropriate

adjustments to salary levels to ensure

that they remain market competitive.

It is not envisaged that this will be

a frequent occurrence. Detail of

current salaries for the Executive

Directors can be found on page 74.

None.

Benefits – not applicable to Executive Chair

To provide market

competitive, yet cost

effective, benefits

to attract and retain

high‑calibre Executives.

Executive Directors receive benefits

which consist primarily of the provision

of a car allowance, life insurance and

medical insurance, although they

may include such other benefits as

the Committee deems appropriate

including in circumstances where

new benefits are introduced for other

employees in the location where an

Executive Director is based.

Benefits vary by role and individual

circumstances; eligibility and cost

are reviewed periodically. The

Remuneration Committee retains

the discretion to approve a higher

total benefit cost in exceptional

circumstances (e.g. relocation) or

in circumstances where factors

outside the Company’s control have

changed materially (e.g. increases in

life insurance premiums). The value

of benefits awarded to the Executive

Directors can be found in the table on

page 74.

None.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

Link to strategy Operation Opportunity Performance metrics

Pension – not applicable to Executive Chair

To provide market

competitive, yet cost

effective, benefits

to attract and

retain high‑calibre

Executives.

A Company contribution to a defined

contribution pension scheme or

provision of a cash payment in

lieu of a pension contribution (or

combination of such) for UK‑based

Directors. In the US, Dialight

operates a 401(k) and SERP (or

cash equivalent payment in lieu in

respect of the latter). Salary is the

only element of remuneration that is

pensionable for Executive Directors.

Executive Directors will receive

pension arrangements consistent

with the majority of employees in the

relevant jurisdiction:

• UK‑based Executive Directors will

be entitled to join the existing

defined contribution scheme

offering employer contributions

of up to 5% of salary, or to receive

an equivalent cash payment in

lieu; and

• US‑based Executive Directors will

be entitled to participate in the

401(k) and the SERP (or to receive a

cash equivalent payment in lieu of

employer contribution in respect

of the latter) on terms consistent

with the majority of US employees.

None.

Annual Performance Bonus Plan (‘APBP’) – not applicable to Executive Chair

The APBP incentivises

the achievement of

annual objectives,

which support

the short‑term

performance goals of

the Company.

APBP measures, weightings and

targets are set by the Remuneration

Committee at the beginning

ofeach financial year following

thefinalisation of the budget for

thatyear.

Bonuses up to target are paid in

cash, with pay‑outs above target

delivered in Dialight shares.

Where the Executive receives

Dialight shares, half of these vest

after two years with the balance

vesting after three years, subject

to continued employment with the

Group. Dividends are accrued on

these deferred shares and are paid

tothe participant on release of

shares that are subject to the award.

Awards under the APBP are subject

to malus and clawback provisions,

further details of which are included

as a note to the Policy Table.

The maximum bonus opportunity

is 150% of salary. Threshold

performance will deliver payouts

of up to 20% of maximum, while

payouts for target performance will

be up to 50% of maximum.

Performance is assessed on an annual

basis, as measured against specific

objectives set at the start of each year.

Financial measures will make up at

least 75% of the total annual bonus

opportunity in any given year, with up

to 25% based on objectives linked to

Dialight’s strategy.

The Committee has discretion to

adjust the formulaic bonus outcomes

both upwards (within the plan limits)

and downwards (including to zero)

to ensure alignment of pay with

performance, e.g. in the event of one

of the targets under the bonus being

significantly missed or if there are

unforeseen circumstances outside

management control.

The Committee also considers

measures outside the bonus

framework (including ESG factors) to

ensure there is no reward for failure

and that outcomes are fair in the

context of overall performance and

the Group’s wider environmental and

societal impact.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

Link to strategy Operation Opportunity Performance metrics

Dialight Value Creation Plan (‘VCP’)

Executive Directors

are eligible for awards

under the VCP. No

Executive Director

that receives a VCP

award will be eligible

for a 2023 Dialight

Restricted Share Plan

(‘DRSP’) award in either

2024 or 2025 except

potentially in the case

of “buy outs” under

the appointments

policy. It is anticipated

that DRSP awards

will recommence in

FY2026/27. The VCP

provides a way to align

remuneration more

closely to shareholder

value creation. The

aim of the VCP is

to incentivise the

Executive Chair, CEO

and CFO and other key

executives to pursue

ambitious targets

forgrowth.

Participants will be eligible for a

share in a pool of excess value

created over three and four‑year

periods. The total pool will be

calculated as 7.5% of value created

through share price growth plus

dividends (‘TSR’) in excess of

350pvsa four‑week average

share price ending 1 April) of

approximately 166p; i.e. growth

ofapproximately 110%.

The award will have two

independentthree and four‑year

performance measurement periods

(1 April 2024 to 31 March 2027 and

1 April 2024 to 31 March 2028).

Eachperiod will determine 50% of

the award, i.e. 3.75% of value created

will apply to each period.

A three‑month average opening

and closing share price will be used

to measure value creation for the

pool. Awards will be granted as a

number of units in the pool. At the

end of each performance period,

units will be converted into an

award of shares/nil cost options

with participants required to hold

onto their vested shares after any

sales required to settle tax and

withholdings on vesting for a period

of five years from grant, inline

with the provisions of the Code

and market best practice. To avoid

excessive payouts and shareholder

dilution, the total value of the pool

for all participants will be capped

at 3% of shares in issue. If the

aggregate value of the pool exceeds

this cap, then awards will be scaled

back pro‑rata on the same basis

for all participants. Theimplication

is that the slope of the payout

curve reduces once the share price

exceeds 583p.

Awards to be granted to four to

five key individuals including the

Executive Chair, Chief Executive

Officer and the Chief Financial

Officer. Both the Executive Chair and

Chief Executive Officer are eligible

for awards over units representing

34% of the pool and the Chief

Financial Officer 17% of the pool,

with the remaining 16% allocated

among other current or future

participants as determined by the

Board. At a share price of £5, the

awards to the Executive Chair and

CEO would be worth approximately

£1.5m each, representing around

0.34% each of the value created for

shareholders above the hurdle. The

Executive Chair and Chief Executive

Officer were required to acquire

£150,000 worth of Dialight shares by

31 March 2025 in order to be eligible

for VCP payouts.

No awards would be made under

the DRSP to VCP participants until

2026. These awards would vest in

2029, one year after the second

element of the VCP awards vest,

ensuring the ongoing retention

of plan participants. Other senior

management DRSP participants may

receive awards in the usual way.

Awards under the VCP are subject

to malus and clawback provisions,

further details of which are included

as a note to the Policy Table.

As described under “Operation”, the

amounts received by participants are

directly proportional to shareholder

value generated in excess of a

threshold that represents substantial

growth. The Committee has discretion

to adjust outcomes as described later

in this Policy.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

Link to strategy Operation Opportunity Performance metrics

Restricted Share Plans – not applicable to Executive Chair

The DRSP replaced

the 2024 Dialight

Performance Share

Plan (‘DPSP’) for

awards to Executive

Directors in 2021

and thereafter. There

are no outstanding

DPSP awards to any

Executive Directors.

As noted above,

no DRSP awards

will be made to any

Executive Director that

receives a VCP award

in either FY2024/25

or FY2025/26 except

potentially in the case

of “buy outs” under

the appointments

policy. It is anticipated

that DRSP awards

will recommence for

Executive Directors in

FY2026/27.

The DRSP provides a

simple and transparent

long‑term incentive

award to help ensure

alignment between

the interests of

shareholders and

those of the Executive

Directors, and is

aligned to the plans

operated below

Boardlevel.

DRSP awards may be structured as

conditional shares or nil‑cost options

with a two‑year exercise window

from the date of vesting.

The release of awards may, at

the discretion of the Committee,

be deferred in whole or in part

followingthe end of a three‑year

vesting period.

The Committee’s intention is

that all vested awards will be

subject to a two‑year post‑vesting

holdingperiod.

The Remuneration Committee has

the power to authorise the payment

of dividends or dividend equivalents

under the rules of the DRSP.

Awards under the DRSP are subject

to malus and clawback provisions,

further details of which are included

as a note to the Policy Table.

The DRSP provides for an award up

to a normal limit of 62.5% of salary

for Executive Directors, with an

overall limit of 75% of salary for use

inexceptional circumstances.

These maximum opportunities under

the DRSP represent a 50% reduction

against the maximum opportunity

that was available under the previous

PSP scheme.

The Committee has discretion to

reduce awards in the event that

there has been a significant fall in the

shareprice.

Vesting of awards will require:

(a) that the recipient remains in role as

at the date of vesting (subject to the

“leaver” provisions of the shareholder

approved share plan); and

(b) that the Committee is satisfied that

Dialight’s underlying performance

and delivery against strategy are

sufficient to justify the level of payout,

taking into consideration factors such

as absolute total shareholder return

(‘TSR’), relative TSR, environmental

impact and operational performance

over the period, as well as individual

contribution and the workforce and

wider stakeholder experience.

The Committee will have discretion

to reduce the vesting of awards

(including to zero) in the event that

it considers that the outcome would

be otherwise misaligned with the

experience of shareholders and

otherstakeholders.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

Link to strategy Operation Opportunity Performance metrics

Non-Executive Director fees

The Company sets fee

levels to attract and

retain Non‑Executive

Directors with the

necessary experience

and expertise to

advise and assist

with establishing

and monitoring the

strategic objectives of

the Company.

Fee levels are typically considered

every year, taking into account

fees paid for equivalent roles at

companies of similar size, time

commitment and complexity. In

the event of the Group reverting to

having a Non‑Executive Chair, the

fees for that role will be determined

by the Remuneration Committee,

while fees for Non‑Executive

Directors are determined by the

Board. Additional fees are payable

for acting as Senior Independent

Director and as Chair of any of the

Board’s Committees. Non‑Executive

Directors do not receive any bonus,

do not participate in awards under

the Company’s share plans and are

not eligible to join the Company’s

pension scheme.

The Company’s policy in relation

to fees is to reflect the time

commitment and responsibilities

of the roles, normally by paying up

to median level fees, compared

to market, depending on the

experience and background of

the Non‑Executive Directors.

The Company also reimburses

the Non‑Executive Directors for

expenses reasonably and properly

incurred in the performance of their

duties. In normal circumstances,

increases to fees will be broadly

in line with price inflation, subject

to cases of material misalignment

with the market or a change in the

complexity, responsibility or time

commitment required to fulfil a

Non‑Executive Director role.

It remains important for the Board to

have the necessary flexibility to step

outside this general policy should

the requirement be clear that a

certain type of individual is required

to conform with new governance

requirements or legislation.

Aggregate fees for all Non‑Executive

Directors will be within the limits

set by the Company’s Articles of

Association. Details of current

Non‑Executive Director fees can

befound on page 74.

None.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

NOTES TO THE REMUNERATION POLICY TABLE

EXPLANATORY DETAIL FOR FUTURE REMUNERATION

POLICY TABLE

For the avoidance of doubt, in approving this Directors’

Remuneration Policy, authority is given to the Company to

honour any commitments previously entered into with current

or former Directors (such as the vesting or exercise of past

share awards).

PERFORMANCE MEASURES AND TARGETS

Measures used under the APBP are selected annually to

reflect Dialight’s main short‑term objectives and reflect

both financial and non‑financial priorities, as appropriate.

The performance underpinned to any future DRSP awards

will be based on those which best reflect the overall

performance of the business. These might include, but not

be limited to, absolute TSR, relative TSR, ESG metrics and

operational performance over the period, as well as individual

contribution and broader stakeholder experience.

For the APBP, EBIT continues to be used as the primary

measure to provide a direct link to one of our KPIs.

In FY2024/25 the Executive Director APBP performance

targets were based upon EBIT, revenue and net debt.

Up to 25% of the APBP may be based on strategic or other

non‑financial goals in order to reflect the importance of

incentivising non‑financial objectives linked to Dialight’s

strategy. Targets are set on an annual basis taking into

account the Company’s budget as well as external

expectations for Dialight and the sector.

If an event occurs which causes the Remuneration Committee

to consider that an outstanding DRSP or APBP award

would not achieve its original purpose without alteration,

the Remuneration Committee has discretion to amend the

targets, provided the new conditions are materially no less

challenging than was intended when originally imposed.

Such discretion could be used to appropriately adjust

for the impact of material acquisitions or disposals, or for

exceptional and unforeseen events outside the control of the

management team and would be disclosed in the relevant

remuneration report.

The VCP is based entirely on total shareholder return.

However, the Remuneration Committee is mindful of potential

windfall impacts and will therefore have the ability to make

adjustments to the share price hurdle and/or to payouts.

Adjustments may also be made in the event of a capital raise

and in other circumstances where the Committee considers

this to be necessary and in the interest of the Company. In the

event that a discretionary adjustment in favour of participants

is proposed (within the cost and dilution parameters of the

plan) that goes beyond the usual provisions that exist in

relation to obtaining or maintaining favourable tax, exchange

control or regulatory treatments, then the Committee will

consult with major shareholders.

DIFFERENCE BETWEEN THE DIRECTORS’

REMUNERATION POLICY AND THAT FOR

OTHEREMPLOYEES

All employees receive salaries and benefits which are

consistent with local market practice, with any review of fixed

pay taking into account experience, responsibility, individual

performance and salary levels at comparable companies.

Senior management roles are typically eligible to participate

in the APBP, with opportunities and performance measures

reflecting organisational level and business area, as

appropriate. A small number of very senior employees will

receive VCP awards. Certain other employees at senior

management level or in key roles may receive DRSP awards.

These arrangements help Dialight remain competitive in the

main talent markets in which it operates, while also continuing

to align plan participants with the interests of shareholders in

growing the value of the Company over the longer term.

SHAREHOLDING GUIDELINES

Executive Directors are required to accumulate and

maintain aholding of Dialight shares equivalent in value

to 200% of their base salary. The net of tax number of

vested shares under the Company’s DRSP will normally

be required to be retained until the guideline has been

met. Current shareholding levels are set out on page

79. In light oftheir recent appointment, the Executive

Directors will have aperiod of five years to build up their

respective shareholdings to meet this requirement.

However,notwithstanding such period, Steve Blair was still

required the meet the requirement to purchase £150,000

worth of Dialight shares by 31 March 2025 in order to be

eligible for VCP payments.

In addition to the above, specific share purchase requirements

were applied to the Executive Chair and Chief Executive

Officer in order to be eligible for awards under the VCP as

set out in the Policy Table above. The general shareholding

requirement does not apply to the Executive Chair role of Neil

Johnson on the basis that he is not, in that role, eligible to

participate in any bonus scheme, nor be eligible for any DRSP

grants. Neil was, however, required to meet the shareholding

requirement specific to the VCP – i.e. the purchase of £150,000

worth of Dialight shares by 31 March 2025.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

COMMITTEE DISCRETION

As it is not possible for any Remuneration Policy to anticipate

every possible scenario, the Remuneration Committee retains

the ability to apply various discretions and judgements in

order to ensure the achievement of fair outcomes and to

maintain the flexibility required to balance the interests of

individuals and those of the Company.

For example, the Committee may be required to exercise

discretion when determining whether or not the outcomes

of performance measures and targets applicable to variable

incentives are fair in context, or if realities encourage the use

of upward or downward adjustments (within scheme limits).

Accordingly, the Committee retains a number of discretions

including the ability to determine the following:

• scheme participants;

• the timing of grant and size of awards, subject to the

maximum levels set out above;

• appropriate treatment of vesting of awards in the context

ofa change of control;

• appropriate adjustments to awards in the event of variations

to the Company’s share capital;

• treatment, size and grant of awards in a recruitment context;

and

• the application, scope, weighting and targets for

performance measures and performance conditions.

Although it is not possible to give an exhaustive list of

Remuneration Committee discretions, the exercise of any

such discretion and the rationale underpinning their use,

would be provided in context, as part of the Annual Report

on Remuneration.

MALUS AND CLAWBACK

Payments and awards under the APBP bonus, VCP and

DRSP (as well as awards already made under the legacy

DPSP scheme) are subject to malus and clawback provisions,

which can be applied to both vested and unvested awards.

Circumstances in which malus and clawback may be applied

include a material misstatement of the Company’s financial

accounts, fraud or gross misconduct on the part of the award

holder, an error in calculating the award vesting outcome,

material reputational damage and corporate failure. In respect

of the APBP, the provisions apply for up to two years following

payment. In respect of VCP, DRSP and the legacy DPSP

awards the provisions apply remain subject to the provisions

throughout the vesting and holding period (where applicable).

Participants in all plans will be required to acknowledge their

understanding of the withholding and recovery provisions

as a pre‑condition to participation in order to help ensure

that the provisions would be enforceable should the

circumstances arise.

PAY FOR PERFORMANCE

The following charts provide an estimate of the potential future rewards for the Group Chief Executive and Group Chief

Finance Officer, and the potential split between different elements of pay, under four different performance scenarios: “Fixed”,

“On‑target”, “Maximum” and “Maximum including share price appreciation” using the following assumptions:

Executive Salary Pension Benefits Maximum APBP Share of VCP Pool

Neil Johnson £250,000 n/a n/a n/a Maximum of 34%

Steve Blair £466,000 5% of salary £21,000 150% of salary Maximum of 34%

Mark Fryer £300,000

5% of salary £15,000 125% of salary 17%

Applicable salary from 1 May 2025.

As Executive Chair, Neil Johnson is not entitled to participate in the DRSP nor in any bonus scheme.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Remuneration Committee report continued

EXECUTIVE CHAIR

Minimum

On-target

Maximum + share price growth

Maximum

0 400 800 1,200 1,600 2,000

£250k

100%

33%

67%

£758k

Key

Fixed

APBP

VCP

Minimum

On-target

Maximum + share price growth

Maximum

0 400 800 1,200 1,600 2,000

£532k

£892k

£1,252k

100%

60%

42%

40%

58%

30% 41%

29%

£1,760k

CEO

Key

Fixed

APBP

VCP

Minimum

On-target

Maximum + share price growth

Maximum

0 400 800 1,200 1,600 2,000

£350k

£537k

£725k

100%

65%

48%

35%

52%

36% 38%

26%

£979k

CFO

Key

Fixed

APBP

VCP

The “Minimum” scenario reflects base salary, pension and

benefits (i.e. fixed remuneration), which are the only elements

of the remuneration package not linked to performance.

The “Target” scenario reflects fixed remuneration as above,

plus APBP payout of 50% of maximum. No value is shown

for the VCP since nothing is earned unless total shareholder

return is 110%.

The “Maximum” scenario reflects fixed remuneration plus

APBP payout of 100% of maximum. No value is shown for the

VCP since nothing is earned unless there is a very significant

increase in share price.

The “Maximum with share price appreciation” scenario is

based on a share price of 400p, which is more than double its

level on 31 March 2024. This is well above the 50% increase

referred to in the regulations since 50% growth would not

beenough to trigger a payout.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

RECRUITMENT POLICY

In cases of appointing a new Executive Director from outside the Company, the Remuneration Committee may make use of all

the existing components of remuneration as follows:

Component Approach

Salary Executive Directors will receive a base salary, which will be determined by reference to relevant market data,

experience and skills of the individual, internal relativities and their current basic salary.

Where new appointees have initial basic salaries set below market, any shortfall may be managed with phased

increases over a period of two to three years subject to the individual’s development in the role.

Benefits New appointees will be eligible to receive benefits in line with the current policy, benefits provided to the

wider workforce in the same location plus (if applicable) expatriation allowances or benefits and any necessary

expenses relating to an Executive’s relocation.

Pension New appointees will be eligible to participate in one of the Company’s defined contribution plans, or receive a

cash supplement or local equivalent on the same basis as the majority of employees in the relevant jurisdiction.

APBP The scheme as described in the Policy Table will apply to new appointees, with the relevant maximum typically

being pro‑rated to reflect the proportion of employment over the year. Where applicable, targets for the

individual strategic element will be tailored to each Executive.

VCP Awards may be made within the overall pool size and dilution limits described in the Policy Table. Therefore,

anyawards to new hires will need to be funded by via unallocated units and/or awards forfeited by leavers.

DRSP New appointees may be granted restricted share awards under the DRSP on the same terms as other

Executives, as described in the Policy Table. The normal limit of 62.5% of salary will apply, save in exceptional

circumstances where up to 75% of salary may be awarded. If the individual is granted an award under the VCP,

itis likely that DRSP awards (other than to buy‑out awards forfeited as described below) will be reduced or

delayed until a future year.

Remuneration Committee report continued

In determining appropriate remuneration, the Remuneration

Committee will take into consideration all relevant factors

(including quantum, nature of remuneration and the

jurisdiction from which the candidate was recruited) to ensure

that arrangements are in the best interests of both Dialight

and shareholders.

In addition to the remuneration structure outlined above,

the Committee may, in certain circumstances, choose to

make an award in respect of a new appointment to “buy

out” remuneration forfeited on leaving a previous employer

on a like‑for‑like basis. If the Committee determines that it is

appropriate to do so it will apply the following approach.

The fair value of these buy‑out incentives will be calculated

taking into account: the proportion of the performance

period completed on the date of the Executive’s cessation

of employment; the performance conditions attached

to the vesting of these incentives; the likelihood of them

being satisfied; and, any other terms and conditions having

amaterial effect on their value (Lapsed Fair Value).

The Committee may then grant up to the same fair value as

the Lapsed Fair Value where possible under the Company’s

incentive plans (subject to the limits under these plans).

The Committee, however, also retains the discretion to

provide the Lapsed Fair Value under specific arrangements

inrelation to the recruitment of the particular individual within

the constraints set out in the Listing Rules.

The approach to the recruitment of internal candidates would

be similar but the Remuneration Committee would continue

to honour existing contractual commitments prior to any

promotion. For the avoidance of doubt, this would not extend

to pension arrangements which, as above, would be aligned

with the majority of employees in the relevant jurisdiction.

For Non‑Executive Directors, the Remuneration Committee

and the Company would seek to pay fees in line with

the Company’s existing Policy. A base fee in line with

the prevailing fee schedule would be payable for Board

membership, with additional fees payable for acting as Senior

Independent Director and/or as Chair of a Board Committee.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Annual bonus

Cash In the event of an Executive Director leaving Dialight before the end of a bonus year or prior

to the payment of a bonus, the Remuneration Committee has discretion to allow them to

be paid a portion of bonus relative to their point of leaving. This will be highly contingent

on the manner of the Executive Director’s departure – specifically payment would only be

made if they are classified as a “good leaver” pursuant to the rules of the APBP as well as

businessperformance.

Deferred shares For good leavers, deferred bonus shares will normally be retained by the participant and will

be released in full following completion of the applicable deferral period. For other leavers,

deferred bonus shares will lapse.

DRSP

Leavers before the end of the

performance or vesting period

In most circumstances, awards will lapse. If the Executive Director is classed as a “good

leaver”, outstanding DRSP shares would typically be pro‑rated for the proportion of the

vesting or performance period served and released, subject to applicable conditions, at the

normal vesting date. The Remuneration Committee has flexibility to allow awards to vest

earlier than above when an individual leaves; however, the default position will be for awards

not to be released early except in compassionate circumstances.

Leavers after the end of the

performance or vesting period

Any awards in a holding period will normally be released following completion of the holding

period.

VCP

In most circumstances, awards will lapse. If the Executive Director is classed as a “good

leaver” and has served for at least 24 months of the plan (i.e. until 31 March 2026) they will

remain eligible to receive their awards on the original timetable subject to pro‑rating for

time. The Remuneration Committee will have discretion to vest awards on cessation or to

disapply pro‑rating subject to the overall pool size of 7.5% and the dilution limit of 3%.

Awards forfeited by leavers would remain in the pool for grants to be made to new joiners

or to individuals whose roles change significantly. The value of awards lapsing due to leavers

would not be shared among existing participants.

SERVICE CONTRACTS

Executive Directors’ service contracts, including

arrangements for early termination, are carefully considered

by the Remuneration Committee. Executive Directors’ service

contracts contain provisions that require up to 12 months’

notice of termination on either side. Such contracts do not

contain any provisions for payments outside the scope of those

contained in the contract. Executive Director service contracts

are available to view at the Company’s registered office.

Non‑Executive Directors have specific terms of

engagement provided in formal letters of appointment,

which contain three‑month notice periods that are mutual.

The Non‑Executive Directors are appointed for a three‑year

term, subject to annual re‑election by the shareholders at the

Company’s AGM.

The Executive Chair contract complies with Company

remuneration policy and is terminable by the Company or the

Director on three months’ notice.

NOTICE PERIODS

Executive Directors’ service contracts require up to 12 months’

notice to be given by Dialight in the event of termination.

Both can be terminated with and without cause and require

up to 12 months’ notice from either party.

Both Steve Blair’s and Mark Fryer‘s contracts provide for pay in

lieu of notice, but do not contain any additional compensation

provisions, nor do they contain liquidated damages clauses.

If a contract is to be terminated, the Remuneration Committee

will determine such mitigation as it considers fair and

reasonable in each case. In determining any compensation,

it will take into account the best practice provisions of the

UK Corporate Governance Code and published guidance

from recognised institutional investor bodies and will take

legal advice on the Company’s liability to pay compensation

and the appropriate amount. The Remuneration Committee

periodically considers what compensation commitments the

Executive Directors’ contracts would entail in the event of

early termination. There are no contractual arrangements that

would guarantee a pension with limited or no abatement on

severance or early retirement.

The Remuneration Committee will exercise discretion in

making appropriate payments in the context of outplacement,

settling legal claims or potential legal claims by a departing

Executive Director, including any other amounts reasonably

due to the Executive Director, for example, to meet the

legal fees incurred in connection with the termination of

employment, where the Company wishes to enter into

a settlement agreement and the individual must seek

independent legal advice.

The table below summarises how the awards under the APBP,

DRSP and VCP are typically treated in specific circumstances,

with the final treatment remaining subject to the Committee’s

discretion within the plan rules.

Remuneration Committee report continued

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

For the purpose of the above, “good leaver” is defined

as a participant ceasing to be employed by the Group by

reason of death, disability, ill health, redundancy, retirement

with agreement of the Company or any other reason that

the Remuneration Committee determines in its absolute

discretion. As noted above, should the Executive Director

leave the Company in any other circumstances, outstanding

awards would typically lapse.

The Remuneration Committee also retains discretion in

the event of a change of control to release awards under

the DRSP. It is usual in this situation that awards would be

pro‑rated for time. In relation to the APBP, the scheme rules

allow the Remuneration Committee to determine that all

deferred share elements of the bonus awards will vest on a

change of control and may be exercised within such period as

the Remuneration Committee shall specify.

VCP awards would vest immediately on a change of control

before the completion of either performance period, with

value creation measured by reference to the offer price and

no pro‑rating for time given that the plan is based on value

creation above a hurdle rather than expressed as an award

of shares.

The Remuneration Committee is also mindful that it is

conceivable that a shareholder agreed corporate event could

occur prior to any vesting of the VCP and at a level below

the VCP hurdle but where the Committee believes that

material progress had been made, at that time, towards the

improvement in financial performance envisaged under the

VCP. In those circumstances the Committee would consult

with major shareholders with a view to agreeing an equitable

treatment of VCP participants, taking into account the

performance of the share price and time elapsed.

EXTERNAL APPOINTMENTS

It is the Company’s policy that, except in extraordinary

circumstances, Executive Directors should only accept one

appointment with a third party as a Non‑Executive Director.

Any such appointment is subject to prior Board approval

and consideration will be given to potential conflicts of

interest with Dialight and the time demands of the external

appointment. The Executive Director concerned is entitled

toretain any fees from such a non‑executive directorship.

EMPLOYMENT CONDITIONS ELSEWHERE

IN THE COMPANY

The Remuneration Committee takes into account what the

general rise in employee salaries was across the Company

at the review date when considering changes to the

remuneration of the Executive Directors. The Committee

did not expressly seek the views of employees when drawing

up the Remuneration Policy but does carry out an annual

review of salaries across the Group and the Board is regularly

updated on employee matters.

SHAREHOLDER VIEWS

The Remuneration Committee maintains a regular dialogue

with its major shareholders and monitors trends and

developments in corporate governance and market practice

to ensure that the structure of executive remuneration under

the new Remuneration Policy is appropriate.

Remuneration Committee report continued

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

2024/25 Annual report on remuneration

The remuneration data reported in this section is, not withstanding the move to $ reporting elsewhere in this annual report and

accounts, expressed in £, as this more readily facilitates comparison with prior year reporting and is the currency in which the

majority of current Directors are paid in.

SINGLE FIGURE OF TOTAL REMUNERATION (AUDITED INFORMATION)

The following tables provide details of the Directors’ remuneration for the 2024/25 (12‑month) financial period and for the

2023/24 (15‑month) financial period, in each case before deductions for income tax and national insurance contributions.

2024/25 Directors’ pay –

12-months (£’000s) Salary/fees Benefits

Pension

Sub-total

fixed Bonus DPSP/DRSP

Sub-total

variable

Total

remuneration

Executive Directors (current):

Neil Johnson

250 – – 250 – – – 250

Steve Blair 466 28 23 517 – – – 517

Mark Fryer

67 – 3 70 – – – 70

Executive Directors (past):

Carolyn Zhang

195 29 7 231 – – – 231

Non-Executive Directors:

Nigel Lingwood

135 – – 135 – – – 135

Lynn Brubaker 72 – – 72 – – – 72

John Lincoln

33 – – 33 – – – 33

1 Neil Johnson was appointed as Executive Chair on 20 March 2025 having previously been Non‑Executive Chair. His annual fee was unchanged.

2 Mark Fryer served as interim CFO from 6 January 2025 to 30 April 2025. He started his permanent role on 1 May 2025.

3 Carolyn Zhang stepped down as a Director on 11 November and thereafter received a total of £157,000 as pay in lieu of contractual notice and £24,000 in respect of accrued but

untaken holiday.

4 Nigel Lingwood was paid enhanced fees between 1 October 2024 and 28 February 2025 in recognition of his expanded workload as a NED following the departure of Carolyn Zhang

andprior to the appointment of Mark Fryer.

5 John Lincoln was appointed as a Non‑Executive Director on 1 August 2024.

6 “Benefits” does not include expenses in principle incurred in the ordinary course of business.

2023/24 Directors’ pay –

15‑months (£’000s) Salary/fees Benefits Pension

Sub‑total

fixed Bonus DPSP

Sub‑total

variable

Total

remuneration

Executive Directors

Steve Blair 56 3 3 62 – – – 62

Carolyn Zhang 53 – – 53 – – – 53

Fariyal Khanbabi 609 156 23 788 – – – 788

Clive Jennings 234 9 12 255 – – – 255

Non-Executive Directors

Neil Johnson 217 – – 217 – – – 217

Nigel Lingwood 72 – – 72 – – – 72

Lynn Brubaker 49 – – 49 – – – 49

David Blood 11 – – 11 – – – 11

David Thomas 50 – – 50 – – – 50

Gaëlle Hotellier €55 – – €55 – – – €55

Gotthard Haug 35 – – 35 – – – 35

Steve Blair 54 – – 54 – – – 54

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

ADDITIONAL DISCLOSURES (AUDITED INFORMATION)

EXECUTIVE DIRECTORS’ BENEFITS

Executive Directors other than the Executive Chair

receive benefits comprising life insurance, healthcare and

car allowances.

PENSIONS

The figure includes the amount of Company pension

contributions to Executive Directors’ during the year.

Steve Blair and Mark Fryer received Company contributions

of 5% of their base salary (paid in cash). The Executive Chair

isnot eligible for pension benefits.

APBP

Following adoption of the 2024 Remuneration Policy, the

APBP for Executive Directors operates on the basis that is

set out in the Remuneration Policy report on pages 74 to 77.

Maximum bonus potential, paid in a mixture of cash and, in

respect of performance above target, shares, is 150% of salary

for the CEO and 125% of salary for the CFO. The Executive

Chair is not eligible for the APBP. The 2024/25 Executive

Director APBP was based on three elements: 30% of the

available bonus pot being payable against an EBIT metric;

40% against a revenue target; and 30% against a net debt

target. The performance ranges for each of performance

targets were as follows.

Threshold Target Maximum Actual

EBIT element (after

provision for bonus)

$2.3m $2.5m $8.6m $4.2m

Revenue $210m $210m $230m $183.5m

Net bank debt $19.1m $19.1m $17.2m $17.8m

As set out above, the EBIT and net debt performance

elements met the threshold targets and therefore £301,646,

representing 43% of the total bonus achievable (150% of

salary or £699,000), will be awarded to Steve Blair in July 2025.

Under the 2024 Remuneration Policy, any bonus paid in excess

of 50% of the total bonus achievable should be paid in shares

(under the 2022 APBP). As this threshold has not been met,

allof this bonus amount will be paid in cash.

CFO BONUS

Under the terms of Mark Fryer’s interim service agreement

with the Company, he is entitled to a bonus totalling £41,250,

payable in July 2025, subject to a set of deliverables as agreed

with the Board.

DPSP AND DRSP AWARDS (AUDITED INFORMATION)

Under the 2024 Remuneration Policy, share‑based awards for

Executive Directors in respect of the financial years 2024/25

and 2025/26 were replaced with VCP awards. There are no

DRSP awards currently held by any Directors or past Directors.

VCP awards were made to Neil Johnson and Steve Blair, but

it should be noted that Neil Johnson will not be eligible to

participate in any future DRSP grants.

CEO PAY – PAY RATIO METHODOLOGY

The table on page 75 discloses the ratio of the CEO’s pay

against the remuneration of the Group’s UK workforce in

2024/25. The ratios have been calculated in accordance with

“Option A” of the three methodologies provided under the

applicable regulations, which we believe to be the most

statistically appropriate approach. This data is presented

against the comparable, indicative, full‑time equivalent total

remuneration of those employees whose pay is ranked at the

25th percentile, median and 75th percentile in the Group’s

UK workforce. Where possible, employee pay was calculated

based on actual pay and benefits for the 12‑monthly payrolls

within the full financial year. Given the small size of the Group’s

UK workforce, we have adopted the following protocols to

avoid skewing the figures: if a role was maintained but the

individual(s) in such role changed, the figure provided in

respect of such role has been calculated on a pro‑rata basis

for the two or more relevant individuals; and, if there was

anew role or a role was eliminated, the figure provided was

calculated as an annualised rate for such role. It should be

noted that all the Group’s manufacturing operations and most

of its employees are located outside of the UK and therefore

do not fall within the reporting requirements.

CEO PAY – PAY RATIO DISTORTING EVENTS

IN 2023/24, 2021 AND 2020

The 2023/24 ratio was a blended ratio to reflect the period

from 15 February 2024 to 31 March 2024, when Steve Blair

was CEO (and paid below the rate received by Fariyal

Khanbabi). The 2021 and 2020 ratios were impacted by the

COVID‑19 pandemic and resulted in adjustments in the

Group Remuneration Policy to achieve a more equitable

outcome for all employees across the Group at a challenging

time for our employees, supply chain and markets. In 2020,

the impact was primarily the non‑payment of any variable

remuneration, and by the voluntary reduction in CEO base

pay across five months of the year by 20% (a progressive

COVID‑19 salary reduction policy under which the most

highly paid Executives in the Group voluntarily surrendered

a higher percentage of their salary), and by layered salary

reductions (with the reductions for employees declining in

percentage terms at lower pay thresholds). These voluntary

deductions have not been subsequently paid to the CEO

or any employee. In 2021 the impact was less marked (as all

elements of variable remuneration were paid), but the annual

incremental pay review was deferred for those Executives

on the highest salaries until 1 October 2021 (for employees

in our manufacturing operations the equivalent date was

1 May 2021).

Year

25th percentile

ratio

50th percentile

ratio

75th percentile

ratio

2024/25 16.4:1 6.7:1 3.1:1

2023/24 10.8:1 8.7:1 5.8:1

2022 8.2:1 6.3:1 3.7:1

2021 8.3:1 6.0:1 3.6:1

2020 11.7:1 7.7:1 5.6:1

2019 10.8:1 8.4:1 5.3:1

2024/25 Annual report on remuneration continued

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

DIRECTOR PAY – PERCENTAGE CHANGE IN THE

REMUNERATION OF THE DIRECTORS

The following table sets out the change in remuneration

paid to the Directors with continuity of service from 2023/24

to 2024/25 compared with the average percentage change

for employees as a whole. The above notes in respect of

comparison of pay ratio calculations apply. The main benefits

provided include healthcare, life insurance and car allowance.

There has been no change in the level of benefits provided

to Group employees. The salary and benefits changes have

been calculated based on the 12‑month period ending

31 March 2025.

% change 2023/24–2024/25

CEO CFO

Non-

Executive

Directors

Group

employees

Salary – – 3% 3%

Bonus – – – –

Benefits – – – –

1 Calculation relates to Carolyn Zhang who was the CFO as at the date of implementation

of 2024/25 Group salary increases.

RELATIVE IMPORTANCE OF SPEND ON PAY

The table below shows the total amount paid by the Company

to its employees (excluding severance costs) foreach

of 2023/24 and 2024/25 relative to the total amount of

distributions in each year.

Spend on pay Distributions

2024/25 £33.6m –

2023/24

£44.0m –

1 Based on a 15‑month financial period.

PERFORMANCE GRAPH AND TABLE

The graph below sets out the Company’s TSR performance

over the past 10 years relative to the FTSE 250 Mid Index

(excluding investment trusts), the FTSE SmallCap Index

(excluding investment trusts) and the FTSE All Share

Electronic & Electrical Equipment Index, indices of which

Dialight has been a constituent during the period.

2024/25 Annual report on remuneration continued

Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 25Mar 24Mar 23Mar 17Mar 15 Mar 16

300

250

200

150

100

Dialight FTSE 250 Index (exd. investment trusts) FTSE SmallCap Index (exd. investment trusts) FTSE All Share Electronics & Electronical Equipment Index

Source: Datastream

TOTAL CEO REMUNERATION

The table below sets out the “single figure” of total remuneration of the CEO over the past 10 years.

2016 2017 2018 2019 2020 2021 2022

2023/24

(12‑month

comparator)

2023/24

(actual)

2024/25

(12‑month)

M Sutsko M Sutsko M Rapp

M Rapp

F Khanbabi

F Khanbabi F Khanbabi

F Khanbabi

S Blair

F Khanbabi

S Blair

Total remuneration (£’000) £1,182 £602 £605 £573 £447 £911 £507 £531 £850 £517

Bonus outcome (% of

maximum)

74% – – – – 62.5% – – – 43%

PSP vesting outcome

(%ofmaximum)

– – – – – – – – – –

1 M Rapp to 9 August, F Khanbabi from 10 August.

2 F Khanbabi as Interim CEO to 4 March and as permanent CEO from 5 March.

3 2023/24 was a 15‑month reporting period – the actual CEO “single figure” data for the 15‑month period is shown in the right‑hand column – with a 12‑month comparator shown in the

adjacent column.

4 F Khanbabi to 15 February 2024, S Blair from 15 February 2024.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

VCP AWARDS MADE IN 2024/25

VCPs were awarded to Neil Johnson and Steve Blair as set

out below. In accordance with the plan rules, participants

are eligible for a share in a pool of excess shareholder value

created over three and four‑year performance periods ending

31 March 2027 and 31 March 2028. The total pool is calculated

as 7.5% of value created through share price growth, plus

dividends in excess of 350p per share.

Each performance period accounts for 50% of the total award.

Participants receive units in the value pool, which convert

toshares or nil‑cost options upon vesting. Vested shares

(netof tax) must be retained for five years from the date

the performance period commenced (1 April 2024),

i.e.until 31 March 2029.

Awards are capped at 3% of the Company’s shares in issue.

No awards will be granted under the Deferred Restricted

Share Plan (‘DRSP’) until 2026, with vesting from 2029 onwards.

There are no good leaver provisions during the first 24 months

of the plan. Both the Chair and CEO acquired £150,000 of

Dialight shares by 31 March 2025 in order to have qualified

forVCP payouts.

Director

Neil Johnson Steve Blair

Plan VCP VCP

% of VCP pool 34% 34%

Nature of interest Nil‑cost option Nil‑cost option

Number of units awarded 335 335

Exercise price per share n/a n/a

Date of grant of award 19 March 2025 19 March 2025

Date of end of performance period 50% on or immediately following

31 March 2027

50% on or immediately following

31 March 2028

50% on or immediately following

31 March 2027

50% on or immediately following

31 March 2028

Outcome Pending Pending

PAYMENTS TO PAST DIRECTORS OR FOR LOSS

OFOFFICE (AUDITED INFORMATION)

Carolyn Zhang resigned as a Director on 11 November 2024.

Carolyn was paid $200,000 in lieu of notice in 13 bi‑weekly

instalments of $15,000, together with a payment of $30,000

for accrued and untaken holiday. No other exit or other

termination payments were made to her.

2024/25 Annual report on remuneration continued

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Implementation of the remuneration policy for 2025/26

2025/26: EXECUTIVE DIRECTOR SALARIES,

PENSIONSAND BENEFITS

A new 2024 Remuneration Policy was approved by

shareholders at the 2024 AGM in September 2024.

Remuneration across FY2024/25 complied with the 2024 Policy

and its predecessor (as applicable).

Mark Fryer has been appointed as Group CFO on a

permanent basis with effect from 1 May 2025 on a salary of

£300,000. Prior to that, including for the first three months of

FY2025/26, he was on an interim contract. His remuneration

onappointment as full‑time CFO was set by the Remuneration

Committee following receipt of benchmarking advice from

Mercer Limited. Following a review by the Remuneration

Committee, Steve Blair will receive an annual salary increase

effective from 1 July 2025 of 3% (in line with the average

increases applied to the wider workforce).

2025/26: CHAIR FEE

On 20 March 2025, Neil Johnson was issued with a new

Executive Chair service agreement as a result of the award

of units under the Dialight Value Creation Plan (VCP). At this

time, it was agreed that the Chair’s fees would be kept under

review. Following receipt of benchmarking advice from Mercer

and a review by the Remuneration Committee, Neil Johnson’s

Chair fee will reduce to £200,000 from 1 October 2025.

2025/26: APBP

The 2025/26 APBP bonus scheme for Executive Directors will

be in line with that set out in the 2024 Policy. In respect of the

2025/26 reporting period, the following APBP performance

metrics have been set with no element of the bonus apportioned

to individual targets, to reflect the primacy of these three‑

performance metrics): 30% against a cash conversion metric

(for which a net bank debt target is used); 30% against an EBIT

metric and, 40% against a revenue metric. Any bonus payable

in excess of target performance (50% ofthe bonus opportunity)

will be paid in shares. Of such shares, 50% will vest after two

years from award date and 50% after three years from award

date. Any shares vesting will have to be retained until such time

as the recipient meets theapplicable shareholding guidelines.

2025/26: VCP AND DRSP

In line with assurances given on the introduction of the VCP,

no share scheme awards for Executive Directors under the

DRSP will be made in 2025/26. The VCP award made to Steve

Blair on 19 March 2025 was the full amount of VCP awards

that can be made to him, and he will receive no further

share‑based awards until he becomes eligible for DRSP

awards in the 2026/27 financial year. It is envisaged that a VCP

award will be made to Mark Fryer during the 2025/26 financial

year, on the basis set out in the 2024 Policy. Further details on

the VCP are set out in page 65.

Type of

award Award date

Number at

01.04.24

Awarded

in year

Vested

in year

Exercised

in year

Lapsed

in year

Number at

31.03.25

Exercise

price

Earliest vesting/exercise

date Expiry date

Neil

Johnson

VCP VCP% 19 March 2025 – 34% – – – 335 n/a 50% 1 April 2027

50% 1 April 2028

50% 1 April 2037

50% 1 April 2038

Total – 34% – – – 335

Steve Blair

VCP VCP% 19 March 2025 – 34% – – – 335 n/a 50% 1 April 2027

50% 1 April 2028

50% 1 April 2037

50% 1 April 2038

Total – 34% – – – 335

Mark Fryer

VCP VCP% n/a – – – – – – n/a n/a n/a

Total – – – – – –

Notes:

Participants will be eligible for a share in a pool of excess value created over three and four‑year periods. The total pool will be calculated as 7.5% of value created through share price growth

plus dividends (‘TSR’) in excess of 350p vs a four‑week average share price ending 1 April of approximately 166p; i.e. growth of approximately 110%.

The award will have two independent three and four‑year performance measurement periods (1 April 2024 to 31 March 2027 and 1 April 2024 to 31 March 2028). Each period will determine

50% ofthe award, i.e. 3.75% of value created will apply to each period.

A three‑month average opening and closing share price will be used to measure value creation for the pool. Awards will be granted as a number of units in the pool. At the end of each

performance period, units will be converted into an award of shares/nil cost options with participants required to hold onto their vested shares after any sales required to settle tax and

withholdings on vesting for a period of five years from grant, in line with the provisions of the Code and market best practice. To avoid excessive payouts and shareholder dilution, the total

value of the pool for all participants will be capped at 3% of shares in issue. If the aggregate value of the pool exceeds this cap, then awards will be scaled‑back pro‑rata on the same basis for

all participants. The implication is that the slope of the payout curve reduces once the share price exceeds 583p.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

EXECUTIVE DIRECTORS’ SHAREHOLDING GUIDELINES

Executive Directors are required (under the 2024 Policy)

to accumulate and maintain a holding of Dialight shares

equivalent in value to 200% of base salary and are required to

retain all net of tax VCP, APBP and DRSP share vestings until

the guidelines have been met. All Dialight shares, whether

purchased on the open market or received through vestings

and/or exercises under the various Dialight share plans, are

included in the relevant calculation. The Dialight share price

used to value a holding for the purposes of the guidelines

will be the higher of: (a) the prevailing price on the date that

the holding is valued (on the last working day of the relevant

financial year); and (b) the acquisition price (i.e. the price on

the date on which the shares were acquired/awards vested).

The Remuneration Committee is aware of the significance

of Executive Directors having a personal holding of shares

in Dialight (to align management’s interests with those

of the shareholders) and acted to further strengthen the

shareholding guidelines under the terms of the 2024 Policy.

Steve Blair assumed his Executive Director role in February

2024, and Mark Fryer took up his permanent Executive

Director role on 1 May 2025. Accordingly, the Remuneration

Committee recognises that both Executive Directors will take

time to build up their shareholdings. The holdings of ordinary

shares in the Company as at 31 March 2025 by the Executive

Directors are shown below.

Implementation of the remuneration policy for 2025/26 continued

TOTAL SHAREHOLDING OF DIRECTORS (AUDITED INFORMATION)

The table below shows the holdings of ordinary shares in the Company as at 31 March 2025 by each of the Directors.

Beneficially held shares

Year

Ordinary shares

at 31 March 2024

Ordinary shares

at 31 March 2025

Steve Blair

2, 3

31,446 88,483

Mark Fryer

n/a –

Neil Johnson

96,393 97,393

Lynn Brubaker 25,157 25,157

Nigel Lingwood 11,289 11,289

John Lincoln n/a –

1 Some of these shares may be held through nominees.

2 Both Steve Blair and Mark Fryer are required to build up a shareholding equivalent in value to 200% of their base salary within five years of their appointment.

3 Both Neil Johnson and Steve Blair were required to purchase £150,000 worth of Dialight shares by 31 March 2025 in order to be eligible for VCP payouts.

DIRECTORS’ SERVICE AGREEMENTS AND LETTERS OF APPOINTMENT

The dates on which Directors’ initial service agreements/letters of appointment commenced and the expiry dates as at 31 March

2025 are as follows.

Directors Commencement date Expiry date of current employment/service agreement or letter of appointment

Steve Blair 15 February 2024 The contract is terminable by the Company or the Director on 12 months’ notice.

Mark Fryer 6 January 2025

1 May 2025

Letter of interim engagement was for an initial period of six months (ending on 30

June 2025). This was superseded by Mark’s permanent appointment as CFO effective

from 1 May 2025 with his contract terminable by the Company or the Director on six

months’notice.

Neil Johnson 17 May 2023

19 March 2025

Letter of appointment was for an initial term of three years. This was superseded by

Neil’s appointment as Executive Chair from 19 March 2025 with his contract terminable

by the Company or the Director on three months’ notice.

Lynn Brubaker 1 July 2023 Letter of appointment was for an initial term of three years (ending on 30 June 2026).

Nigel Lingwood 1 November 2022 Letter of appointment was for an initial term of three years (ending on 31 October

2025). Nigel will be standing for re‑election at the 2025 AGM, and it is intended that his

engagement will be extended for a further three‑year period.

John Lincoln 1 August 2024 Letter of appointment was for an initial term of three years (ending on 31 July 2027).

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Directors’ report

The Directors present their report and the audited

consolidated financial statements of Dialight plc for the

12‑month period ended 31 March 2025.

ACTIVITIES

Dialight plc is a holding company. Our businesses by sector

and their activities are set out on pages 141 to 142.

ORDINARY DIVIDENDS

The Board is not proposing any final dividend payment for

2024/25 (2023/24: nil). The Group has a clear capital allocation

discipline and is committed to returning future excess funds

to shareholders via future dividend or share repurchase.

The Company has established an employee benefit trust,

the Dialight Employee Share Ownership Plan Trust (‘EBT’),

in respect of which all employees of the Group, including

Executive Directors, are potential beneficiaries. The EBT

held 417,307 shares in the Company as at 31 March 2025

(2023/24: 192,675). It is likely that it will acquire further shares

in the Company in 2025/26 in anticipation of future vestings

under the 2023 DRSP and the 2014 DPSP. It is anticipated that

the EBT will waive any right to dividends payable in respect

of any Dialight shares held by the EBT. The Trustees of the

EBT retain the voting rights over the shares held in the EBT

and may exercise these rights independent of the interests

ofthe Company.

SHARE CAPITAL AND CAPITAL STRUCTURE

Details of the share capital, together with details of the

movements in the share capital during the year, are shown in

note 11 to the Company financial statements. The Company

has one class of ordinary share which carries no right to fixed

income. Each share carries the right to one vote at general

meetings of the Company. There are no other classes of

share capital. There are no specific restrictions on the size of

a holding nor on the transfer of shares, with both governed

by the general provisions of the Articles of Association (the

‘Articles’) and prevailing legislation. No person has any special

rights of control over the Company’s share capital and all

issued shares are fully paid. No purchases by the Company

of its own shares were made in 2024/25 under the authority

granted at the 2024 Annual General Meeting (‘AGM’).

RIGHTS AND OBLIGATIONS OF ORDINARY SHARES

Holders of ordinary shares are entitled to attend and speak

at general meetings of the Company and to appoint one

or more proxies or, if the holder of shares is a corporation,

one or more corporate representatives. On a show of hands,

each holder of ordinary shares who (being an individual) is

present in person or (being a corporation) is present by a duly

appointed corporate representative, not themselves being a

member, shall have one vote, as shall proxies (unless they are

appointed by more than one holder, in which case they may

vote both for and against the resolution in accordance with

the holders’ instructions).

On a poll, every holder of ordinary shares present in person

or by proxy shall have one vote for every share of which they

are the holder. Electronic and paper proxy appointments and

voting instructions must be received not later than 48 hours

before the meeting. A holder of ordinary shares can lose the

entitlement to vote at general meetings where that holder has

been served with a disclosure notice and has failed to provide

the Company with information concerning interests held in

those shares. Except as set out above and as permitted under

applicable statutes, there are no limitations on voting rights of

holders of a given percentage, number of votes or deadlines

for exercising voting rights.

RESTRICTIONS ON TRANSFER OF SHARES

There are no specific restrictions on the transfer of the

Company’s shares, although the Articles contain provisions

whereby Directors may refuse to register a transfer of a

certificated share which is not fully paid. There are no other

restrictions on the transfer of ordinary shares in the Company

except certain restrictions which may from time to time be

imposed by laws and regulations (for example, insider trading

laws). The Directors are not aware of any agreements between

holders of the Company’s shares that may result in restrictions

on the transfer of securities or on voting rights.

SUBSTANTIAL INTERESTS IN SHARES

As at 23 June 2025, the Company had been notified, in

accordance with DTR chapter five, of the following voting

rights as a shareholder of the Company.

Shareholder Holding

Voting rights

Odyssean Capital 6,875,000 17.10

Generation Investment

Management LLP

6,532,248 16.25

Aberforth Partners LLP 6,218,568 15.47

Schroder Investment Management 5,061,963 12.59

The Wellcome Trust Ltd 3,698,639 9.20

Sterling Strategic Value Fund S.A.,

SICAV‑RAIF

3,342,517 8.31

Blackmoor Investment Partners 1,610,263 4.01

EMPLOYEE SHARE PLANS

Details of employee share plans are set out in note 16 to the

consolidated financial statements. The Company currently

has in place three share plans: the 2023 Restricted Share Plan

(2023 DRSP) (which succeeded the 2014 Dialight Performance

Share Plan (2014 DPSP), but under which granted options

will continue to vest for their respective vesting periods), the

Annual Performance Bonus Plan (‘APBP’) and the 2024 Value

Creation Plan (‘VCP’). Further details of these share plans are

provided in the report of the Remuneration Committee.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Directors’ report continued

APPOINTMENT AND REPLACEMENT OF DIRECTORS

The appointment and replacement of Directors of the

Company is governed by the Company’s Articles, the UK

Corporate Governance Code, the Companies Act 2006

and related legislation. Directors can be appointed by the

Company by ordinary resolution at a general meeting or

by the Board. If a Director is appointed by the Board, such

Director will hold office until the next AGM and shall then be

eligible subject to Board recommendation, for election at that

meeting. In accordance with Provision 18 of the 2024 Code

each of the Directors, being eligible, will offer themselves

for election or re‑election at the 2025 AGM (subject to any

retirements). The Company can remove a Director from office,

either by passing a special resolution or by notice being given

by all the other Directors. The Articles may be amended by

special resolution of the shareholders.

POWERS OF DIRECTORS

The powers of Directors are described in the Articles and

in the Matters Reserved to the Board, copies of which are

available on the Company’s website at www.dialight.com/ir,

and are summarised in the Corporate Governance report on

page 46.

DIRECTORS’ INDEMNITIES

Qualifying third‑party indemnity provisions (as defined

by s234 of the Companies Act 2006) were in force in the

reporting period for the benefit of the then Directors of the

Company and the then Directors of certain subsidiaries of the

Company in relation to certain losses and liabilities which they

may incur (or have incurred) in connection with their duties,

powers and/or office. The Group also maintains Directors’ and

Officers’ liability insurance which gives appropriate cover for

legal action brought against any Directors of the Company

and/or its subsidiaries.

ESSENTIAL CONTRACTS AND CHANGE OF CONTROL

The Directors are not aware of there being any significant

agreements that contain any material change of control

provisions to which the Company is a party, other than in

respect of the five‑year unsecured multi‑currency revolving

credit facility with HSBC Bank plc (‘HSBC’), which was entered

into on 21 July 2022 for an initial duration of four years

expiring 21 July 2026 (recently extended to 21 July 2027).

Under the terms of this facility, and in the event of a change

of control of the Company, HSBC can withdraw funding and

all outstanding loans; accrued interests and other amounts

due and owing become payable within 20 business days of

the change.

ALLOTMENT AUTHORITY

Under the Companies Act 2006, the Directors may only

allot shares if authorised by shareholders to do so. At the

2025 AGM, an ordinary resolution will be proposed which,

if passed, will authorise the Directors to allot and issue

new shares up to an aggregate nominal value that is in line

with Investment Association guidelines. In accordance with

the Directors’ stated intention to seek annual renewal, an

authority granted at the 2024 AGM will have expired by the

time of the 2025 AGM. Passing this resolution will give the

Directors flexibility to act in the best interests of shareholders,

when opportunities arise, by issuing new shares.

The Companies Act 2006 also requires that, if the Company

issues new shares for cash or sells any treasury shares, it must

first offer them to existing shareholders in proportion to their

current holdings. At the 2025 AGM, a special resolution will be

proposed which, if passed, will authorise the Directors to issue

a limited number of shares for cash and/or sell treasury shares

without offering them to shareholders first. The authority is

for an aggregate nominal amount of up to 10% of the issued

share capital of the Company as at the relevant date set out in

the notice of the 2025 AGM, of which 5% of the issued share

capital can only be issued for the purposes of financing an

acquisition or other capital investment. While it believes that it

is entirely appropriate (not least for administrative purposes),

and in line with good corporate practice, to seek the

allotments that will be set out in the notes accompanying the

resolutions to be considered at the 2024 AGM (the ‘Notes’),

it has again provided additional assurance, in the Notes, for

shareholders with regard to the circumstances under which

such powers may be exercised. In particular, the Company

notes that in excess of 80% of voting shareholders supported

the allotment resolutions at the 2024 AGM.

AUDITOR

Each of the persons who is a Director at the date of approval

of this annual report and accounts confirms that:

• so far as the Director is aware, there is no relevant audit

information of which the Company’s auditor is unaware; and

• the Director has taken all the steps that he/she ought to

have taken as a Director in order to make herself/himself

aware of any relevant audit information and to establish that

the Company’s auditor is aware of that information.

This confirmation is given and should be interpreted

in accordance with the provisions of section 418 of the

Companies Act 2006. The Board is recommending to

shareholders the re‑appointment of Grant Thornton UK LLP

as auditor of the Company and a resolution authorising the

Directors to set its remuneration will be proposed at the

forthcoming AGM. Grant Thornton was first appointed as the

Company’s auditor in 2023, following a competitive tender

exercise in 2022.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Directors’ report continued

AGM

The Company’s AGM will be held on 1 September 2025.

The Notice of Meeting, together with an explanation of the

proposed resolutions, is enclosed with this annual report and

accounts and is also available on the Company’s website at

www.dialight.com/ir.

SCOPE OF THE REPORTING IN THIS ANNUAL REPORT

AND ACCOUNTS

The Directors present their annual report on the affairs of the

Group, together with the financial statements and Auditor’s

report, for the 12‑month period ended 31 March 2025.

The Corporate Governance report set out on pages 36 to 83,

which includes details of the Directors who served during the

year, forms part of this report.

There have been no significant events since the balance

sheet date, other than the multi‑currency revolving credit

facility with HSBC which was extended on 5 June 2025 to

21 July 2027 on the same terms as the original revolving credit

facility agreement.

An indication of the likely future developments in the

business of the Company and details of research and

development activities are included in the Strategic

report on pages 04 to 34. Details related to employee

matters are in the “Ourpeople” section on pages 15 to 17.

Environmental matters, including greenhouse gas emissions

reporting, are included within the Non‑financial and

sustainability report on pages 19 to 21. Information about

the use of financial instruments by the Company and its

subsidiaries is given in note 24 to the financial statements.

The Company made no political donations during the year.

For the purposes of compliance with DTR R(2) and DTR 4.1.8

R, the required content of the management report can be

found in the Strategic report and these regulatory disclosures,

including the sections of the annual report and accounts

incorporated by reference.

By order of the Board.

Laura Walker

Company Secretary

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Directors’ responsibility statement

Directors are responsible for preparing the annual report

(including the Directors’ report, the Strategic report,

the Directors’ Remuneration report and the Corporate

Governance statement) and the financial statements of

the Group and the Parent Company, in accordance with

applicable law and regulations.

Company law requires the Directors to prepare Group and

Parent Company financial statements for each financial year.

Under the law they are required to prepare the Group financial

statements in accordance with UK‑adopted international

accounting standards and applicable law and have elected

to prepare the Parent Company financial statements in

accordance with UK accounting standards and applicable

law, including FRS 102 (the Financial Reporting Standard

applicable in the UK and Republic of Ireland). Directors must

be satisfied that the financial statements give a true and fair

view of the state of affairs of the Group and Parent Company

and of the Group’s profit or loss for that period.

In preparing each of the Group and Parent Company financial

statements, the Directors are required to:

• select suitable accounting policies and to then apply

them consistently;

• make judgements and accounting estimates that are

reasonable, relevant, reliable, and prudent;

• for the Group financial statements, state whether they

have been prepared in accordance with the UK‑adopted

international accounting standards;

• for the Parent Company financial statements, state whether

applicable UK accounting standards have been followed,

subject to any material departures disclosed and explained

in the Parent Company financial statements;

• assess the Group and Parent Company ability to continue as

a going concern, disclosing, as applicable, matters related

to going concern; and

• use the going concern basis of accounting unless they

either intend to liquidate the Group or the Parent Company

or to cease operations or have no realistic alternative but to

do so.

The Directors are responsible for keeping adequate

accounting records that are sufficient to show and explain the

Group and Parent Company’s transactions and disclose with

reasonable accuracy at any time the financial position of the

Group and Parent Company and enable them to ensure that

its financial statements comply with the CA 2006. They are

responsible for such internal control as they determine is

necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to

fraud or error, and have general responsibility for taking

such steps as are reasonably open to them to safeguard the

assets of the Group and to prevent and detect fraud and

other irregularities.

The Directors are responsible for preparing the annual

report in accordance with applicable law and regulations.

The Directors consider the annual report and the financial

statements, taken as a whole, provides the information

necessary to assess the Company’s performance, business

model and strategy and is fair, balanced and understandable.

The Directors are responsible for the maintenance and

integrity of the corporate and financial information included

on the Company’s website (www.dialight.com), on which this

annual report and accounts are published. Legislation in the

UK governing the preparation and publication of financial

statements may differ from legislation in other jurisdictions.

RESPONSIBILITY STATEMENT OF THE DIRECTORS

INRESPECT OF THE ANNUAL FINANCIAL REPORT

Each of the Directors, at the date of approval of this annual

report and accounts, confirms that to the best of her/

his knowledge:

• the Group and Parent Company financial statements,

prepared in accordance with the applicable set of

accounting standards, give a true and fair view of the

assets, liabilities, financial position and profit or loss of the

Company and the undertakings included in consolidation

taken as a whole; and

• the Strategic report and Corporate Governance reports

include a fair review of the development and performance

of the business and the position of the issuer and the

undertakings included in the in the consolidation taken

as a whole, together with a description of the principal risks

and uncertainties that they face.

On behalf of the Board

Steve Blair

Group Chief Executive Officer

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

FINANCIAL

STATEMENTS

Independent auditor's report to the 85

members of Dialight plc

Consolidated income statement 98

Consolidated statement of comprehensive income 99

Consolidated statement of changes in equity 100

Consolidated statement of financial position 101

Consolidated statement of cash flows 102

Notes to the consolidated financial statements 103

Company balance sheet (prepared under FRS 102) 143

Company statement of changes in equity 144

Notes to the company financial statements 145

Dialight plc Annual Report and Accounts 2025

Business overview Strategic Report Governance Financial Statements Other information

Independent auditor’s report to the members of Dialight plc

OPINION

Our opinion on the financial statements is unmodified

We have audited the financial statements of Dialight plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year

ended 31 March 2025, which comprise the Consolidated income statement, the Consolidated statement of comprehensive

income, the Consolidated statement of financial position, the Consolidated statement of changes in equity, the Consolidated

statement of cash flows, the notes to the consolidated financial statements, including significant accounting policies, the

Company balance sheet, the Company statement of changes in equity and the notes to the company financial statements,

including significant accounting policies. The financial reporting framework that has been applied in the preparation of the

Group financial statements is applicable law and UK-adopted international accounting standards. The financial reporting

framework that has been applied in the preparation of the Parent Company financial statements is applicable law and United

Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in

the UK and Republic of Ireland’ (United Kingdom Generally Accepted Accounting Practice).

In our opinion:

• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as at

31 March 2025 and of the Group’s loss for the year then ended;

• the Group financial statements have been properly prepared in accordance with UK-adopted international

accounting standards;

• the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally

Accepted Accounting Practice; and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

BASIS FOR OPINION

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law.

Our responsibilities under those standards are further described in the ‘Auditor’s responsibilities for the audit of the financial

statements’ section of our report. We are independent of the Group and the Parent Company in accordance with the ethical

requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied

to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

MATERIAL UNCERTAINTY RELATED TO GOING CONCERN

We draw attention to the going concern paragraph in note 2(b) in the financial statements which indicates that the directors

believe the Group will be able to deliver on its plan to improve margins through cost reduction and automation programmes

within the next 12 months. Whilst the directors believe that the Group will deliver on its plan, the directors recognise that the

results in recent years have fluctuated from the forecast. In the reverse stress test, whilst revenues are forecast to decrease,

gross profit margin is forecast to increase by 1.3% between the year ended 31 March 2025 to the quarter ended 30 June 2026.

As a result, the Group is required to increase gross profit margin in excess of this level in order to avoid breaching covenants.

The directors have therefore concluded that there is a plausible risk of a covenant breach within the reverse stress test scenario.

As stated in note 2(b), these events or conditions, along with the other matters as set forth in note 2(b), indicate that a material

uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not

modified in respect of this matter.

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the

preparation of the financial statements is appropriate.

OUR EVALUATION OF MANAGEMENT’S ASSESSMENT OF THE ENTITY’S

ABILITY TO CONTINUE AS A GOING CONCERN

Our evaluation of the directors’ assessment of the Group’s and the Parent Company’s ability to continue to adopt the going

concern basis of accounting included obtaining management’s going concern assessment covering the period to 30 June 2026

and performing the following procedures:

• Obtaining an understanding of the key controls over management’s going concern assessment including those over the inputs;

• Obtaining management’s forecasts and performing arithmetical and model integrity checks on the forecast cash flows;

• Challenging management’s key trading, working capital and cash flow assumptions made within the forecasts by comparing

management’s forecasted position against their historic position;

• Obtaining management’s downside scenarios (including management’s downside case and reverse stress test) which

reflect management’s assessment of uncertainties. We evaluated the assumptions during the forecast period under each

ofthese scenarios;

• Assessing the accuracy of management’s past forecasting for the previous two financial years by comparing management’s

forecasts to actual results for those years and considering the impact on the plausibility of the going concern forecast;

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

• Checking the latest available results for the first and second months of the following financial period to consider how the latest

performance has tracked against budget;

• Evaluating management’s assessment on whether there are any breaches in covenants in the period;

• Evaluating the completeness and accuracy of the directors’ assessment of the material uncertainties by assessing the

disclosure against information available in the public domain or otherwise, including reading board minutes, and making

inquiries of management, the finance team, legal counsel and the board of directors. Considering and inquiring whether

management and those charged with governance are aware of events or conditions beyond the period of management’s

assessment that may cast significant doubt on the entity’s ability to continue as a going concern;

• Considering availability of borrowing facilities throughout the assessment period and beyond, including corroborating the

extension of the facilities with HSBC to July 2027; and

• Ensuring that the forecasts include the expected outflows in respect of the Sanmina settlement agreement and assessing the

likelihood of increased payments being required through a breach of the agreement or an increase in market capitalisation of

the Group.

OUR RESPONSIBILITIES

We are responsible for concluding on the appropriateness of the directors’ use of the going concern basis of accounting and,

based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast

significant doubt on the Group’s and the Parent Company’s ability to continue as a going concern. If we conclude that a material

uncertainty exists, we are required to draw attention in our report to the related disclosures in the financial statements or, if such

disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit evidence obtained up to

the date of our report. However, future events or conditions may cause the Group or the Parent Company to cease to continue

as a going concern. The responsibilities of the directors with respect to going concern are described in the “Responsibilities of

directors for the financial statements” section of this report.

REPORTING UNDER THE UK CORPORATE GOVERNANCE CODE

Except for the material uncertainty identified above, in relation to the Group’s and the Parent Company’s reporting on how they

have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’

statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of

accounting and the directors’ identification in the financial statements of any material uncertainties related to the entity’s ability to

continue to do so over a period of at least twelve months from the date of approval of the financial statements.

OUR APPROACH TO THE AUDIT

Overview of our audit approach

Overall materiality:

Group: $1.26m, which represents 0.7% of the Group’s total revenue.

Parent Company: £0.58m, which represents 1% of the Parent Company’s total assets.

Key audit matters were identified as:

• Going concern (Group and Parent Company) (same as previous period);

• Valuation of inventory in respect of Traffic Business (Group) (same as previous period,

however the risk is pinpointed to inventory in the Traffic Business in the current year); and

• Valuation of investments and intercompany loans (Parent Company) (same as

previous period).

Our auditor’s report in the period ended 31 March 2024 included three key audit matters

that have not been reported as key audit matters in our current year’s report. These relate to

the following:

• Valuation and allocation of goodwill and other intangible assets. This is no longer

considered to be a key audit matter following the impairment of all Goodwill in the

prior period.

• Risk of fraud in revenue recognition. This is no longer considered to be a key audit matter

due to the low level of complexity observed in the revenue cycle in the current year audit.

• Management override of controls. This is no longer considered to be a key audit matter as

significant findings identified in the prior period have not recurred.

We have performed audit of the financial information of the component using component

materiality (full scope audit) on two components and audit of one or more account balances,

classes of transactions or disclosures of the component (specific audit procedures) on a

further three components. We performed analytical procedures at group level (analytical

procedures) on the remaining components of the group.

Independent auditor’s report to the members of Dialight plc

continued

Materiality Key audit

matters

Scoping

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

KEY AUDIT MATTERS

Key audit matters are those matters that, in our professional

judgement, were of most significance in our audit of the

financial statements of the current period and include the

most significant assessed risks of material misstatement

(whether or not due to fraud) that we identified. These matters

included those that had the greatest effect on: the overall

audit strategy; the allocation of resources in the audit; and

directing the efforts of the engagement team. These matters

were addressed in the context of our audit of the financial

statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

In the graph below, we have presented the key audit matters

and significant risks relevant to the audit. This is not a

complete list of all risks identified by our audit.

Description

Disclosures

Audit response

Our results

KAM

POTENTIAL

FINANCIAL

STATEMENT

IMPACT

EXTENT OF MANAGEMENT JUDGEMENT

High

Low

Low High

Key audit matter (KAM) Significant risk

Going Concern

Occurrence

of Revenue

Valuation of Inventory

in respect of the

Traffic Business

Valuation of Parent

Company investments

andintercompany loans

Management

override of controls

Accuracy of Inventory

overhead absorption

Valuation of tangible

andintangible assets

Accuracy and valuation

ofDefined benefit pension

scheme liabilities

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

In addition to the matter described in the Material uncertainty related to going concern section, we have determined the

matter(s) described below to be the key audit matter(s) to be communicated in our report.

Key Audit Matter – Group How our scope addressed the matter – Group

Valuation of inventory in respect of the Traffic Business

We identified inventory as one of the most significant

assessed risks of material misstatement due to fraud and

error. This key audit matter is pinpointed to the valuation of

the inventory relating to the Traffic Business.

The Group operates in an industry whereby development in

product technology may result in inventory becoming slow

moving or obsolete. Levels of older or longer dated inventory

may indicate an element of slow moving or obsolete inventory

that requires a provision.

We identified a risk of fraud that management could generate

improved results through provision manipulation or make

inappropriate judgements which cause the provision to be

materially inappropriate.

We also identified a risk of error as the underlying provision

computation involves management judgement.

At 31 March 2025, the Group held $52.5m (2024: $55.7m)

of gross inventory on its balance sheet of which $3.8m

(2024:$3.0m) related to the Traffic Business which the Group

no longer operates following the sale to Leotek in the year.

This inventory was fully provided for at the end of the prior

period as it was not expected to be saleable.

In responding to the key audit matter, we performed the

following audit procedures:

• Gaining an understanding of the Group’s processes

and controls with respect to inventory as part of overall

understanding of the entity and business process;

• Reviewing and assessing management’s accounting policy to

ensure that is line with corresponding IFRS standards and no

indicators of management bias;

• Obtaining management’s provision calculation and testing

the mathematical accuracy;

• Assessing and challenging management’s model, and the

assumptions underpinning it, including obtaining purchase

order information for the Traffic inventory held;

• Assessing the underlying data used in management’s

assessment and performing a recalculation based on

management’s methodology; and

• Assessing the quality, completeness and transparency of

disclosures in the financial statements.

Relevant disclosures in the Annual Report

• Audit Committee report: Key judgements and financial

reporting matters

• Financial statements: Note 2(c) Estimates regarding the

inventory reserve, Note 4 Significant accounting policies,

Note 17 Inventories

Our results

As a result of our audit challenge, management recorded a

material adjustment to reduce the inventory provision in respect

of the Traffic inventory. We have not identified any further

material misstatements in the valuation of the provision relating

to the Traffic inventory.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

Key Audit Matter – Parent company How our scope addressed the matter – Parent company

Valuation of Parent Company investments

andintercompany loans

We identified valuation of parent Company investments and

intercompany loans as one of the most significant assessed

risks of material misstatement due to error. This is due to the

high degree of estimation uncertainty in determining the

recoverable amount of these balances.

Investments in subsidiaries of £9.9 million (2023: £11.7 million)

and intercompany loans to subsidiaries £27.1m (2024: £33.5m)

are reported in the Parent Company balance sheet at cost

less provision for impairment.

Investments and intercompany loans are tested for

impairment if impairment indicators exist. If such indicators

exist, the recoverable amounts of the investments in

subsidiaries are estimated in order to determine the extent

of the impairment loss, if any. Any such impairment loss is

recognised in the income statement.

Management’s assessment identified impairment indicators

for the investment in Dialight Europe Limited and the loan

with Dialight Penang Sdn. As a result, management have

recognised an impairment in investments of £2.0m, an

impairment for loans to subsidiaries of £5.6m and a bad debt

provision against amounts due from subsidiaries of £10.0m.

In responding to the key audit matter, we performed the

following audit procedures:

• Gaining an understanding of the Group’s processes and

controls with respect of the impairment assessment as part of

overall understanding of the entity and business process;

• Evaluating management’s assessment of whether there were

any other indicators of impairment;

• Assessing and challenging management’s impairment review,

including determining whether appropriate costs and cash

flows are included, and that these appropriately factor in

the current economic climate, and corroborate medium and

long-term growth assumptions to relevant evidence, such as

external market data;

• Using an auditor’s internal valuation expert to independently

determine a weighted average cost of capital (WACC),

to assess whether the WACC used by management, as

determined by their expert, is appropriate;

• Evaluating historical forecasting accuracy by comparing

results achieved in prior years to initial forecasts;

• Performing sensitivity analysis on the key assumptions,

including the forecasted cash flows, the long-term growth

rates and discount rates and assessing the impact on the

value-in-use calculation;

• Assessing and challenging management’s assessment of the

expected bad debt provision against amounts owed by group

undertakings; and

• Assessing the disclosures made in the financial statements

for completeness and accuracy in line with the accounting

standards and the Group’s accounting policies.

Relevant disclosures in the Annual Report

• Audit Committee report: Key judgements and financial

reporting matters

• Financial statements: Note 2 Significant accounting

policies, Note 5 Investments and Note 8 Debtors in the

Parent Company Financial statements.

Our results

We did not identify any material misstatement to impairment of

both investments and intercompany loans.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

OUR APPLICATION OF MATERIALITY

We apply the concept of materiality both in planning and performing the audit, and in evaluating the effect of identified

misstatements on the audit and of uncorrected misstatements, if any, on the financial statements and in forming the opinion

inthe auditor’s report.

Materiality was determined as follows:

Materiality measure Group Parent Company

Materiality for financial

statementsasa whole

We define materiality as the magnitude of misstatement in the financial statements that,

individually or in the aggregate, could reasonably be expected to influence the economic

decisions of the users of these financial statements. We use materiality in determining the

nature, timing and extent of our audit work.

Materiality threshold $1.26m which represents 0.7% of the Group’s

total revenue.

£0.58m which represents 1% of the Parent

Company’s total assets.

Significant judgements

made by auditorin

determining materiality

In determining materiality, we made the

following significant judgements:

• Total revenue was considered to be the

most appropriate benchmark because

this is a key performance indicator used

by the directors to report on the financial

performance of the Group;

• Total revenue has been less volatile than

reported profit in recent years and the

Group has reported a loss; and

• The measurement of 0.7% of revenue

is, in our view, appropriate given

user expectations and industry

benchmarking which results in a materiality

which is sufficient to identify any

material misstatements.

Materiality for the current year is higher than

the level that we determined for the period

ended 31 March 2024 as a result of an increase

in the benchmark percentage.

In determining materiality, we made the

following significant judgements:

• Total assets was considered to be the most

appropriate benchmark for the Parent

Company because, in our view, it is the most

reflective of the financial position of the Parent

Company and its nature of operations; and

• The measurement of 1% total assets is, in our

view, appropriate given user expectations

and industry benchmarking which results in

a materiality which is sufficient to identify any

material misstatements.

Materiality for the current year is lower than the

level that we determined for the year ended

31 March 2024 to reflect a reduction in the

Parent Company’s total assets.

Performance materiality

used todrivethe extent

ofour testing

We set performance materiality at an amount less than materiality for the financial statements

as a whole to reduce to an appropriately low level the probability that the aggregate of

uncorrected and undetected misstatements exceeds materiality for the financial statements

asa whole.

Performance

materiality threshold

$0.82m which is 65% of financial

statement materiality.

£0.38m which is 65% of financial

statement materiality.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

Materiality measure Group Parent Company

Significant judgements made

by auditorin determining

performance materiality

In determining performance materiality, we

made the following significant judgements:

• Our previous experience with the Group;

• Our assessment of prior year adjustments;

and

• Our risk assessment – we considered

control deficiencies previously identified

and the potential impact on the current

period’s audit when performing our risk

assessment procedures.

In determining component performance

materiality, we made the following

significant judgements:

• Extent of disaggregation of financial

information across components, including

the relative risk and size of a component to

the Group.

For each component in scope for our

Group audit, we allocated a performance

materiality that is less than our overall Group

performance materiality.

In determining performance materiality, we

made the following significant judgements:

• Our previous experience with the Company;

• Our assessment of prior year adjustments;

and

• Our risk assessment – we considered

control deficiencies previously identified

and the potential impact on the current

period’s audit when performing our risk

assessment procedures.

Specific materiality We determine specific materiality for one or more particular classes of transactions, account

balances or disclosures for which misstatements of lesser amounts than materiality for the

financial statements as a whole could reasonably be expected to influence the economic

decisions of users taken on the basis of the financial statements.

Specific materiality We determined a lower level of specific

materiality for the following areas:

• director’s remuneration; and

• related party transactions outside of the

normal course of business.

We determined a lower level of specific

materiality for the following areas:

• director’s remuneration; and

• related party transactions outside of the

normal course of business.

Communication of

misstatements to the

audit committee

We determine a threshold for reporting unadjusted differences to the audit committee.

Threshold

for communication

$0.06m (2024: $0.06m) which represents

5% of financial statement materiality,

and misstatements below that threshold

that, in our view, warrant reporting on

qualitative grounds.

£0.02m (2024: £0.02m) which represents

5% of financial statement materiality, and

misstatements below that threshold that, in our

view, warrant reporting on qualitative grounds.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

The graph below illustrates how performance materiality and the range of component performance materiality interacts with our

overall materiality and the threshold for communication to the audit committee.

Key

Group revenue $183.5m

FSM $1.26m

OVERALL MATERIALITY – GROUP

Key

Total assets £

52.3m

FSM

£0.58m

OVERALL MATERIALITY – PARENT

FSM

$1.26m

$0.82m

RoPM

$0.82m to $0.45m

TfC

$0.06m

FSM PM TfC

£0.58m

£0.38m

£0.02m

FSM: Financial statement materiality, PM: Performance materiality, RoPM: Range of performance materiality: range of

performance materiality at 5 components, TfC: Threshold for communication to the audit committee

AN OVERVIEW OF THE SCOPE OF OUR AUDIT

We performed a risk-based audit that requires an understanding of the Group’s and the Parent Company’s business and

inparticular matters related to:

Understanding the Group, its components, their environments,

anditssystemofinternalcontrolincludingcommoncontrols

The Group auditor obtained an understanding of the Group and its components, their environment, and its system of internal

control, including the nature and extent of common controls and centralised activities relevant to financial reporting, and

assessed the risks of material misstatement at the Group level.

Identifying components at which to perform audit procedures

We have determined the components at which to perform further audit procedures, by considering the following:

• components in scope for further audit procedures due to individually including a risk of material misstatement to the group

financial statements due to the component’s nature or circumstances.

• components in scope for further audit procedures due to the nature and size of assets, liabilities and transactions at the

component (being of financial significance to one or more scoped items that it is required to be in scope).

• components in scope for further audit procedures to obtain sufficient appropriate audit evidence for significant classes

oftransactions, account balances and disclosures, or for unpredictability.

Type of work to be performed on financial information of Parent Company and other components (including how it

addressed the key audit matters)

In order to address the audit risks identified during our planning procedures, the Group engagement team determined that the

following audit procedures were necessary:

• Full-scope audits on the financial statements of two components, being Dialight Corporation (US) and Dialight plc (Parent

Company). These full-scope audits included all of our work on the identified key audit matters described above. These two

components contributed 85% of the Group revenue and 86% of the Group absolute loss before taxation;

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

• Specific scope procedures were performed in respect of three components, Dialight Penang Sdn, Dialight ILS Australia and

Dialight Europe. This was in order to obtain sufficient appropriate audit evidence in respect of the financial statement line

items considered to be of financial significance; and

• We performed analytical procedures at group level over the remaining seven components.

Performance of our audit

In total, revenue coverage of full-scope audit and specified audit procedures equated to 85% of Group revenue and 86% of the

Group’s absolute loss before taxation.

Further audit procedures performed on components subject to specific scope may not have included testing of all significant

account balances of such components, but further audit procedures were performed on specific accounts within that

component that we, the Group auditor, considered had the potential for the greatest impact on the Group financial statements

either due to risk, size or coverage.

The components within the scope of further audit procedures accounted for the following percentages of the Group’s results,

including the key audit matters identified:

Audit approach No. of components % coverage total assets % coverage revenue % coverage LBT on absolute basis

Full-scope audit 2 74% 85% 86%

Specific scope audit 3 14% 0% 0%

Full-scope and specific

scope procedures

coverage 5 (2024: 5) 88% (2024: 83%) 85% (2024: 87%) 86% (2024: 96%)

Analytical procedures 7 (2024: 5) 12% (2024: 17%) 15% (2024: 13%) 14% (2024: 4%)

Total 12 (2024: 10) 100% 100% 100%

Communications with component auditors

• The specific-scope audit of Dialight Penang Sdn (Malaysia) was performed by Grant Thornton Malaysia, and the specific-

scope audit of Dialight ILS Australia were performed by Grant Thornton Australia. Grant Thornton Mexico performed specific

procedures on the inventory and payroll balances within the Dialight Corporation component.

• Each of the overseas teams were issued with detailed Group audit instructions. These instructions highlighted the risks that

needed to be addressed through the audit procedures and specified the information that we required to be reported to the

Group auditor;

• Throughout the planning, fieldwork, and concluding stages of the audit, the Group auditor communicated with all component

auditors and conducted a review of their work. Key working papers were prepared by the Group auditor to summarise their

review of component auditor files; and

• The Group auditor held detailed discussions with the component auditors and performed remote reviews of the work

performed, update calls on the progress of the fieldwork and by attending the component audit clearance meetings with

component management.

Changes in approach from previous period

As a result of International Standard on Auditing (UK) 600 (revised September 2022) Special considerations—Audits of group

financial statements (Including the work of component auditors) there has been an increase in the number of components

identified. There have been no other significant changes in the audit scope to that in the previous period.

Additionally, the Group auditor visited the US location of Dialight Corporation to gain an in-depth understanding of their

operations and the risks associated with them.

OTHER INFORMATION

The other information comprises the information included in the Annual Report and Accounts, other than the financial

statements and our auditor’s report thereon. The directors are responsible for the other information contained within the Annual

Report and Accounts. Our opinion on the financial statements does not cover the other information and, except to the extent

otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially

inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially

misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine

whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed,

weconclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

Our opinions on other matters prescribed by the Companies Act 2006 are unmodified

• In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with

the Companies Act 2006;

• In our opinion, based on the work undertaken in the course of the audit:

– the information given in the strategic report and the directors’ report for the financial year for which the financial

statementsare prepared is consistent with the financial statements; and

– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the Group and the Parent Company and their environment obtained in the

course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report

to you if, in our opinion:

• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been

received from branches not visited by us; or

• the Parent Company financial statements and the part of the directors’ remuneration report to be audited are not in

agreement with the accounting records and returns; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

CORPORATE GOVERNANCE STATEMENT

We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate

Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified

for our review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate

Governance Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

• the directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any

material uncertainties identified as set out on page 32;

• the directors’ explanation as to their assessment of the company’s prospects, the period this assessment covers and why the

period is appropriate as set out on page 32;

• the directors’ statement on whether they have a reasonable expectation that the company will be able to continue in

operation and meets its liabilities as set out on page 32;

• the directors’ statement on fair, balanced and understandable as set out on page 37;

• the board’s confirmation that it has carried out a robust assessment of the emerging and principal risks as set out on page 37;

• the section of the annual report that describes the review of the effectiveness of risk management and internal control

systems as set out on page as set out on page 22; and

• the section describing the work of the audit committee as set out on page 55.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

RESPONSIBILITIES OF DIRECTORS

As explained more fully in the directors’ responsibilities statement set out on page 83, the directors are responsible for the

preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as

the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement,

whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the Group’s and the Parent Company’s ability

to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of

accounting unless the directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no

realistic alternative but to do so.

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material

misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance

is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a

material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could

reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. The extent to which our procedures

are capable of detecting irregularities, including fraud, is detailed below:

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and the Parent

Company and determined that the most significant are applicable law, UK-adopted international accounting standards (for the

Group), United Kingdom Generally Accepted Accounting Practice (for the Parent Company), Pension legislation, and relevant

tax regulations;

• We corroborated our understanding of the legal and regulatory framework applicable to the Group and the Parent Company

by discussing relevant frameworks with group management and component management, obtaining correspondence with

relevant parties and reviewing Board minutes;

• Our assessment of the Group and Parent Company’s compliance with these laws and regulations was integrated into our

procedures on the related financial statement items. We obtained an understanding of the Group’s and Parent Company

systems and processes for monitoring compliance, tested key controls, and evaluated the effectiveness of the Group’s

and Parent Company compliance program. We also evaluated relevant documentation and obtained representations from

management regarding their compliance with these laws and regulations.

• We made enquiries of management and the Board of Directors to determine if they were aware of any instances of

noncompliance with laws and regulations and whether they had any knowledge of actual, suspected or alleged fraud and

corroborated this with our review of the board minutes. We also assessed the susceptibility of the Group’s and Parent

Company financial statements to material misstatement, including fraud risk.

• We assessed the susceptibility of the Group’s and the Parent Company’s financial statements to material misstatement,

including how fraud might occur, by evaluating management’s incentives and opportunities for manipulation of the financial

statements. This included the evaluation of the risk of management override of controls. We determined that the principal

risks were in relation to:

– Journal entries that were posted by infrequent users, journals that reclassified costs within the consolidated statement

ofcomprehensive income to distort the underlying operating profit measure;

– Material post-close journal entries;

– Revenue transactions which fall outside of the expected transaction flow;

– Potential management bias in determining accounting estimates, especially in relation to the valuation of intangible and

tangible assets, the accuracy of absorbed overheads in inventory, and the valuation of the inventory provision; and

– Transactions with related parties outside of the normal course of business.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

• Audit procedures performed by the engagement team included:

– Enquiring of management, the finance team and the Board of Directors about the risks of fraud at the Group and the Parent

Company and the controls implemented to address those risks. Assessing the design and implementation of controls

relevant to the audit that management has in place to prevent and detect fraud, including updating our understanding of

the internal controls over journal entries, including those related to the posting of entries used to record non-recurring,

unusual transactions or other non-routine adjustments;

– Identifying and testing journal entries, with selection based on risk profiling;

– Running specific keyword searches (including to related parties and of those previously connected to related entities)

over the journal entry population to identify descriptions that could indicate fraudulent activity or management override

of controls;

– Assessing the disclosures within the Annual Report and Accounts, including principal and emerging risks; and

– Challenging assumptions and judgements made by management in its significant accounting estimates.

• These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or

error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from

error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error,

as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed

non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely

we would become aware of it.

• As part of the engagement partner’s assessment of the engagement team’s collective competence and capabilities, they

considered the team’s understanding of, and practical experience with, audit engagements of a similar nature and complexity

through appropriate training and participation. They also evaluated the team’s knowledge of the industry in which the Parent

Company and the Group operate, as well as the team’s understanding of the legal and regulatory requirements specific to the

Group and the Parent Company.

• We communicated relevant laws and regulations and potential fraud risks to all engagement team members, including internal

specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

• In assessing the potential risks of material misstatement, we obtained an understanding of:

– the entity’s operations, including the nature of its revenue sources, products and services and of its objectives and

strategies to understand the classes of transactions, account balances, expected financial statement disclosures and

business risks that may result in risks of material misstatement;

– the applicable statutory provisions;

– the rules and interpretative guidance issued by the Financial Conduct Authority; and

– the entity’s control environment, including the policies and procedures implemented to comply with the requirements of

its regulator, including the adequacy of the training to inform staff of the relevant legislation, rules and other regulations

of the regulator, the adequacy of procedures for authorisation of transactions, internal review procedures over the entity’s

compliance with regulatory requirements, the authority of, and resources available to the compliance officer and procedures

to ensure that possible breaches of requirements are appropriately investigated and reported.

• For components at which audit procedures were performed, we requested component auditors to report to us for

noncompliance with laws and regulations that gave rise to a material misstatement of the Group financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting

Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Independent auditor’s report to the members of Dialight plc

continued

OTHER MATTERS WHICH WE ARE REQUIRED TO ADDRESS

We were appointed by the Board on 22 January 2025 to audit the financial statements for the period ending 31 March 2024.

Our total uninterrupted period of engagement is two periods, covering the period ended 31 March 2024 and the year ended

31 March 2025.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the Parent Company and we

remain independent of the Group and the Parent Company in conducting our audit.

Our audit opinion is consistent with the additional report to the audit committee.

USE OF OUR REPORT

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act

2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to

state to them in an auditor’s 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 and the company’s members as a body, for our audit work, for this report, or for

the opinions we have formed.

Mark Overfield BSc FCA

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

Leeds

23 June 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Consolidated income statement

for the 12-month period ended 31 March 2025

Notes

		12-month	15-month
		period ended	period ended
		31 March 2025	31 March 2024
		$m	$m
Revenue	5	183.5	226.0
Cost of sales		(117.0)	(158.9)
Gross profit		66.5	67.1
Distribution costs		(29.0)	(36.8)
Administrative expenses		(52.8)	(60.5)
Impairment losses of financial assets	24	(2.1)	–
Gain on disposal of business		5.8	–
Loss from operating activities	5	(11.6)	(30.2)
Adjusted profit/(loss) from operating activities, before impairment losses of financial assets		6.3	(4.6)
Impairment losses of financial assets	24	(2.1)	–
Underlying profit/(loss) from operating activities		4.2	(4.6)
Non-underlying items	6	(21.6)	(25.6)
Gain on disposal of business		5.8	–
Loss from operating activities	5	(11.6)	(30.2)
Financial expense	8	(2.5)	(4.1)
Loss before tax		(14.1)	(34.3)
Taxation credit	9	0.5	1.8
Loss for the period		(13.6)	(32.5)
Loss for the period attributable to:
Equity of the Company		(13.8)	(32.5)
Non-controlling interests		0.2	–
Loss for the period		(13.6)	(32.5)
Loss per share
Basic	11	(34.4) cents	(91.1) cents
Diluted	11	(34.4) cents	(91.1) cents

The accompanying notes form an integral part of these financial statements.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Consolidated statement of comprehensive income

for the 12-month period ended 31 March 2025

Notes

		12-month	15-month
		period ended	period ended
		31 March 2025	31 March 2024
		$m	$m
Other comprehensive (expense)/income
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations		(0.1)	0.4
Income tax on exchange differences on translation of foreign operations		–	–
		(0.1)	0.4
Items that will not be reclassified subsequently to profit and loss
Remeasurement of defined benefit pension liability	16	(4.0)	(0.5)
Income tax on remeasurement of defined benefit pension liability	9	1.0	0.1
		(3.0)	(0.4)
Other comprehensive expense for the period, net of tax		(3.1)	–
Loss for the period		(13.6)	(32.5)
Total comprehensive expense for the period		(16.7)	(32.5)
Attributable to:
Owners of the parent		(16.9)	(32.5)
Non-controlling interest		0.2	–
Total comprehensive expense for the period		(16.7)	(32.5)

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

Consolidated statement of changes in equity

for the 12-month period ended 31 March 2025

					Capital					Non-
		Share	Merger	Translation	redemption	Share	Own	Retained		controlling	Total
		capital	reserve	reserve	reserve	premium	shares	earnings	Total	interests	equity
	Notes	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
At 1 April 2024		1.2	1.0	12.6	4.3	13.0	(1.2)	32.8	63.7	0.2	63.9
Loss for the period		–	–	–	–	–	–	(13.8)	(13.8)	0.2	(13.6)
Other comprehensive income:
Foreign exchange translation		–	–	(0.1)	–	–	–	–	(0.1)	–	(0.1)
differences, net of tax
Remeasurement of defined benefit		–	–	–	–	–	–	(3.0)	(3.0)	–	(3.0)
pension liability, net of tax
Total other comprehensive income/(expense)		–	–	(0.1)	–	–	–	(3.0)	(3.1)	–	(3.1)
Total comprehensive income/		–	–	(0.1)	–	–	–	(16.8)	(16.9)	0.2	(16.7)
(expense) for the period
Transactions with owners, directly recorded in equity
Issue of share capital	20	–	–	–	–	–	–	–	–	–	–
Share-based payments		–	–	–	–	–	–	0.3	0.3	–	0.3
Re-purchase of own shares		–	–	–	–	–	(0.2)	–	(0.2)	–	(0.2)
Total transactions with owners		–	–	–	–	–	(0.2)	0.3	0.1	–	0.1
At 31 March 2025		1.2	1.0	12.5	4.3	13.0	(1.4)	16.3	46.9	0.4	47.3

					Capital					Non-
		Share	Merger	Translation	redemption	Share	Own	Retained		controlling	Total
		capital	reserve	reserve	reserve	premium	shares	earnings	Total	interests	equity
	Notes	$m	$m	$m	$m	$m	$m	$m	$m	$m	$m
At 1 January 2023		1.0	1.0	12.2	4.3	1.2	(1.1)	64.2	82.8	0.2	83.0
Loss for the period		–	–	–	–	–	–	(32.5)	(32.5)	–	(32.5)
Other comprehensive income:
Foreign exchange translation		–	–	0.4	–	–	–	–	0.4	–	0.4
differences, net of tax
Remeasurement of defined benefit		–	–	–	–	–	–	(0.4)	(0.4)	–	(0.4)
pension liability, net of tax
Total other comprehensive income/(expense)		–	–	0.4	–	–	–	(0.4)	–	–	–
Total comprehensive income/		–	–	0.4	–	–	–	(32.9)	(32.5)	–	(32.5)
(expense) for the period
Transactions with owners, directly recorded in equity
Issue of share capital	20	0.2	–	–	–	12.7	–	–	12.9	–	12.9
Transaction costs	20	–	–	–	–	(0.9)	–	–	(0.9)	–	(0.9)
Share-based payments		–	–	–	–	–	–	1.5	1.5	–	1.5
Re-purchase of own shares		–	–	–	–	–	(0.1)	–	(0.1)	–	(0.1)
Total transactions with owners		0.2	–	–	–	11.8	(0.1)	1.5	13.4	–	13.4
At 31 March 2024		1.2	1.0	12.6	4.3	13.0	(1.2)	32.8	63.7	0.2	63.9

The accompanying notes form an integral part of these financial statements.

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Dialight plc Annual Report and Accounts 2025

100

Consolidated statement of financial position

at 31 March 2025

		31 March 2025	31 March 2024
	Notes	$m	$m
Assets
Property, plant and equipment	12	13.5	12.7
Right-of-use assets	13	9.0	8.8
Intangible assets	14	9.0	8.1
Deferred tax assets	15	8.5	5.8
Employee benefits	16	2.2	5.4
Other receivables	18	0.5	5.9
Total non-current assets		42.7	46.7
Inventories	17	46.6	49.1
Trade and other receivables	18	34.3	32.3
Income tax recoverable		0.4	0.8
Cash and cash equivalents	19	7.9	11.5
Total current assets		89.2	93.7
Total assets		131.9	140.4
Liabilities
Trade and other payables	21	(40.1)	(34.3)
Provisions	22	(2.4)	(1.2)
Current tax liabilities		(0.5)	(1.4)
Lease liabilities	13	(2.5)	(2.0)
Borrowings	23	–	(27.9)
Total current liabilities		(45.5)	(66.8)
Trade and other payables	21	(3.8)	–
Provisions	22	(2.1)	(1.6)
Borrowings	23	(25.7)	–
Lease liabilities	13	(7.5)	(8.1)
Total non-current liabilities		(39.1)	(9.7)
Total liabilities		(84.6)	(76.5)
Net assets		47.3	63.9
Equity
Issued share capital	20	1.2	1.2
Merger reserve		1.0	1.0
Share premium	20	13.0	13.0
Other reserves		15.4	15.7
Retained earnings		16.3	32.8
		46.9	63.7
Non-controlling interest		0.4	0.2
Total equity		47.3	63.9

The accompanying notes form part of these financial statements. These financial statements were approved by the Board of

Directors on 23 June 2025 and were signed on its behalf by:

Steve Blair Mark Fryer

Group Chief Executive Officer Group Chief Finance Officer

Company number: 2486024

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Dialight plc Annual Report and Accounts 2025

101

Consolidated statement of cash flows

for the 12-month period ended 31 March 2025

Notes

		12-month period	15-month period
		ended	ended
		31 March 2025	31 March 2024
		$m	$m
Operating activities
Loss for the period		(13.6)	(32.5)
Adjustments for:
Financial expense	8	2.5	4.1
Income tax credit	9	(0.5)	(1.8)
Sanmina liability		11.3	–
Gain on disposal of business		(5.8)	–
Share-based payments		0.3	1.5
Defined benefit pension scheme service cost		0.2	–
Depreciation of property, plant and equipment	12	3.2	4.3
Impairment losses on property, plant and equipment	12	–	1.1
Loss on disposal		0.3	–
Depreciation of right-of-use assets	13	2.5	3.0
Gain on lease modification		–	(0.2)
Amortisation of intangible assets	14	2.6	7.7
Impairment losses of financial assets	24	2.1	–
Impairment losses on intangible assets	14	0.2	15.8
Operating cash flows before movements in working capital		5.3	3.0
Decrease in inventories		2.6	15.7
Decrease in trade and other receivables		1.9	5.2
Increase/(decrease) in trade and other payables		2.2	(10.9)
Increase in provisions		1.1	0.2
Pension contributions (more than)/less than income statement charge		(0.7)	0.1
Cash generated by operations		12.4	13.3
Income taxes paid		(1.7)	(2.6)
Interest paid 2		(2.8)	(4.1)
Net cash generated by operations		7.9	6.6
Investing activities
Proceeds on disposal of business		5.2	–
Purchase of property, plant and equipment	12	(4.3)	(1.4)
Purchase of intangible assets	14	(3.7)	(5.4)
Net cash used in investing activities		(2.8)	(6.8)
Financing activities
Proceeds on issue of shares – net of issue costs	20	–	12.0
Drawdown of bank facility	23	3.0	6.2
Repayment of bank facility	23	(5.2)	(5.9)
Payment of Sanmina liability	23	(4.0)	–
Re-purchase of own shares		(0.2)	(0.1)
Repayment of lease liabilities 1	13	(2.3)	(2.9)
Net (outflow)/inflow from financing activities		(8.7)	9.3
Net (decrease)/increase in cash and cash equivalents		(3.6)	9.1
Cash and cash equivalents at beginning of period	19	11.5	2.0
Effects of exchange rates		–	0.4
Cash and cash equivalents at end of period	19	7.9	11.5

The Group has classified:

1 cash payments for the principal portion of lease payments as financing activities; and

2 cash payments for the interest portion as operating activities consistent with the presentation of interest payments chosen by the Group.

The accompanying notes form an integral part of these financial statements.

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Dialight plc Annual Report and Accounts 2025

102

Notes to the consolidated financial statements

for the 12-month period ended 31 March 2025

1. REPORTING ENTITY

Dialight plc is a public listed company which is listed on the London Stock Exchange and is incorporated and domiciled

in England and Wales under registration number 2486024.

Details of the Company’s registered office are set out on page 154 under the “Directory and shareholder information” section.

The consolidated financial statements of the Company for the 12-month period ended 31 March 2025 comprise the Company

and its subsidiaries (together referred to as the ‘Group’).

2. BASIS OF PREPARATION

(a) Statement of compliance

The consolidated financial statements have been prepared in accordance with UK-adopted International Accounting Standards.

The consolidated financial statements are presented in US dollars and all values are rounded to the nearest tenth of a million

dollars ($ 0.1 million), except where otherwise indicated.

The Company has elected to present its Parent Company financial statements in accordance with FRS 102 “The Financial

Reporting Standard applicable in the UK and Republic of Ireland”. The Parent Company financial statements are presented

in pounds Sterling and all values are rounded to the nearest tenth of a million pounds (£ 0.1 million), except where

otherwise indicated.

(b) Consolidated basis of preparation

Going concern

The Group’s business activities, together with the factors likely to affect its future development, performance and position

are set out in the Strategic report on pages 04 to 34. The financial position of the Group, its cash flows, liquidity position and

borrowing facilities are discussed in the Chief Financial Officer’s review on pages 28 to 31.

The Directors’ assessment of the viability of the Group is set out in the Viability statement on page 34. In addition, note

24 to the financial statements includes the Group’s objectives, policies and processes for managing its capital; its financial

risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and

liquidity risk.

The Group’s bank facility comprises a revolving credit facility (‘RCF’) of $28.8m from HSBC. A balance of $5.2m was repaid in

August 2024 using the proceeds received from the disposal of the Traffic business after which the facility was reduced by a

corresponding amount from $34.0m to $28.8m. The facility was extended to 21 July 2027 on the same terms as the original

agreement on 5 June 2025.

Net debt increased to $17.8m at 31 March 2025 (31 March 2024: $16.4m) and comprised $25.7m borrowings with $7.9m cash

in hand.

The covenants are tested quarterly and are as follows:

Ratio	Calculation	Threshold
Leverage ratio	Net bank debt: Proforma unaudited EBITDA	<3.0x
Interest cover	Proforma unaudited EBITDA: Interest expense	>4.0x

The interest cover was temporarily reset from 4.0x to 2.5x for the quarter period ending 31 December 2024 only and was reset to

4.0x thereafter. Covenants were met in all four quarters.

In assessing the going concern assumptions, the Directors have prepared three main scenarios over the going concern period

which the Directors have assessed as a 15-month period to 30 June 2026, being:

• the base case;

• a plausible downside case in relation to revenue and margin; and

• a reverse stress test (break-even assessment).

Various upside scenarios also exist, but those result in positive outcomes and have not been included here given the focus of

the Directors, and its auditors, is on the risk to the going concern basis of preparation to the financial statements. Nonetheless,

the Directors consider these upside scenarios as realistic outcomes and continue to drive the Group’s performance and other

activities to seek to achieve those positive results.

The downside scenarios reflect the risk of lower than expected organic revenue growth in core Lighting markets, lower gross

margins than forecast and cost savings not being realised to the full extent forecasted.

Base case

The base case is derived from the Board approved year to 31 March 2026 Budget, which assumes that the margin will improve

over the going concern period through various Group initiatives. The base case is driven by material cost reduction projects

and tight control over the cost-base. In this scenario, the Directors consider that the Group will continue to operate within its

available committed facilities of $28.8m with sufficient headroom and covenant compliance throughout the forecast period.

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Dialight plc Annual Report and Accounts 2025

103

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

2. BASIS OF PREPARATION (CONTINUED)

The key assumptions in the base case include:

• Decline in net revenue in the year to 31 March 2026 mainly due to the expected disposal of Traffic and Rail in October 2025

(end of MSA).

• No growth in Lighting net revenue in the year to 31 March 2026 due to the current macroeconomic climate and the uncertainty

surrounding global tariffs.

• Net revenue for the quarter to 30 June 2026 is forecast to increase by 2.4% compared to the same quarter in 2025. This is

driven by a combination of factors including increasing, benefits from strategic relationships, price increases, and increased

source and sell product range sales.

• Gross margin improvement as component price premiums continue to reduce and supply becomes more readily available;

freight costs normalise, and the benefits from cost reduction and automation programmes are delivered resulting in a gross

profit margin improvement of 1.9% in the year to 31 March 2026 and a further 4.2% in the quarter to 30 June 2026 respectively.

• Operating costs are expected to be 33.2% of revenue in the year to 31 March 2026 and the quarter to 30 June 2026.

Plausible downside case

The Directors have assumed:

• Year to 31 March 2026: reduction of Budget revenue by 5% across Lighting, Obstruction, OE and Vehicle.

• Quarter to 30 June 2026: no growth in core revenue and a 75% reduction of the forecast product cost savings and

discounting decrease.

• No mitigating actions are assumed apart from the removal of a bonus provision for the year to 31 March 2026 and the quarter

to 30 June 2026.

Reverse stress test (break-even assessment)

The Directors have assumed:

• Year to 31 March 2026: reduction of Budget revenue by 9% across Lighting, Obstruction, OE and Vehicle.

• Quarter to 30 June 2026: no growth in core revenue and a 85% reduction of the forecast product cost savings

and discounting decrease.

• No mitigating actions are assumed apart from the removal of a bonus provision for the year to 31 March 2026 and the quarter

to 30 June 2026.

As indicated above, the downside and reverse stress testing scenarios do not consider any mitigating actions apart from the

removal of a bonus provision. In all these scenarios, the Group has a series of controllable mitigating actions that can be taken

swiftly, including various temporary and permanent cost and cash saving measures.

All scenarios include the settlement payments to be made to Sanmina. An initial $4.0m has been paid in March 2025 with a

further $1.0m to be made per quarter until March 2027, rising to $1.5m if Dialight’s market capitalisation rises above £100m for 30

consecutive days. Cumulative total payments to Sanmina under this scenario will not exceed $12.0m. The Directors are confident

the payments will be funded out of operating cash flows, with sufficient headroom to meet business needs.

In the base case and downside scenarios, the Group is forecast to have sufficient liquidity and not breach any covenants in the

going concern period. In the reverse stress test, the leverage covenant ratio is forecast to breach in the quarter to 31 March 2026

and the quarter to 30 June 2026. The interest cover is expected to breach in the quarter to 30 June 2026.

Whilst the Directors believe the Group will deliver on its plan, the Directors recognise that the results in recent years have

fluctuated from the forecast. In the reverse stress test, whilst core revenue is forecast to decrease from the year to 31 March 2025

to the quarter to 30 June 2026, gross profit margin is forecast to increase by 1.3% in the same period. As a result, the Group will

require a gross profit margin increase more than this to avoid breaching covenants. The Directors have therefore concluded

that while the scenario itself is unlikely given the mitigating actions that can be implemented, there is a plausible risk of a

covenant breach.

Accordingly, the Directors have identified circumstances which give rise to a material uncertainty which may cast significant

doubt on the entity’s ability to continue as a going concern, meaning it may be unable to realise it assets and discharge

its liabilities in the normal course of business. Notwithstanding this material uncertainty, the Directors consider it remains

appropriate to continue to adopt the going concern basis in the preparation of the financial statements. The HSBC facility was

extended on 5 June through to 21 July 2027, which covers the going concern period.

The preparation of the consolidated financial statements requires management to make judgements, estimates and

assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

These estimates, judgements and assumptions are based on historical experience and other factors that are believed to be

reasonable under the circumstances. Actual results may differ from these estimates. The areas which require the most use

of management estimation and judgement are set out below.

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Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

2. BASIS OF PREPARATION (CONTINUED)

Significant judgements

Going concern

The determination by the Directors of the entity’s ability to continue as a going concern involves areas of judgement including

preparation and assessment of budgets, forecasts and various scenarios. Refer to note 2(b) for a fuller discussion.

Development and patent costs

The Group capitalises development costs and patent costs provided they meet all criteria in the respective accounting policy.

Costs are only capitalised when management applies judgement that is satisfied as to the ultimate commercial viability of the

projects based on review of the relevant business case. The capitalised costs are amortised over the expected useful economic

life, which is determined based on the reasonable commercial prospects of the product and a comparison to similar products

being sold by the Group.

The Group has $8.6m (2024: $7.4m) of development and patent costs that relate to the current product portfolio and new

products expected to launch over the next one to two years. An impairment review of the total balance was performed resulting

in impairment of $0.1m recorded in underlying EBIT (2024: $4.6m recorded as a non-recurring expenses (note 6)).

All of the development projects are within the Lighting CGU and are tested for impairment at the CGU level. However,

management also performs a review of each individual project to see if there are any indications of specific impairment by

comparing the carrying amount of the asset with the net present value derived from the Board approved strategic plan.

Directors recognise that the results in recent years have fluctuated from the forecast. Consideration was therefore given to the

reversal of impairments recognised in prior periods. Given the sensitivity of the tests to the growth assumptions utilised in the

forecasts, it was deemed to be appropriate to not recognise any such reversal at this time.

Deferred tax assets

The Group must determine the extent to which deferred tax assets can be recognised and this determination is based on an

assessment of the probability that future taxable income will be available against which the deductible temporary differences

and tax loss carry-forwards can be utilised. In addition, significant judgement is required in assessing the impact of any legal or

economic limits or uncertainties in various tax jurisdictions.

The Group has recognised a net deferred tax asset of $8.5m (2024: $5.8m). Of this balance, $6.4m (2024: $5.4m) arises in the US

with $4.4m (2024: $3.2m) relating to short-term timing differences that typically unwind on a yearly basis, $0.4m (2024: $0.7m)

arising on intangible assets, $0.3m (2024: nil) arising on other items, $1.9m (2024: $1.5m) arising on losses and restricted interest

deductions which have no expiry dates. This is offset by a US deferred tax liability of $0.7m (2024: $0.7m) arising on property,

plant and equipment.

The Group considers it highly probably that sufficient future taxable profits will arise in the US based on both the earning

history and the future forecasted profits. In addition, the Group is satisfied that the losses will unwind in the same period as the

forecasted taxable profits.

The remaining $2.1m of the recognised net deferred tax asset arises in respect of deferred tax assets on right-of-use assets and

lease liabilities ($0.4m), provisions ($1.0m), losses ($1.0m), offset by deferred tax liabilities arising on employee benefits ($0.2m)

and individually immaterial net DTAs recognised by the Group’s subsidiary entities in various geographical locations.

Non-underlying items

The Group incurs costs and earns income that is non-underlying in nature or that, in the Directors’ judgement, needs to be

disclosed separately by virtue of its size and incidence in order for users of the consolidated financial statements to obtain a

proper understanding of the financial information and the underlying performance of the business. Judgement is required in

determining whether an item should be classified as non-underlying or included within the underlying results. Refer to note 6 for

further information.

Estimates

Inventory reserve

The total value of the inventory provision for all categories of inventory over which judgement has been exercised was $5.9m

(2024: $6.6m) and this represents 11.2% (2024: 11.8%) of the gross inventory value.

Details of the inventory reserve are set out in note 17.

Inventory reserve – raw materials and sub-assemblies

The Group’s policy is that all raw material and sub-assembly inventory that is over 24-months old at the balance sheet date is

provided for. This basis for estimate reduces estimation subjectivity, while allowing for the adverse impact from component

shortages that have led to high inventory levels and some components being held for longer than expected. Two years has

been assessed to be appropriate as the components have a long shelf life, continue to be used in production and the product

demand mix between project and MRO. The inventory ageing continues to be skewed as a result of post COVID-19 supply chain

disruption leading to inventory which is now two years old.

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105

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

2. BASIS OF PREPARATION (CONTINUED)

The value of the inventory provision for raw materials and sub-assemblies as at 31 March 2025 was $4.4m (2024: $5.9m).

If all raw material and sub-assembly inventory over 18-months old at the balance sheet date was to be provided for, the inventory

provision would be $4.9m. Alternatively, if all raw material and sub-assembly inventory over 36-months old at the balance sheet

date was to be provided for, the inventory provision in that scenario would be $1.7m.

Inventory reserve – finished goods

The review of finished goods inventory was based on all inventory over 365 days old. Inventory on hand was compared

to historical sales, current orders, sales pipeline and whether the product had been recently launched.

Management judgement was then applied to determine whether there was a reasonable probability that the inventory would

be sold, with a provision being required for any inventory that failed this assessment.

Management believes that any reasonably possible change in the assumption would not cause any significant change in the

provision estimate for finished goods.

The value of the inventory provision for finished goods as at 31 March 2025 was $1.5m (2024: $0.7m).

Inventory reserve and onerous contract provision – disposal of traffic business

Following the disposal of the traffic business, an estimate was made of the provision for excess or obsolete inventory and to

provide for inventory expected to be sold at below cost. The provision, which is included in the inventory provisions noted

above, is $0.8m as at 31 March 2025 (2024: $3.0m); during the 12-month period ended 31 March 2025, $2.2m of the inventory

provision was released as it was deemed to be in excess of current requirements. Inventory is being utilised or sold to Leotek

and as at the balance sheet date future inventory utilisation/sales are inherently an estimate.

Additionally, during the current financial period, an onerous contract provision relating to the Leotek contract of $0.9m (2024: nil)

was made. The provision is for estimated expected losses until the end of the Leotek contract in October 2025.

These are recognised within cost of goods sold and are disclosed as a non-underlying item within note 6.

Inventory – absorbed overhead costs

The valuation of inventory, detailed in note 17, requires the use of estimates in the amount of costs to be absorbed into

inventory valuation.

The costs of purchase of inventories comprise the purchase price, import duties/other taxes and freight, handling and other

costs directly attributable to the acquisition of inventory.

The costs of conversion of inventories include costs directly related to the units of production and also include a systematic

allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Costs related

to production comprise labour and direct overheads attributable to the production process. They are assessed to ensure that

costs unrelated to production are excluded. Unallocated overheads are recognised as an expense in the period in which they

are incurred.

Consistent with prior year, the Group absorbs costs using weighted average inventory turns. The value of directly attributable

costs over which judgement was exercised was $6.9m (2024: $7.6m) and this represents 15% (2024: 15%) of the inventory value.

For every day that the estimate of the days used for the overheads absorbed changes, it changes the calculation by $78.0k (2024:

$96.9k). In relation to the amount of freight costs that are included in the inventory valuation, the value of freight costs over which

judgement was exercised was $3.2m (2024: $2.8m) and this represents 7% (2024: 6%) of the inventory value. For every day that

the estimate of the days used for the freight costs absorbed changes, it changes the calculation by $16.6k (2024: $17.1k).

Management believes that any reasonably possible change in the assumptions would not cause any significant change in the

amount of costs absorbed into inventory.

Pension plans

The key actuarial assumptions used to value the pension plan liabilities and could have a significant impact on the valuation

of the liabilities. The Group’s assumptions are disclosed in note 16 with associated sensitivity analysis. The key assumptions

are mortality rates, inflation and market yields. These assumptions are set with close reference to market conditions.

Impairment losses of financial assets

Expected credit losses of financial assets contain a number of measurement uncertainties relating to management’s view

of the expected future cash flows receivable from financial assets due from customers and the inherent creditworthiness of

those customers. Judgement is based on the Group’s past experience as well as taking into consideration current market and

economic conditions, and any factors relating to a specific customer or sale. Changes in judgements and assumptions could

result in a material adjustment to those estimates in future reporting periods.

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106

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

3. CHANGES IN SIGNIFICANT ACCOUNTING POLICIES

The following accounting standards, interpretations, improvements and amendments have become applicable for the current

period and although the Group has adopted them, they have had no material impact on the Group. These comprise:

• Non-current Liabilities with Covenants and classification of Liabilities as Current or Non-current (Amendments to IAS 1);

• Lease liability in a Sale and Leaseback (Amendments to IFRS 16); and

• Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7).

The following amendments to standards and interpretations have also been issued, but are not yet effective and have not been

early adopted for the period ended 31 March 2025:

• Lack of Exchangeability (Amendments to IAS 21);

• Presentation and Disclosures in Financial Statements (IFRS 18);

• Subsidiaries without Public Accountability: Disclosures (IFRS 19);

• Amendments to the Classification and Measurement of Financial Instruments (amendments to IFRS 9 and IFRS 7);

• Contracts Referencing Nature-dependent Electricity (amendments to IFRS 9 and IFRS 7); and

• Annual Improvements to IFRS Accounting Standards (amendments to IFRS 10, IFRS 9, IFRS 1, IAS 7 and IFRS 7).

The adoption of these amendments is not expected to have a material impact on the financial results of the Group but could

impact the presentation of the financial statements.

4. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial

statements and have been applied consistently by Group entities.

(a) Basis of consolidation

The consolidated financial statements comprise the financial statements of the parent and its subsidiaries as at 31 March 2025.

Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has

the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if,

the Group has (a) power over the investee; (b) exposure, or rights, to variable returns from the investee; and (c) ability to use its

power to affect those returns. The Group reassesses whether or not it controls an investee if facts and circumstances indicate

that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group

obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and

expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the

date the Group gains control until the date the Group ceases to control the subsidiary. If the Group loses control of a subsidiary,

it derecognises the related assets (including goodwill), liabilities and other components of equity, while any resultant gain or loss

is recognised in the income statement.

Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated.

Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Accounting policies as applied to subsidiaries have been changed where necessary to ensure consistency with the policies

adopted by the Group.

(b) Business combinations and goodwill

Business combinations are accounted for using the acquisition method as at the acquisition date, which is the date on which

control is transferred to the Group. In assessing control, the Group takes into consideration potential voting rights that were

then currently exercisable.

Acquisitions on or after 1 January 2010

For acquisitions on or after 1 January 2010, the Group measures goodwill at the acquisition date as:

• the fair value of the consideration transferred; plus

• the recognised amount of any non-controlling interests in the acquiree; less

• the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a gain is recognised immediately in profit or loss. Costs related to the acquisition, other than those

associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are

expensed as incurred.

Acquisitions between 1 January 2004 and 1 January 2010

For acquisitions between 1 January 2004 and 1 January 2010, goodwill represents the excess of the cost of the acquisition over

the Group’s interest in the recognised amount (generally fair value) of the identifiable assets, liabilities and contingent liabilities

of the acquiree.

Transaction costs, other than those associated with the issue of debt or equity securities, that the Group incurred in connection

with business combinations were capitalised as part of the acquisition.

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107

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Acquisitions prior to 1 January 2004 (date of transition to IFRSs)

As part of its transition to IFRSs, the Group elected to restate only those business combinations that occurred on or after

1 January 2003. In respect of acquisitions prior to 1 January 2003, goodwill represents the amount recognised under the Group’s

previous accounting framework, UK GAAP.

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated

financial statements from the date that control commences until the date that control ceases. Intra-group balances, and

any unrealised income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated

financial statements.

Changes in ownership interest

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity

owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling

and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the

adjustment to non-controlling interests and any consideration paid or received is recognised in retained earnings within the

statement of changes in equity.

The Group incurs costs and earns income that is non-underlying in nature or that, in the Directors’ judgement, needs to be

disclosed separately by virtue of its size and incidence in order for users of the consolidated financial statements to obtain

a proper understanding of the financial information and the underlying performance of the business.

These items could include (but are not limited to):

• the costs related to transferring production back from an outsourced manufacturer;

• the impairment of tangible or intangible assets including goodwill;

• the impairment of inventory as a result of a significant change in product design;

• individual restructuring projects which are material or relate to the closure of a part of the business and are not expected

to recur;

• gains or losses on disposal of businesses;

• gains or losses arising on significant changes to closed defined benefit pension plans; and

• costs arising from legal disputes including that with Sanmina Corporation (see note 6).

Determining whether an item is part of specific non-underlying items requires judgement to determine the nature and the

intention of the transaction.

(d) Foreign currency translation

Functional and presentation currency

The consolidated financial statements are presented in US dollars to provide greater transparency in the Group’s performance

for investors and other stakeholders and to reduce exchange rate volatility in reported figures. The functional currency of

Dialight plc is considered to be GBP Sterling because that is the currency of the primary economic environment in which the

Company operates.

Foreign operations

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s overseas operations,

including goodwill and fair value adjustments arising on consolidation, are translated using exchange rates prevailing on the

balance sheet date.

Foreign currency transactions and balances

Income and expense items of overseas operations are translated at average exchange rates for the period. The resulting

exchange differences are recognised as a separate component of equity within the Group’s translation reserve. Such translation

differences are recognised in the income statement in the period in which the foreign operation is disposed of. Foreign currency

transactions are accounted for at the exchange rate prevailing at the date of the transaction.

Gains and losses resulting from the settlement of such transactions and from the translation of monetary and non-monetary

assets and liabilities denominated in foreign currencies are recognised in the income statement.

(e) Derivative financial instruments

Derivative financial instruments are recorded initially at cost and are remeasured to fair value at subsequent reporting dates.

The gain or loss on remeasurement to fair value is recognised immediately in the income statement.

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108

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f) Property, plant and equipment

All items of property, plant and equipment are stated at cost less accumulated depreciation and provision for impairment.

Subsequent costs are included in the asset carrying amount or recognised as a separate asset, as appropriate, only when it is

probable that future economic benefits associated with the item will flow to the Group and the cost can be measured reliably.

All other repair and maintenance costs are charged to the income statement in the financial period they are incurred.

(g) Other intangible assets

Other intangible assets that are acquired by the Group and have finite useful lives are measured at cost less accumulated

amortisation and accumulated impairment losses.

(h) Depreciation and amortisation

Depreciation

Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item

of property, plant and equipment, except for right-of-use assets which are depreciated over the shorter of the lease contract

period and their useful lives. Land is not depreciated.

The estimated useful lives are as follows:

Plant, equipment and vehicles 3–10 years

Right-of-use assets 2–9 years

Amortisation

Amortisation is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets, other

than goodwill, from the date that they are available for use.

The estimated useful lives are as follows:

Patents and trademarks 3–5 years

Development costs

Product upgrades 3 years

New product 4 years

Control and technology-related products 5 years

Goodwill that arises upon acquisition of subsidiaries is included in intangible assets. For the measurement of goodwill at initial

recognition, see note 4(b).

Subsequent measurement

After initial recognition, goodwill is measured at cost less any accumulated impairment losses until disposal or termination of the

cash generating unit (‘CGU’). Goodwill is allocated to the CGUs and is tested at least annually for impairment. An impairment

loss recognised for goodwill is not reversed in a subsequent period.

(i) Research and development costs

Expenditure on research activities undertaken with the prospect of gaining new scientific or technical knowledge and

understanding is immediately recognised in the income statement as an expense.

Development expenditure is capitalised only if the expenditure can be measured reliably, the product and process is technically

and commercially viable, future economic benefits are probable and the Group intends and has sufficient resources to complete

the development and to use or sell the asset. Costs are only capitalised once the initial research phase has been completed

and the business case for development has been approved by management. The expenditure capitalised includes direct cost

of material, direct labour and directly attributable overheads. Other development expenditure is recognised in the income

statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation and

impairment losses.

(j) Impairment

The carrying amounts of the Group’s non-financial assets, other than inventories and deferred tax assets, are reviewed at

each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s

recoverable amount is estimated. For goodwill and intangible assets that have indefinite lives or that are not yet available for

use, the recoverable amount is estimated at each reporting date.

An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its recoverable amount. A CGU is

the smallest identifiable asset group that generates cash flows that are largely independent from other assets and groups.

Impairment losses are recognised in the income statement. Impairment losses recognised in respect of CGUs are allocated first

to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets

in the unit (group of units) on a pro-rata basis.

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109

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The recoverable amount of an asset or CGU is the greater of its value in use and its fair value less costs to sell. In assessing value

in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current

market assessments of the time value of money and the risks specific to the asset.

Any impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior

periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment

loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss

is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been

determined, net of depreciation or amortisation, if no impairment loss had been recognised.

A financial asset, in particular the carrying value of trade receivables, is considered to be impaired if one or more events

have had a negative effect on the estimated future cash flows expected to arise from that asset. Any impairment losses are

recognised through the income statement.

(k) Inventories

Inventories are stated at the lower of cost and net realisable value. Cost includes all expenses directly attributable to the

manufacturing process as well as suitable portions of related production overheads, based on normal operating capacity.

Costs of ordinarily interchangeable items are assigned using the first in, first out cost formula. Net realisable value is the

estimated selling price in the ordinary course of business less any directly attributable selling expenses. When calculating

inventory reserves, management considers the nature and condition of the inventory, as well as taking into consideration an

assessment of market developments, change in strategy or business model, regulatory and technology evolvement, and analysis

of historical and projected usage with regard to quantities held.

(l) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

(m) Share capital

Dividends are recognised in the period in which they are approved by the Company’s shareholders, or, in the case of an interim

dividend, when the dividend is paid. Under the terms of the PSP, RSP and deferred bonus schemes, dividends accrue on shares

not yet vested; however, in the event that the shares lapse or are forfeited then the dividends will not be paid and the accrual

is reversed.

Own shares

Company shares held by the employee benefit trusts (‘EBT’) are held at the consideration paid. It has been concluded that Dialight Plc

controls the EBT and consequently the EBT has been incorporated into the Group financial statements. Purchases of shares

made by the EBT are shown in the statement of changes in equity as own shares.

(n) Employee benefits

(i) Defined contribution pension plans

Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement when

they are due.

(ii) Defined benefit pension plans

The Group’s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the

amount of future benefit that employees have earned for their service in prior periods, discounting that amount and deducting

the fair value of any plan assets.

The calculation is performed by an independent qualified actuary using the projected unit credit method. In accordance with

IFRIC 14 – IAS 19 “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”, the pension

surplus can be recognised as an asset on the balance sheet, limited to the present value of economic benefits available in the

form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value of

economic benefits, consideration is given to any applicable minimum funding requirements.

Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets

(excluding interest) and the effect of the asset ceiling (if any, excluding interest) are recognised immediately in other

comprehensive income.

The Group determines the net interest expense/(income) on the net defined benefit liability/(asset) for the period by applying

the discount rate used to measure the defined benefit obligation at the beginning of the annual period to the then net defined

benefit liability/(asset), taking into account any changes in the net defined benefit liability/(asset) during the period as a result

of contributions and benefit payments. Net interest expense and other expenses related to defined benefit plans are recognised

in the income statement.

When the benefits of a plan are changed, or when a plan is curtailed, the resulting change in benefit that relates to past service,

or the gain or loss on curtailment, is recognised immediately in the income statement. The Group recognises gains and losses

on the settlement of a defined benefit plan when the settlement occurs.

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110

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(iii) Share-based payments and deferred bonus transactions

The PSP and RSP allows Group employees to acquire shares of the Company. The fair value of the grants is measured using

the five-day weighted average prior to grant, taking into account the terms and conditions upon which the grants were

made. The amount recognised as an expense is only adjusted to reflect forfeitures resulting from failures to meet non-market

conditions. The share-based payments are equity-settled.

Key Group employees can be awarded shares in the Company under the Annual Performance Bonus Plan (‘APBP’). The fair value

of the award granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured

at the grant date and spread over the performance period, during which the employees become unconditionally entitled to the

award. All of the share awards are based on three-year continued service conditions, except under the APBP where 50% vest

after two years.

Executive Directors are eligible for awards under the Value Creation Plan (‘VCP’). Participants will be eligible for a share in a pool

of excess value created over three and four-year periods. The total pool will be calculated as 7.5% of value created through share

price growth plus dividends (‘TSR’) in excess of 350p vs a four-week average share price ending 1 April of approximately 166p;

i.e. growth of approximately 110%. The award will have two independent three and four-year performance measurement periods.

Each period will determine 50% of the award. A three-month average opening and closing share price will be used to measure

value creation for the pool. Awards will be granted as a number of units in the pool. At the end of each performance period, units

will be converted into an award of shares/nil cost options with participants required to hold onto their vested shares after any sales

required to settle tax and withholdings on vesting for a period of five years from grant. The fair value is measured at the grant date

and spread over the performance period during which the participants become unconditionally entitled to the award.

(iv) Bonus plan

The Group recognises a liability in respect of the best estimate of bonus payable where contractually obliged to or where past

practice has created a constructive obligation.

(o) Other provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a

past event and it is probable that an outflow of economic benefits will be required to settle the obligation. A warranty provision

is made for the expected costs of future warranty claims relating to past product sales. This provision is estimated based on

historical trends for returns, product-specific warranty terms, internal knowledge of product performance characteristics and

the expected costs of remedying warranty-returned products. All other provisions are based on management’s best estimate

of a probable expected outcome.

(p) Trade and other receivables

Trade and other receivables are recognised at fair value except for trade receivables that do not have a significant financing

component which are measured at transaction price and carried at amortised cost, less an allowance for expected lifetime

losses as permitted under the simplified approach in IFRS 9. Fully provided balances are not written off from the balance sheet

until the Group has decided to cease enforcement activity.

The Group has applied the simplified approach as permitted by IFRS 9. The expected credit loss (‘ECL’) model considers the

Group’s historical credit loss, factors specific to each receivable, the current economic environment and expected changes

in future forecasts (see note 24).

(q) Trade and other payables

Trade and other payables are initially recorded at fair value and then subsequently stated at amortised cost.

(r) Revenue recognition

The Group’s revenue is derived from the single performance obligation to transfer lighting products under arrangements in

which the transfer of control of the products and the fulfilment of the Group’s performance obligations occur at the same time.

Revenue from the sale of goods is recognised when the Group has transferred control of the goods to the buyer and the buyer

obtains the benefits from the goods based on Incoterms, the potential cash flows and the amount of revenue (the transaction

price) can be measured reliably, and it is probable the Group will collect the consideration to which it is entitled to in exchange

for the goods.

The majority of sales are on an ex works basis with revenue recognised on dispatch of finished goods. Warranty is not a separable

performance obligation so has no impact on revenue recognition.

The Group does not have any contracts where the period between the transfer of the promised goods or services to the

customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the transaction

prices for the time value of money.

Where rebates agreements are in place revenue is recognised based on the price specified in the contract net of the estimated

rebate discount. Accumulated experience is used to estimate and provide for the discounts and revenue is only recognised to

the extent that it is highly probable that a significant reversal will not occur. A contract liability is recognised for expected rebate

discounts payable to customers in relation to sales made until the end of the reporting period.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

111

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(s) Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions

attaching to them and that the grants will be received. Government grants that are receivable as compensation for expenses or

losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are

recognised in profit or loss in the period in which they become receivable.

(t) Net financing costs

Net financing costs comprise interest receivable, interest payable on borrowings, arrangement fees on revised or new borrowing

facilities, interest payable on lease liabilities, interest on pension assets and liabilities, foreign exchange gains and losses.

(u) Income tax expense

Income tax expense comprises current and deferred tax. Income tax expense is recognised in the income statement except to the

extent that it relates to items recognised directly in equity. The tax currently payable is based on the taxable profit for the year.

Taxable profit differs from profit as reported in the income statement because it excludes items of income or expense that are

taxable or deductible in other years and it further excludes items that are not taxable or deductible. The tax rate and laws used

to compute the amount are those that are enacted, or substantially enacted, by the reporting date.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements

and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet

liability method.

Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised

to the extent that it is probable that taxable profits will be available against which temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no

longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered. Deferred tax

is calculated using tax rates that are enacted or substantively enacted at the balance sheet date. Deferred tax is charged or

credited to profit and loss, except when it relates to items charged or credited directly to equity, in which case the deferred

tax is also dealt with in equity. Deferred tax is determined using tax rates (and laws) that have been enacted, or substantially

enacted, by the balance sheet date and are expected to apply when the deferred tax assets is released or the deferred tax

liability is settled.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current

tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current

tax assets and liabilities on a net basis. Additional income taxes that arise from the distribution of dividends are recognised at the

same time as the liability to pay the related dividend is recognised.

(v) Leases

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the

contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess

whether a contract conveys the right to control the use of an identified asset, the Group uses the definition of a lease in IFRS 16.

(i) As a lessee

At commencement or on modification of a contract that contains a lease component, the Group allocates the consideration

in the contract to each lease component on the basis of its relative stand-alone prices. However, for the leases of property the

Group has elected not to separate non-lease components and accounts for the lease and non-lease components as a single

lease component.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially

measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before

the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying

asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the end

of the lease term, unless the lease transfers ownership of the underlying asset to the Group by the end of the lease term or

the cost of the right-of-use asset reflects that the Group will exercise a purchase option. In that case the right-of-use asset will

be depreciated over the useful life of the underlying asset, which is determined on the same basis as those of property and

equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain

remeasurements of the lease.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date,

discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group’s incremental

borrowing rate. The Group operates in multiple economic environments so the incremental borrowing rate (‘IBR’) that applies

will vary from lease to lease.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

112

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Discount rates applied for different jurisdictions

IFRS 16 allows the use of two possible discount rates, namely the interest rate implicit in the lease from the perspective of the

lessor (implicit rate) or the Group’s IBR.

The IBR is the rate of interest that Dialight pays to borrow (a) over a similar term; (b) with a similar security; (c) the funds necessary

to obtain an asset of a similar value to the right-of-use asset; and (d) in a similar economic environment. The rate reflects the

amount that the Group could borrow over the term of the lease.

The Group operates in multiple jurisdictions and the economic environment in those jurisdictions would also influence the IBR.

This is expected to lead to a different IBR for every lease in a different territory. Key information that the Group considered while

determining the IBR relates to the region where the lease is domiciled, the functional currency and the currency of the lease,

the asset being leased and the remaining years left on the lease.

The Group has property leases in the US, Mexico, UK, Australia and Malaysia. The Mexican and Malaysian leases are for

industrial premises with the remaining leases being for office buildings.

The IBR is determined based on the interest rates available to the Group entities in which the underlying leases are held, based

on the credit rating of each of these entities. Certain adjustments are made to these interest rates to reflect the terms of the

individual leases and the types of assets leased. The IBRs calculated for use by the Group vary between 2.5% and 8.0%.

Lease payments included in the measurement of the lease liability comprise the following:

Fixed payments, including in-substance fixed payments; variable lease payments that depend on an index or a rate, initially

measured using the index or rate as at the commencement date; amounts expected to be payable under a residual value

guarantee; and the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in

an optional renewal period if the Group is reasonably certain to exercise an extension option, and penalties for early termination

of a lease unless the Group is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change

in future lease payments arising from a change in an index or rate, if there is a change in the Group’s estimate of the amount

expected to be payable under a residual value guarantee, if the Group changes its assessment of whether it will exercise a

purchase, extension or termination option or if there is a revised in-substance fixed lease payment. When the lease liability

is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded

in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The Group presents right-of-use assets that do not meet the definition of investment property in right-of-use assets and lease

liabilities separately in the statement of financial position.

The Group has elected not to recognise right-of-use assets and lease liabilities for leases of low-value assets and short-term

leases, including IT equipment. The Group recognises the lease payments associated with these leases as an expense on

a straight-line basis over the lease term.

(ii) As a lessor

When the Group is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately. It assesses

the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference

to the underlying asset. The Group classifies the sub-lease as an operating lease as the lease does not transfer substantially

all of the risks and rewards incidental to ownership of the underlying asset. If this is the case, then the lease is a finance lease.

The Group recognises lease payments received under operating leases as income on a straight-line basis over the lease term.

(w) Measurement of fair values

A number of the Group’s accounting policies and disclosures require the measurement of fair values, for both financial and

non-financial assets and liabilities.

The Group has an established control framework, appropriate for the size and complexity of the Group, with respect to the

measurement of fair values. When measuring the fair value of an asset or liability, the Group uses market observable data as far

as possible. Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation

techniques as follows:

Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2: inputs other than quoted prices included in level 1 that are observable for the asset or liability, either directly

or indirectly.

Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value

hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest

level input that is significant to the entire measurement.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

113

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

4. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(x) Contingent liabilities

A contingent liability arises from past events and includes possible obligations (50% certain or less) whose existence will be

confirmed only by the occurrence of uncertain future events not wholly within the entity’s control and present obligations, which

are not recognised because it is not probable that a transfer of economic benefits will be required to settle the obligation or the

obligations cannot be measured reliably. It includes guarantees to third parties and certain lawsuits.

5. OPERATING SEGMENTS

The Group has two reportable operating segments.

These segments have been identified based on the internal information that is supplied regularly to the Group’s chief operating

decision maker for the purposes of assessing performance and allocating resources. The chief operating decision maker is

considered to be the Group Chief Executive Officer.

The two reportable operating segments are:

• Lighting, which develops, manufactures and supplies highly efficient LED lighting solutions for hazardous and industrial

applications in which lighting performance is critical and includes anti-collision obstruction lighting; and

• Signals & Components, which develops, manufactures and supplies status indication components for electronics OEMs,

together with niche industrial and automotive electronic components and highly efficient LED signalling solutions for the

traffic and signals markets.

There is no inter-segment revenue and there are no individual customers that represent more than 10% of revenue.

All revenue relates to the sale of goods. Segment gross profit is revenue less the costs of materials, labour, production and

freight that are directly attributable to a segment. Central and unallocated overheads comprise operations management plus

corporate costs, which include share-based payments.

Segmental assets and liabilities are not reported internally and are, therefore, not presented below.

Reportable segments

		Signals &	Central &
	Lighting	Components	Unallocated	Total
for the 12-month period ended 31 March 2025	$m	$m	$m	$m
Revenue	138.0	45.5	–	183.5
Underlying gross profit	54.1	11.2	–	65.3
Underlying overheads	(41.2)	(7.9)	(12.0)	(61.1)
Underlying profit/(loss) from operating activities	12.9	3.3	(12.0)	4.2
Non-underlying items (note 6)	(18.6)	0.9	(3.9)	(21.6)
Gain on disposal of business	–	5.8	–	5.8
(Loss)/profit from operating activities	(5.7)	10.0	(15.9)	(11.6)
Financial expense	–	–	(2.5)	(2.5)
(Loss)/profit before tax	(5.7)	10.0	(18.4)	(14.1)
Taxation	–	–	0.5	0.5
(Loss)/profit after tax	(5.7)	10.0	(17.9)	(13.6)

		Signals &	Central &
	Lighting	Components	Unallocated	Total
for the 15-month period ended 31 March 2024	$m	$m	$m	$m
Revenue	171.1	54.9	–	226.0
Underlying gross profit	57.6	12.5	–	70.1
Underlying overheads	(50.8)	(12.3)	(11.6)	(74.7)
Underlying profit/(loss) from operating activities	6.8	0.2	(11.6)	(4.6)
Non-underlying items (note 6)	(20.6)	(3.6)	(1.4)	(25.6)
Gain on disposal of business	–	–	–	–
(Loss)/profit from operating activities	(13.8)	(3.4)	(13.0)	(30.2)
Financial expense	–	–	(4.1)	(4.1)
(Loss)/profit before tax	(13.8)	(3.4)	(17.1)	(34.3)
Taxation	–	–	1.8	1.8
(Loss)/profit after tax	(13.8)	(3.4)	(15.3)	(32.5)

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

114

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

5. OPERATING SEGMENTS (CONTINUED)

			12-month period ended 31 March 2025				15-month period ended 31 March 2024
		Signals &	Central &			Signals &	Central &
	Lighting	Components	Unallocated	Total	Lighting	Components	Unallocated	Total
Other segmental data	$m	$m	$m	$m	$m	$m	$m	$m
Cost of inventories recognised as expense	47.9	19.3	–	67.2	65.8	25.0	–	90.8
Total personnel expenses	35.6	10.8	3.3	49.7	46.6	13.9	4.0	64.5
Depreciation of property, plant and equipment	2.4	0.8	–	3.2	3.3	1.0	–	4.3
Depreciation of right-of-use assets	1.9	0.6	–	2.5	2.3	0.7	–	3.0
Amortisation of intangible assets	2.6	–	–	2.6	7.7	–	–	7.7
Impairment of property, plant and equipment	–	–	–	–	1.1	–	–	1.1
Impairment of goodwill	–	–	–	–	11.2	–	–	11.2
Impairment of other intangible assets	0.1	0.1	–	0.2	4.1	0.5	–	4.6

Geographical segments

Lighting and Signals & Components segments are managed on a worldwide basis, but operate in three principal geographic

areas: North America, EMEA and Rest of the World. 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.

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
Sales revenue by geographical market	$m	$m
North America	155.3	183.7
EMEA	10.7	18.3
Rest of the World	17.5	24.0
Revenue	183.5	226.0

6. NON-UNDERLYING ITEMS

The Group incurs cost and earns income that is non-recurring in nature or that, in the Director’s judgement, need to be

separately disclosed for users of the consolidated financial statements to obtain a full understanding of the financial information

and the best indication of the underlying performance of the Group.

The table below presents the components of non-underlying items recognised in the income statement. All costs are

recognised within administrative expenses unless otherwise stated.

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Transformation Plan	4.1	4.5
Impairment of goodwill (note 14)	–	11.2
Impairment of other intangible assets (excluding business disposal impairment)	–	4.1
Litigation costs	17.8	2.3
Other non-underlying costs	0.6	–
Business disposal (income)/costs	(0.9)	3.5
Non-underlying items	21.6	25.6

The Group has incurred $4.1m (15-months ended 31 March 2024: $4.5m) of non-underlying costs relating to the Transformation

Plan. This is a significant multi-year change programme for the Group, which is designed to address legacy issues associated

with excess cost and complexity within the organisation, while at the same time focusing more resources on the most attractive

growth opportunities within its core industrial LED lighting market. Implementation of the Transformation Plan is expected to

be complete by 31 March 2026. The multi-year Transformation Plan is a material, infrequent programme and is not considered

to be part of the underlying performance of the business. The costs incurred in the 12-month period to 31 March 2025 relate

to resetting and realigning the Group’s cost base including severance costs, and legal and professional fees. In the prior period,

an impairment charge of $1.1m for property, plant, and equipment (note 12) and dilapidation costs of $0.4m (note 22) were

recognised in relation to the vacation of the Malaysian facility that occurred during the year.

Please refer to note 14 for details of the impairment of goodwill and other intangible assets in the prior year, there were no

impairments recognised through non-underlying in the 12-month period ended 31 March 2025.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

115

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

6. NON-UNDERLYING ITEMS (CONTINUED)

During the 12-month period ended 31 March 2025 costs of $17.8m have been expensed (2024: $1.9m) relating to the legal

settlement with Sanmina. On 31 March 2025 the Group settled its long-standing litigation with Sanmina for $12.0m to be paid by

instalments. This required payment of $4.0m on 31 March 2025 and eight quarterly payments of $1.0m per quarter with the final

payment due on 27 March 2027. The discounted expense of these future payments is $11.3m, with additional legal expenses of

$5.6m in the period and other irrecoverable amounts expensed of $0.9m. Please refer to note 26 for further details of this claim.

In the prior period, other litigation costs of $0.4m relate to a contractual litigation case relating to the use of intellectual property

which was concluded in 2023.

Other non-underlying costs of $0.6m are one-off costs relating to previous financial periods, as such have been recognised

through non-underlying to enable full comparability of the Group’s financial performance with previous periods.

Business disposal (income)/costs relate to the disposal of the Traffic business in July 2024. The (income)/costs relate to a $0.1m

impairment of development costs (2024: $0.5m) for projects that will no longer be pursued, net income of $2.0m being a release

of inventory excess and obsolescence provision, which has been recognised within costs of goods sold (2024: expense of $3.0m),

$0.1m of staff retention costs (2024: nil) and an onerous contract provision of $0.9m in relation to the Leotek contract (2024: nil).

7. PERSONNEL EXPENSES

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Wages and salaries	42.9	54.9
Social security costs	5.5	6.9
Equity-settled share-based payment transactions	0.3	1.5
Contributions to defined contribution plans	1.0	1.1
Total charge for defined benefit plans	–	0.1
Total personnel expenses	49.7	64.5

The average number of employees by geographical location was:

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	Number	Number
US and Mexico	1,254	1,335
Rest of the World	171	226
Total average number of employees	1,425	1,561

The Group employed an average of 875 direct staff (2024: 948) and 550 indirect staff (2024: 613).

The main Board Directors are considered to be the Group’s key management personnel. Key management personnel

compensation comprised the following:

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Short-term employee benefits	1.4	2.3
Termination benefits	0.2	–
Share-based payments	0.3	1.5
	1.9	3.8

The aggregate of remuneration and amounts receivable under long-term incentive schemes of the highest-paid Director was

$0.5m (15-months to 31 March 2024: $1.0m), and pension contributions of $0.0m (15-months to 31 March 2024: $0.0m) were made

to a money purchase scheme on their behalf. During the period, the highest-paid Director was awarded 335 units under the VCP

(15-months to 31 March 2024: 151,547 shares under a long-term incentive scheme).

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

116

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

7. PERSONNEL EXPENSES (CONTINUED)

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
Number of Directors accruing benefits under money purchase schemes	3	4
Number of Directors who exercised share options	–	1
Number of Directors whose qualifying services shares were received or receivable under long-term	2	2
incentive schemes

8. FINANCIAL EXPENSES

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Net interest income on defined benefit pension asset	(0.3)	(0.3)
Interest expense on financial liabilities, excluding lease liabilities	2.2	3.3
Facility arrangement fee expense	–	0.4
Interest expense on lease liabilities	0.6	0.7
Net financing expense recognised in the consolidated income statement	2.5	4.1

9. TAXATION

Recognised in the income statement

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Current tax expense
Current period	1.2	1.2
Adjustment for prior years	–	(0.1)
Total current tax expense	1.2	1.1
Deferred tax expense
Origination and reversal of temporary differences	(1.1)	(4.0)
Adjustment for prior years	(0.3)	0.7
Impact of change in tax laws and rates	(0.3)	0.4
Total deferred tax credit	(1.7)	(2.9)
Total tax credit	(0.5)	(1.8)

Reconciliation of effective tax rate

	12-month	12-month	15-month	15-month
	period ended	period ended	period ended	period ended
	31 March	31 March	31 March	31 March
	2025	2025	2024	2024
	%	$m	%	$m
Loss for the period after tax		(13.6)		(32.5)
Total tax credit		0.5		1.8
Loss for the period before tax		(14.1)		(34.3)
Income tax using the corporation rate of 25.0% (2024: 23.8%)	25.0	(3.5)	23.8	(8.2)
Effect of higher taxes on overseas earnings	(7.8)	1.1	(1.5)	0.5
Change in tax laws and rates	2.1	(0.3)	(1.2)	0.4
Expenses not deductible for tax purposes	–	–	(8.5)	2.9
Current year losses for which no deferred tax is recognised	(17.7)	2.5	(2.9)	1.0
Adjustment for prior years	2.1	(0.3)	(1.5)	0.5
Other	(0.7)	0.1	–	–
Research and development credits	0.7	(0.1)	0.3	(0.1)
Foreign taxes incurred	–	–	(3.5)	1.2
	3.5	(0.5)	5.2	(1.8)

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

117

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

9. TAXATION (CONTINUED)

The effective tax rate for the period is 3.5% compared with 5.2% in the prior year and the standard rate of 25.0% (2024: 23.8%)

in the UK. During the period, the Group made a loss before tax of $14.1m (2024: loss of $34.3m), which resulted in a tax credit

in the period of $0.5m (2024: tax credit of $1.8m).

The normalised tax rate for the Group in the period is 25.0% (tax rate before adjustments) and based on a pre-tax loss of $14.1m

this would generate a tax credit of $3.5m. The Group’s overall tax rate was 3.5% which is significantly lower than the normalised

tax rate as a result of the following major adjustments:

• unrecognised losses in the European Lighting business resulting in $2.5m of tax losses not being recognised in the period; and

• Mexican taxes of $1.1m.

Tax credit recognised directly in equity

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Employee benefits	(1.0)	(0.1)

Current tax

Current tax is calculated with reference to the profit or loss of the Company and its subsidiaries in their respective countries of

operation. Set out below are details in respect of the significant jurisdictions where the Group operates and the factors that

influenced the current and deferred taxation in those jurisdictions.

The UK companies are subject to a corporate tax rate of 25.0% (2024: 23.8%).

Group

The majority of the Group’s profits arise in the US where the corporation tax rate is 23%, including 21% federal tax and 2% state

tax (2024: 24%, including 21% federal tax and 3% state tax).

10. LOSS FOR THE PERIOD

Loss for the period has been arrived at after charging:

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Research and development costs:
Expensed as incurred	3.4	4.2
Amortisation of development costs (note 14)	1.5	6.0
Total research and development costs	4.9	10.2
Depreciation of property, plant and equipment (note 12)	3.2	4.3
Depreciation of right-of-use assets (note 13)	2.5	3.0
Amortisation of other intangible assets (note 14)	1.1	1.7
Impairment of property, plant, and equipment (note 12)	–	1.1
Impairment of goodwill (note 14)	–	11.2
Impairment of other intangible assets (note 14)	0.2	4.6
Gain on lease modification	–	(0.2)
Credit loss recognised in the period (note 24)	2.1	–
Cost of inventories recognised as expense (note 17)	67.2	90.8
Employee benefit expense (note 7)	49.7	64.5

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118

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

10. LOSS FOR THE PERIOD (CONTINUED)

Auditor’s remuneration

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Audit of these financial statements	1.1	1.3
Audit of financial statements of subsidiaries pursuant to legislation	0.1	0.1
Fees payable to the Group’s auditor for non-audit services:
Assurance related services	–	0.1
	1.2	1.5

11. EARNINGS PER SHARE

Basic earnings per share

The calculation of basic earnings per share (‘EPS’) at 31 March 2025 was based on a loss for the year of $13.6m (2024: loss of

$32.5m) and the weighted average number of ordinary shares outstanding during the year of 39,586,489 (2024: 35,603,515).

Weighted average number of ordinary shares

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	000s	000s
Weighted average number of ordinary shares	39,586	35,604

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
Basic (loss)/earnings per share	(34.4) cents	(91.1) cents

Diluted earnings per share

The calculation of diluted earnings per share at 31 March 2025 was based on a loss for the year of $13.6m (2024: loss of $32.5m)

and the weighted average number of ordinary shares outstanding during the year of 39,586,489 (2024: 35,603,515).

Where a loss has been recognised the same number of shares are used in both the basic and diluted loss per share calculation

as there is no dilutive effect when the Group is in a loss-making position. The number of shares that would be used in the diluted

EPS calculation is 40,646,358 (2024: 36,457,712).

Weighted average number of ordinary shares

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	000s	000s
Weighted average number of ordinary shares	39,586	35,604

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
Diluted (loss)/earnings per share	(34.4) cents	(91.1) cents

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119

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

12. PROPERTY, PLANT AND EQUIPMENT

		Plant,
	Land and	equipment
	buildings	and vehicles	Total
	$m	$m	$m
Cost
At 1 January 2023	4.0	67.7	71.7
Additions	–	1.4	1.4
Disposals	–	–	–
Transfers	1.0	(1.0)	–
Foreign exchange movements	0.4	–	0.4
At 31 March 2024	5.4	68.1	73.5
Additions	–	4.3	4.3
Disposals	(0.1)	(8.4)	(8.5)
Foreign exchange movements	–	0.5	0.5
Balance at 31 March 2025	5.3	64.5	69.8
Accumulated depreciation and impairment losses
At 1 January 2023	(4.0)	(50.9)	(54.9)
Charge for period	(0.2)	(4.1)	(4.3)
Impairment charge	–	(1.1)	(1.1)
Foreign exchange movements	–	(0.5)	(0.5)
At 31 March 2024	(4.2)	(56.6)	(60.8)
Charge for period	(0.2)	(3.0)	(3.2)
Disposals	0.1	8.1	8.2
Foreign exchange movements	–	(0.5)	(0.5)
Balance at 31 March 2025	(4.3)	(52.0)	(56.3)
Carrying amount at 31 March 2025	1.0	12.5	13.5
Carrying amount at 31 March 2024	1.2	11.5	12.7
Carrying amount at 1 January 2023	–	16.8	16.8

During the prior period, a review of property, plant, and equipment was performed where it was identified that certain

assets relating to the Malaysian facility are no longer in use following the planned vacation of the existing Malaysian site.

As a result, an impairment loss was recognised in the prior period within non-underlying items (note 6) given it related to the

Transformation Plan.

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120

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

13. LEASES

Right-of-use assets

		Non-property
	Buildings	leases	Total
	$m	$m	$m
Cost
At 1 January 2023	20.0	0.6	20.6
Additions including modifications	0.6	–	0.6
Disposals including modifications	(2.1)	(0.6)	(2.7)
Foreign exchange movements	(0.8)	–	(0.8)
At 31 March 2024	17.7	–	17.7
Additions including modifications	2.6	–	2.6
Disposals including modifications	(1.8)	–	(1.8)
Foreign exchange movements	0.2	–	0.2
Balance at 31 March 2025	18.7	–	18.7
Accumulated depreciation and impairment losses
At 1 January 2023	(7.3)	(0.6)	(7.9)
Charge for the period	(3.0)	–	(3.0)
Disposals	1.2	0.6	1.8
Foreign exchange movements	0.2	–	0.2
At 31 March 2024	(8.9)	–	(8.9)
Charge for year	(2.5)	–	(2.5)
Disposals	1.8	–	1.8
Foreign exchange movements	(0.1)	–	(0.1)
Balance at 31 March 2025	(9.7)	–	(9.7)
Carrying amount at 31 March 2025	9.0	–	9.0
Carrying amount at 31 March 2024	8.8	–	8.8
Carrying amount at 1 January 2023	12.7	–	12.7

Lease liabilities

		Non-property
	Buildings	leases	Total
	$m	$m	$m
At 1 January 2023	(13.7)	–	(13.7)
Interest expense	(0.7)	–	(0.7)
Repayment of lease liabilities	3.6	–	3.6
Additions	(0.6)	–	(0.6)
Disposals	1.2	–	1.2
Foreign exchange movements	0.1	–	0.1
At 31 March 2024	(10.1)	–	(10.1)
Interest expense	(0.6)	–	(0.6)
Repayment of lease liabilities	2.9	–	2.9
Additions	(2.1)	–	(2.1)
Disposals	–	–	–
Foreign exchange movements	(0.1)	–	(0.1)
Balance at 31 March 2025	(10.0)	–	(10.0)

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121

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

13. LEASES (CONTINUED)

Group as lessee

The Group leases various industrial premises and office buildings.

The leases typically run for a period of one to ten years, with various options to renew the leases after that date. Lease terms are

negotiated on an individual basis and contain a wide range of different terms and conditions. Lease payments are renegotiated

dependent on the lease terms to reflect market rentals.

Some leases provide for additional rent payments that are based on fixed percentage changes and/or changes in

local price indices. The lease agreements do not impose any covenants, but leased assets may not be used as security for

borrowing purposes. See accounting policy in note 4(v).

Extension options are included in a number of property and equipment leases across the Group. These terms are used to

maximise operational flexibility in terms of managing contracts. The majority of extension options held are exercisable only by

the Group and not by the respective lessor. In determining the lease term, management considers all facts and circumstances

that create an economic incentive to exercise an extension option. Extension options are only included in the lease term if the

lease is reasonably certain to be extended (or not terminated). The assessment is reviewed if a significant event or a significant

change in circumstances occurs which affects this assessment and is within the control of the Group as a lessee.

The Group leases IT and other equipment with contract terms of one–four years. These leases are short-term and/or leases of

low-value items. The Group has elected not to recognise right-of-use assets and lease liabilities for these leases.

Amounts recognised in income statement

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Depreciation expense on right-of-use assets	2.5	3.0
Interest expense on lease liabilities	0.6	0.7
Expenses relating to short-term leases	0.1	0.1
Expenses relating to leases of low-value assets	–	–
Total recognised in profit and loss	3.2	3.8

Amounts recognised in statement of cash flows

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Repayment of lease liabilities	2.3	2.9
Payment of interest expense on lease liabilities	0.6	0.7
Payments relating to short-term leases	0.1	0.1
Payments relating to leases of low-value assets	–	–
Total cash outflow for leases	3.0	3.7

Group as lessor

The Group has a lease on an office that was entered into during 2019 and which it is also sub-letting. The Group has classified

this sub-lease as an operating lease, because it does not transfer substantially all of the risks and rewards incidental to the

ownership of the asset. The head lease expires in 2029 and the sub-lease expires in 2026. The sub-lessor has the option to renew

the lease at its sole discretion. The lessee does not have an option to purchase property at the expiry of the lease period.

Rental income recognised by the Group during the 12-month period to 31 March 2025 was $0.4m (15-month period to 31 March

2024: $0.4m).

Operating leases minimum rentals receivable under IFRS 16

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Less than one year	0.4	0.3
One to two years	0.3	0.3
Two to three years	–	0.3
Total	0.7	0.9

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122

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

14. INTANGIBLE ASSETS

	Concessions,
	patents,
	licences and		Software	Development
	trademarks	Goodwill	and licences	costs	Total
	$m	$m	$m	$m	$m
Cost
At 1 January 2023	15.0	16.2	8.0	21.1	60.3
Additions	1.2	–	0.3	3.9	5.4
Disposals	–	–	–	–	–
Foreign exchange movements	(0.4)	0.2	(0.2)	0.2	(0.2)
At 31 March 2024	15.8	16.4	8.1	25.2	65.5
Additions	0.8	–	0.1	2.8	3.7
Disposals	(11.9)	–	(2.6)	(2.8)	(17.3)
Foreign exchange movements	–	–	–	–	–
Balance at 31 March 2025	4.7	16.4	5.6	25.2	51.9
Accumulated amortisation and impairment losses
At 1 January 2023	(12.6)	(5.1)	(7.1)	(9.6)	(34.4)
Charge for period	(1.2)	–	(0.5)	(6.0)	(7.7)
Impairment charge	(0.6)	(11.2)	–	(4.0)	(15.8)
Foreign exchange movements	0.2	(0.1)	0.2	0.2	0.5
At 31 March 2024	(14.2)	(16.4)	(7.4)	(19.4)	(57.4)
Charge for period	(0.9)	–	(0.2)	(1.5)	(2.6)
Impairment charge	(0.2)	–	–	–	(0.2)
Disposals	11.9	–	2.6	2.8	17.3
Transfers	0.1	–	(0.2)	0.1	–
Foreign exchange movements	–	–	–	–	–
Balance at 31 March 2025	(3.3)	(16.4)	(5.2)	(18.0)	(42.9)
Carrying amount at 31 March 2025	1.4	–	0.4	7.2	9.0
Carrying amount at 31 March 2024	1.6	–	0.7	5.8	8.1
Carrying amount at 1 January 2023	2.4	11.1	0.9	11.5	25.9

The amortisation charge for the period is included within administrative expenses in the income statement. The carrying value

of development costs not yet available for use and, therefore, for which amortisation has not yet commenced is $5.8m (2024:

$3.1m). All development costs are allocated to the Lighting CGU.

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123

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

14. INTANGIBLE ASSETS (CONTINUED)

CGU impairment

The Group has two cash-generating units (‘CGUs’), Lighting and Signals & Components, which are the smallest identifiable

independent groups of assets that generate cash inflows that are largely independent of the cash inflows from other assets

or groups of assets. Where assets and costs are shared between the two CGUs a reasonable apportionment of these is made

for the purpose of the impairment calculation.

Management have assessed whether any indicators of impairment over the CGUs are present. In addition, intangible assets

not yet available for use are assessed for impairment.

Management have considered whether there are any indicators of impairment over both the Lighting and Signals &

Components CGUs, and determined that there was an indicator of potential impairment within the Lighting CGU, due to

performance against budget, and as such an impairment assessment was performed. For the period ended 31 March 2025, this

assessment identified that the recoverable amount of the Lighting segment based on value in use was $55.6m (2024: $66.7m).

As a result, no impairment has been recorded in the current year. In the prior year, as a result of under performance of the

Lighting CGU, a review for impairment was performed at 31 December 2023, which has resulted in an impairment of goodwill of

$11.2m being recognised. The impairment charge was material, non-cash, and non-operational related items and was therefore

excluded from underlying results (note 6).

The basis of the recoverable amount is the value in use using was management’s latest five-year forecast as at 31 March 2025.

This forecast reflects the growth opportunities inherent in the business in the medium term, including the revenues and

gross margin stemming from the implementation of the Transformation Plan. The long-term growth rate for the valuation

into perpetuity has been determined as the average of Consumer Price Index (‘CPI’) rates for the countries in which the CGU

operates, predicted for the next five years.

Management have also performed a sensitivity analysis for the Lighting CGU impairment assessment by adjusting

management’s five-year forecast. The sensitivity analysis reduces revenue growth to bring this in line with the terminal growth

rate, and reduces forecast cost savings. This reasonably possible change eliminates headroom in the model.

The pre-tax discount rate is based on the Group’s weighted average cost of capital, which reflects current market assessments

of a number of factors that impact on the time value of money and any risk specific to the Group. The discount rate has

increased due to the Company specific risk increasing following the announcement of the Transformation Plan. The rate includes

management’s assessment of a normal level of debt-to-equity ratio within similar companies in the Group’s sector. The costs of

the ultimate holding Company (stewardship costs) have been allocated to each CGU as they provide necessary support to the

CGUs to generate cash inflows. These costs have been allocated on the same allocation basis as the administration costs.

The key assumptions used in the value-in-use calculation are set out below:

	31 March	31 March
	2025	2024
Discount rate – pre-tax	17.9%	19.0%
Terminal growth rate	2.0%	2.0%
FY2026 growth rate	0.0%	–
Annual five-year revenue growth rate range for Lighting segment after FY2026	5.0%	10.0%
Annual five-year gross margin improvement	6.0%	6.4%
Stewardship allocation	80.0%	80.0%

Other intangible asset impairment

In addition to the above impairment assessment over the Lighting CGU, the Development costs and patents relating to the

Lighting segment were assessed for individual impairment, with an impairment of $0.1m recognised based on forecasted

sales. Additionally, $0.1m of patents relating to the sold traffic business (Signals and Components segment) were impaired in

the period.

In the prior year, development costs relating to the traffic business (Signals & Components) of $0.5m were fully impaired as they

relate to projects that will no longer be pursued. In addition, a further $3.5m of development costs and $0.6m of concessions,

patents, licences and trademarks costs relating to the Lighting segment were impaired in the prior year. At 31 March

2025 management have assessed whether there are indicators that the impairment loss recognised in the prior year should

be reversed, and have concluded that the requirement has not been met.

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Dialight plc Annual Report and Accounts 2025

124

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

15. DEFERRED TAX

(i) Recognised deferred tax assets and liabilities

Deferred tax assets and liabilities are attributable to the following:

	Assets		Liabilities		Net
	31 March	31 March	31 March	31 March	31 March	31 March
	2025	2024	2025	2024	2025	2024
	$m	$m	$m	$m	$m	$m
Property, plant and equipment	–	–	(0.6)	(0.5)	(0.6)	(0.5)
Intangible assets	0.4	0.7	–	–	0.4	0.7
Employee benefits	0.2	–	–	(1.0)	0.2	(1.0)
Provisions	5.0	3.4	–	–	5.0	3.4
Right-of-use assets	–	–	(2.0)	(2.0)	(2.0)	(2.0)
Lease liabilities	2.3	2.4	–	–	2.3	2.4
Restricted interest	1.1	0.8	–	–	1.1	0.8
Losses and other items	2.1	2.0	–	–	2.1	2.0
Tax assets/(liabilities)	11.1	9.3	(2.6)	(3.5)	8.5	5.8

(ii) Movement in temporary differences during the year

	Property,
	plant and	Intangible	Employee		Right-of-use	Lease	Restricted	Losses and
	equipment	assets	benefits	Provisions	asset	liabilities	interest	other items	Total
	$m	$m	$m	$m	$m	$m	$m	$m	$m
At 1 January 2023	(1.1)	(0.2)	(1.1)	3.1	(2.9)	3.3	0.4	1.3	2.8
Recognised in income	0.6	0.9	–	0.3	0.9	(0.9)	0.4	0.7	2.9
Recognised in equity	–	–	0.1	–	–	–	–	–	0.1
Foreign exchange
movements	–	–	–	–	–	–	–	–	–
At 31 March 2024	(0.5)	0.7	(1.0)	3.4	(2.0)	2.4	0.8	2.0	5.8
Recognised in income	(0.1)	(0.3)	0.2	1.6	–	(0.1)	0.3	0.1	1.7
Recognised in equity	–	–	1.0	–	–	–	–	–	1.0
Foreign exchange
movements	–	–	–	–	–	–	–	–	–
Balance at 31 March	(0.6)	0.4	0.2	5.0	(2.0)	2.3	1.1	2.1	8.5
2025

The Group has recognised a net deferred tax asset of $8.5m (2024: $5.8m). Of this balance, $6.4m (2024: $4.8m) arises in the US

with $4.4m (2024: $3.2m) relating to short-term timing differences that typically unwind on a yearly basis, $0.4m (2024: $0.7m)

arising on intangible assets, $0.3m (2024: nil) arising on other items, $1.9m (2024: $1.5m) arising on losses and restricted interest

deductions which have no expiry dates. This is offset by a US deferred tax liability of $0.7m (2024: $0.7m) arising on property,

plant and equipment.

The Group considers it highly probably that sufficient future taxable profits will arise in the US based on both the earning

history and the future forecasted profits. In addition, the Group is satisfied that the losses will unwind in the same period as the

forecasted taxable profits.

The remaining $2.1m of the recognised net deferred tax asset arises in respect of deferred tax assets on right-of-use assets and

lease liabilities ($0.4m), provisions ($1.0m), losses ($1.0m), offset by deferred tax liabilities arising on employee benefits ($0.2m)

and individually immaterial net DTAs recognised by the Group’s subsidiary entities in various geographical locations.

Provisions

This deferred tax item amounting to $5.0m (2024: $3.4m) primarily arises respect of amounts recorded in the US and comprises

of a provision recorded in respect of the Sanmina dispute of $1.7m (2024: $0.8m), inventory reserves of $1.5m (2024: $1.1m), trade

receivable allowance of $0.9m (2024: $0.4m), warranty reserves of $0.6m (2024: $0.4m) and UNICAP adjustments held in the US

of $0.4m (2024: $0.3m).

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Dialight plc Annual Report and Accounts 2025

125

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

15. DEFERRED TAX (CONTINUED)

Losses and other items

Of the $2.1m (2024: $2.0m) deferred tax asset relating to losses and other items, $0.3m (2024: $1.0m) arises in the UK and has

been recognised to offset a deferred tax liability arising on employee benefits in that territory. No losses over and above the

offset of the deferred tax liability have been recognised in the UK as the Group do not consider that sufficient taxable profits will

arise against which further losses can be recognised. The remaining deferred tax asset of $1.8m (2024: $1.0m) arises in respect of

carried forward unused tax losses in the US of $1.0m (2024: $0.8m); Singapore $0.2m (2024: $0.2m) which have no expiry dates;

and Malaysia of $0.5m (2024: nil) which expire 10 years after origination.

(iii) Unrecognised deferred tax assets

Deferred tax assets have not been recognised in respect of the following items, because it is not probable that future taxable

profit will be available against which the Group can use the benefits.

	31 March 2025		31 March 2024
	$m		$m
	Gross	Tax	Gross	Tax
	amount	effect	amount	effect
Deductible temporary differences	0.8	0.2	–	–
Tax losses	61.1	15.4	51.1	12.9
	61.9	15.6	51.1	12.9

(iv) Tax losses carried forward

Tax losses for which no deferred tax assets were recognised expire as follows:

	31 March		31 March
	2025	Expiry	2024	Expiry
	$m	date	$m	date
Expire	–	–	–	–
Never expire	61.1	–	51.1	–

In accordance with IAS 12, management have determined that the recoverability of deferred tax assets is not supportable in

excess of deferred tax liabilities based on current three-year forecasts.

At 31 March 2025, the Group has unrecognised deferred tax assets of $15.4m (2024: $12.9m), which are not expected to be

realised in the near future.

The Group has gross tax losses of $61.1m (2024: $51.1m) arising in Dialight Europe $35.1m (2024: $33.5m), Dialight plc $24.0m

(2024: $15.9m) and Dialight GmbH $2.0m (2024: $1.7m), which are available to offset against the future profits of the businesses

and are not subject to expiration.

16. EMPLOYEE BENEFITS

The Group makes contributions to two closed defined benefit plans (referred to below as Plan A and Plan B) to provide benefits

for employees and former employees upon retirement. The plans expose the Group to actuarial risks, such as longevity risk,

interest rate risk and investment risk. Both plans are administered by discrete funds (the ‘Funds’) that are legally separate from

the Group and managed by Trustees that are independent individuals. The Trustees of the plans are required by law to act in the

best interests of the plan participants and are responsible for setting certain policies (e.g. investment) of the Funds.

The aggregate surplus on both schemes is $2.2m, a decrease of $3.2m from 31 March 2024. The duration of the liabilities is six

years for Plan A and eight years for Plan B. The income statement income of $0.1m is made up of $0.2m of current service costs

expense offset by $0.3m of interest income. Actuarial losses of $4.0m recognised in other comprehensive income, were offset by

cash contributions of $0.7m. The last actuarial valuations were completed as at April 2022, with future cash contributions agreed

at the current levels through to December 2028 and July 2029 for each scheme.

The main scheme, (which is the larger of the two), purchased a bulk annuity policy covering the majority of its liabilities on 4 July

2024 with an insurer. This “buy-in” loss of is the primary reason for the actuarial loss in the year. The premium paid was £16.1m.

As at 4 July 2024 the calculated value of the main scheme’s liabilities was £13.2m, using assumptions appropriate for IAS 19.

This generated an actuarial loss of £2.9m or $3.7m. The trustees of the scheme and their advisors are working on various steps

to cleanse the scheme membership data, and complete calculations in respect of the impact of Guaranteed Minimum Pension

(‘GMP’) equalisation. These steps are not expected to be completed for around 18 months. Until this work has been completed,

the Trustee of the scheme will not be in a position to move from a buy-in to a buy-out (where the bulk annuity policy is converted

into a series of individual policies which are then assigned to members). In light of this, the buy-in should be viewed as an

investment transaction, with the impact recognised through other comprehensive income (‘OCI’).

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

126

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

16. EMPLOYEE BENEFITS (CONTINUED)

The Company is required to agree a Schedule of Contributions with the Trustees of the Funds following a valuation, which must

be carried out at least once every three years, with the latest valuation in 2022. The Company expects to pay contributions

of $0.2m in respect of the Funds in the year to 31 March 2026. The weighted average duration of the defined benefit obligation

is seven years for Plan A and nine years for Plan B. There is no effect on recognition of the net defined benefit surplus as a result

of the asset ceiling.

For the principal defined benefit plan, notwithstanding the pension buy-in for Plan B with an insurer, the Group considers that

it has the right to the refund of a surplus, assuming the gradual settlement of the plan liabilities over time until all members

have left the plan. The plan Trustees can purchase annuities to ensure member benefits and can, for the majority of benefits,

transfer these annuities to members. The Trustees cannot unconditionally wind up the plan or use the surplus to enhance

member benefits without employer consent. Our judgement is that these Trustee rights do not prevent us from recognising an

unconditional right to a refund and, therefore, a surplus.

The Trustees of the pension schemes are aware of the court case involving Virgin Media and the resulting judgement which

has potentially wide-ranging implications as it voids changes to contracted-out schemes that were made without a section 37

certificate under the Pension Scheme Act 1993. The judgement in this case has now been upheld by the Court of Appeal.

The Trustees of Plan B have carried out a review of the relevant deeds and concluded that these complied with the requirements

of section 37 of the Pension Schemes Act 1993. The Group is therefore comfortable that the Virgin Media case will not lead to

additional liabilities relating to Plan B that need to be recognised in our financial statements. Plan B makes up 87% of the total

defined benefit obligation recognised on the balance sheet.

The Trustees of Plan A are still in the process of reviewing the relevant deeds. Until that review has been completed, the Group

is not yet in a position to quantify the impact of the Virgin Media case on Plan A. For the 12-month period ended 31 March 2025,

no adjustment has been made to the liabilities of Plan A for potential prior scheme amendments which may be affected by this

ruling. Plan A makes up 13% of the total defined benefit obligation recognised on the balance sheet.

The following table shows a reconciliation from the opening balances to the closing balances for the net defined benefit asset

and its components:

	Fair value of plan assets			Defined benefit obligation	Net defined benefit asset
	31 March	31 March	31 March	31 March	31 March	31 March
	2025	2024	2025	2024	2025	2024
	$m	$m	$m	$m	$m	$m
Balance at the start of the period	25.6	25.2	(20.2)	(19.7)	5.4	5.5
Included in profit or loss
Current service cost	(0.2)	(0.4)	–	–	(0.2)	(0.4)
Interest income/(cost)	1.2	1.5	(0.9)	(1.2)	0.3	0.3
	1.0	1.1	(0.9)	(1.2)	0.1	(0.1)
Included in other comprehensive income
Remeasurements (gain)/loss	–	–	–	–	–	–
Actuarial (gain)/loss arising from:
– changes in demographic assumptions	–	–	–	0.4	–	0.4
– changes in financial assumptions	–	–	1.2	(0.7)	1.2	(0.7)
– other experience items	–	–	0.2	(0.2)	0.2	(0.2)
– past service cost	–	–	–	0.1	–	0.1
– return on plan assets excluding interest income	(5.4)	(0.1)	–	–	(5.4)	(0.1)
	(5.4)	(0.1)	1.4	(0.4)	(4.0)	(0.5)
Other Contributions paid by the employer	0.7	0.3	–	–	0.7	0.3
Benefits paid	(1.5)	(2.0)	1.5	2.0	–	–
	(0.8)	(1.7)	1.5	2.0	0.7	0.3
Foreign exchange movements	0.5	1.1	(0.5)	(0.9)	–	0.2
Balance the end of the period	20.9	25.6	(18.7)	(20.2)	2.2	5.4

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127

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

16. EMPLOYEE BENEFITS (CONTINUED)

Represented by:

	31 March	31 March
	2025	2024
	$m	$m
Net defined benefit asset (Plan A)	0.9	0.6
Net defined benefit asset (Plan B)	1.3	4.8
	2.2	5.4

Plan assets consist of the following:

	31 March	31 March
	2025	2024
	$m	$m
Bonds and gilts (class 2)	3.5	24.6
Insured annuities	16.0	–
Cash	1.4	1.0
	20.9	25.6

All equity securities and government bonds have quoted prices in active markets.

Actuarial assumptions

The principal assumptions at the balance sheet date are:

	31 March	31 March
	2025	2024
	%	%
Discount rate	5.3	4.6
Future salary increases	n/a	n/a
Future pension increases	3.2	3.3
Inflation – RPI	3.3	3.4
Inflation – CPI	2.7	2.7

Assumptions regarding future mortality have been based on published statistics and mortality tables.

The current longevities underlying the values of the defined benefit obligation at the reporting date were as follows:

	Plan A		Plan B
	31 March	31 March	31 March	31 March
	2025	2024	2025	2024
Life expectancy at age 65 for current pensioners
Males	88.1	88.1	85.1	85.1
Females	89.7	89.7	88.4	88.3
Life expectancy at age 65 for current members aged 45
Males	89.0	89.0	86.0	86.0
Females	90.8	90.7	89.5	89.4

Sensitivity analysis

Potential changes at the reporting date to one of the relevant actuarial assumptions, holding other assumptions constant,

would have affected the defined benefit obligation by the amounts shown below:

	Plan A		Plan B
	31 March	31 March	31 March	31 March
	2025	2024	2025	2024
	$m	$m	$m	$m
Discount rate – increase by 0.5%	(0.1)	(0.1)	(0.6)	(0.8)
Discount rate – decrease by 0.5%	0.1	0.1	0.7	0.7
Rate of inflation – increase by 0.5%	0.1	0.1	0.4	0.4
Rate of inflation – decrease by 0.5%	(0.1)	(0.1)	(0.4)	(0.6)
Assumed life expectancy at age 65 – increase by one year	0.1	0.1	0.8	0.8

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128

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

16. EMPLOYEE BENEFITS (CONTINUED)

The present value of the defined benefit obligation has been calculated with the same method as the defined benefit obligation

recognised in the consolidated statement of financial position. The sensitivity analyses are based on a change in one assumption

while not changing all other assumptions. This analysis may not be representative of the actual change in the defined benefit

obligation as it is unlikely the change in any of the assumptions would occur in isolation of one another as some of the

assumptions are correlated.

Based on the sensitivity analysis the Directors’ do not consider the actuarial assumptions to be a major source of estimation uncertainty.

Further details of the DRSP and VCP are included in the Directors’ remuneration report on pages 74 to 77.

Share-based payments PSP and DRSP

During the period, awards under the DRSP were made to the Executive Directors and senior managers, details of which are set

out below.

The award was based solely on service conditions.

	Number of awards
	at the beginning	Number of awards	Number of awards	Number of awards	Number of awards	Fair value
	of	granted during	exercised during	forfeited during	at the end of	pence	Vesting	Maturity
Date of award	the period	the period	the period	the period	the period	per share	period	date
April 2021	246,268	–	(220,251)	–	26,017	257	3 years	April 2024
(service conditions)
May 2021	89,547	–	–	(89,547)	–	307	3 years	May 2024
(service conditions)
April 2022	278,144	–	–	(102,489)	175,655	349	3 years	April 2025
(service conditions)
April 2022	12,164	–	–	(12,164)	–	349	3 years	January
(service conditions)								2025
April 2022	12,164	–	(12,164)	–	–	349	2 years	January
(service conditions)								2024
April 2023	157,009	–	–	(123,948)	33,061	203	3 years	April 2026
(service conditions)
April 2023	329,827	–	–	(14,899)	314,928	203	3 years	April 2026
(service conditions)
August 2024	–	510,208	–	–	510,208	178	3 years	August 2027
(service conditions)
Total	1,125,123	510,208	(232,415)	(343,047)	1,059,869

The 2022, 2023, and 2024 awards linked to service conditions have been valued using the five-day weighted average share price

prior to award date. The employee expense in the 12-month period to 31 March 2025 is $0.3m (15-months ended 31 March 2024:

$1.5m).

Value Creation Plan (‘VCP’)

During the period, awards under the VCP were made to the Executive Directors, details of which are set out below. The award

was based solely on performance conditions.

	Number of awards
	at the beginning	Number of awards	Number of awards	Number of awards	Number of awards	Fair value
	of	granted during	exercised during	forfeited during	at the end of	pence	Vesting	Maturity
Date of award	the period	the period	the period	the period	the period	per unit	period	date
March 2025
VCP Scheme
(performance
conditions)	–	335	–	–	335	8,981	3 years	March 2027
March 2025
VCP Scheme
(performance
conditions)	–	335	–	–	335	19,661	4 years	March 2028
Total	–	670	–	–	670

VCPs were awarded in the period. In accordance with the plan rules, participants are eligible for a share in a pool of excess

shareholder value created over three and four-year performance periods. Vested shares (net of tax) must be retained for five

years from the date of grant. The 2025 VCP awards linked to performance conditions have been valued using a Monte Carlo

simulation to estimate the grant date fair value. The employee expense in the 12-month period to 31 March 2025 is $26k.

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Dialight plc Annual Report and Accounts 2025

129

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

17. INVENTORIES

	31 March	31 March
	2025	2024
	$m	$m
Raw materials and consumables	20.0	18.8
Work in progress	10.7	13.4
Finished goods	15.7	16.7
	46.4	48.9
Spare parts	0.2	0.2
	46.6	49.1

Inventories to the value of $67.2m (15-months ended 31 March 2024: $90.8m) were recognised as expenses in the period.

The inventory reserve at the balance sheet date was $5.9m, which represents 11.2% of gross inventory (2024: $6.6m representing

11.8% of gross inventory). Additional reserves of $3.0m were booked in the period, being offset by utilisation of $1.5m and

released of $2.2m, resulting in a net decrease in the reserve of $0.7m. As at 31 March 2025, management’s best estimate of the

amount of inventory that will not be used within the next 12 months is c. $8.5m (2024: $8.1m).

In 2022, the Group revised its basis for estimate to calculating the inventory reserve to provide for raw and sub-assembly

inventory that is over 24-months old at the balance sheet date. The new basis for estimate reduces estimation subjectivity, while

allowing for the adverse impact from component shortages that have led to high inventory levels and some components being

held for longer than expected. Two years is felt to be appropriate as the components have a long shelf life and continue to be

used in production.

The review of finished goods inventory was based on all inventory over 365 days old. Inventory on hand was compared to

historical sales, current orders, sales pipeline and whether the product had been recently launched. Management judgement

was then applied to determine whether there was a reasonable probability that the inventory would be sold, with a provision

being required for any inventory that failed this assessment.

See note 23 for details of fixed and floating charges which includes the value of inventory in material Group companies.

18. TRADE AND OTHER RECEIVABLES

Amounts falling due within one year

		31 March	31 March
		2025	2024
	Notes	$m	$m
Trade receivables		30.7	27.6
Allowance for credit losses	24	(2.1)	–
		28.6	27.6
Other non-trade receivables		3.1	1.4
Prepayments and accrued income		2.6	3.3
		34.3	32.3

The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables is disclosed

in note 24.

See note 23 for details of fixed and floating charges which includes the value of receivables in material Group companies

Amounts falling due in more than one year

	31 March	31 March
	2025	2024
	$m	$m
Other receivables	0.5	5.9

These relate to deposits on leasehold properties as at March 2025 and at March 2024, and additionally for March 2024 amounts

held in an escrow account by Sanmina Corporation, former manufacturing partner, relating to potential excess inventory claims.

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130

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

19. CASH AND CASH EQUIVALENTS

	31 March	31 March
	2025	2024
	$m	$m
Cash and cash equivalents	7.9	11.5

20. CAPITAL AND RESERVES

Share capital

	31 March	31 March	31 March	31 March
	2025	2025	2024	2024
	Number	$m	Number	$m
Authorised: as previously stated	40,202,936	1.2	39,828,141	1.2
Adjustment*	–	–	199,140	–
Authorised: restated	40,202,936	1.2	40,027,281	1.2
Ordinary shares of 1.89p each Issued and fully paid:
At the beginning of the period	40,027,281	1.2	32,946,371	1.0
Issued during the period	175,655	–	6,881,770	0.2
At the end of the period: as previously stated	40,202,936	1.2	39,828,141	1.2
Issued during the period: adjustment*	–	–	199,140	–
At the end of the period: restated	40,202,936	1.2	40,027,281	1.2

On 24 March 2025 a total of 175,655 new ordinary shares of 1.89 pence each in the capital of the Company were issued.

* On 28 March 2024 a total of 199,140 new ordinary shares of 1.89 pence each in the capital of the Company were issued.

This issue of shares had been inadvertently omitted from the 2024 annual financial statements.

On 5 April 2023 a total of 246,513 new ordinary shares of 1.89 pence each in the capital of the Company were issued.

On 31 October 2023 a total of 6,635,257 new ordinary shares of 1.89 pence each in the capital of the Company were allotted

to raise gross proceeds of approximately $12.9m.

Share premium account

	31 March	31 March
	2025	2024
	$m	$m
At the beginning of the period	13.0	1.2
Issued during the period	–	12.7
Share issues costs	–	(0.9)
At the end of the period	13.0	13.0

Share premium

In the prior period, share issue costs of $0.9m have been netted off against the share premium arising on the new share issue.

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131

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

20. CAPITAL AND RESERVES (CONTINUED)

Merger reserve

On acquiring Lumidrives Limited in 2006, the Company issued ordinary shares as part of the consideration. Merger relief

was taken in accordance with Section 131 of the Companies Act 1985 and hence $1.0m was credited to the merger reserve.

Translation reserve

The translation reserve comprises all foreign exchange differences from 1 January 2004 arising from the translation of the

financial statements of the Company’s overseas subsidiaries.

Capital redemption reserve

The capital redemption reserve comprises the nominal value of “B” preference shares redeemed since the capital

reorganisation in 2005.

Own shares

Own shares represent shares in the Company that are held by an independent employee benefit trust (‘EBT’) and include

treasury shares. Own shares are held to settle share options in the future. In the period to 31 March 2025, the EBT purchased

69,281 shares on the open market for $0.2m and was allotted a further 175,655 new ordinary shares of 1.89 pence each.

Dividends

No dividends were declared in the current or the prior year. After the balance sheet date no dividends were proposed by the

Directors and there are no income tax consequences for the Company.

21. TRADE AND OTHER PAYABLES

Amounts payable within one year

	31 March	31 March
	2025	2024
	$m	$m
Trade payables	18.9	24.2
Other taxes and social security	3.0	1.1
Sanmina liability	3.5	–
Non-trade payables and accrued expenses	14.7	9.0
	40.1	34.3

Amounts payable after more than one year

	31 March	31 March
	2025	2024
	$m	$m
Sanmina liability	3.8	–

The Group’s exposure to currency and liquidity risk related to trade and other payables is disclosed in note 24.

Trade payables relate to amounts owed to suppliers for goods or services purchased on credit, primarily raw materials and other

inventory purchases. Non-trade payables and accrued expenses relate to goods-in-transit and other professional fees.

Sanmina liability

In March 2025 a payment of $4.0m was made and as at March 2025 a discounted liability of $7.3m has been recognised.

The liability was discounted in accordance with IFRS as the liability will be settled over a period of two years and therefore

financing is deemed to be an integral component. Interest will be recognised at 8.0% p.a. (totalling $0.7m) on the liability over

time. Further details of contingencies regarding the settlement are given in note 26. In the view of the Directors, the additional

various triggers are highly unlikely to occur.

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132

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

22. PROVISIONS

	Warranty and	Sanmina	Lease	Onerous
	claims	litigation	restoration	contract	Total
	$m	$m	$m	$m	$m
At 1 April 2024	2.2	–	0.6	–	2.8
Provisions made during the year	0.7	23.2	0.5	0.9	25.3
Provisions utilised during the year	–	(6.3)	(0.5)	–	(6.8)
Provisions released during the year	–	(4.7)	–	–	(4.7)
Reclassified to liabilities	–	(11.3)	–	–	(11.3)
Other	–	(0.9)	–	–	(0.9)
Foreign exchange movements	–	–	0.1	–	0.1
Balance at 31 March 2025	2.9	–	0.7	0.9	4.5

The warranty provision relates to sales made over the past nine years. The warranty provision has been estimated based on

historical warranty data with similar products. The Group expects to settle the majority of the liability over the next two to three

years. The onerous contract provision is in relation to the Leotek contract and is expected to be fully used in the next year.

The table below provides a breakdown of the provisions into their short-term and long-term portions:

	31 March	31 March
	2025	2024
	$m	$m
Within one year	2.4	1.2
Between one and five years	0.7	1.3
After five years	1.4	0.3
	4.5	2.8

23. BORROWINGS

The Group’s bank facility comprise a revolving credit facility (‘RCF’) of $28.8m from HSBC. A balance of $5.2m was repaid

in August 2024 using the proceeds received from the disposal of the Traffic business, after which the facility was reduced by

a corresponding amount from $34.0m to $28.8m. As at 31 March 2025, $25.7m was drawndown (2024: $27.9m).

The facility was extended on 5 June 2025 to 21 July 2027 on the same terms as the original agreement. Aligned with the Group’s

robust commitment to environmental, social, and governance principles, the RCF facility operates as a sustainability-linked loan.

The Group’s bank facility includes security for HSBC by way of fixed and floating charges over all the material companies in

the Group that generate greater than 5% of the turnover, operating profit or net assets of the Group. This was registered at

Companies House on 21 July 2022.

The RCF facility is subject to quarterly covenants encompassing maximum leverage and minimum interest cover. The covenants

for the quarter ending 30 September 2023 were temporarily reset from a leverage ratio maximum target of less than 3x to 4.5x,

and an interest cover minimum target of a maximum 4.0x to 2.5x. The covenants reverted to the original hurdles from the quarter

ending 31 December 2023 onwards.

Due to the historical weak trading performance of the Group, in the final quarter of the financial period ending 31 March 2024

HSBC agreed to reduce the interest rate covenant for the third-quarter of FY2025 (only) to 2.5x. The covenant reverted to the

original level of 4.0x from the quarter ending 31 March 2025 onwards.

In the 12-month period to 31 March 2025 the covenants have been complied with and the outstanding borrowings of $25.7m

have been classified as a non-current liability as at 31 March 2025 in line with the facility expiring in July 2026.

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133

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

23. BORROWINGS (CONTINUED)

	Loans
	$m
At 1 January 2023	27.4
Facility drawdown (RCF – USD)	5.8
Facility repayment (RCF – USD)	(1.0)
Facility drawdown (RCF – GBP)	0.4
Facility repayment (RCF – GBP)	(2.4)
Facility repayment (CLBIL)	(2.5)
Foreign exchange movements	0.2
At 31 March 2024	27.9
Facility drawdown (RCF – USD)	3.0
Facility repayment (RCF – USD)	(5.2)
Foreign exchange movements	–
Balance at 31 March 2025	25.7

			Amount drawn	Amount drawn
			down as at	down as at
			31 March	31 March
	Interest rate	Maturity	2025	2024
Details of the facilities	p.a.*	date	$m	$m
$28.8m revolving credit facility	7.33%	July 2026	25.7	27.9

* Indicative rate as at March 2025.

The banking covenants are as follows:

Ratio	Calculation	Covenant
Leverage ratio	Net bank debt/Adjusted EBITDA	<3.0x
Interest cover	Adjusted EBITDA/Interest expense	>4.0x

Interest is based on the Secured Overnight Financing Rate (‘SOFR’)/Sterling Overnight Index Average (‘SONIA’), depending on

the tranche of debt, plus a margin which varies dependent on the Group’s leverage ratio and a sustainability margin adjustment.

There are three sustainability key performance indicators (‘KPIs’), being: reduction in absolute gross tonnes CO

e per £1m of

revenue; the percentage of employees who take up a day of paid time to participate in charity days; and reduction in absolute

kilolitres of water usage per £1m of revenue. Margin increases by 0.015% if only one KPI is achieved, by 0.03% if no KPI is met and

decreases by 0.015% if two KPIs achieved and by 0.03% if all three KPIs are met.

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134

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

23. BORROWINGS (CONTINUED)

Reconciliation of liabilities arising from financing activities

The changes in the Group’s liabilities arising from financing activities can be classified as follows:

	Long-term	Short-term	Lease	Sanmina
	borrowings	borrowings	liabilities	liability	Total
	$m	$m	$m	$m	$m
Balance at 1 January 2023	–	27.4	13.7	–	41.1
Cash-flows:
– Repayment	–	(5.9)	(2.9)	–	(8.8)
– Proceeds	–	6.2	–	–	6.2
Non-cash:
– Net additions/(disposals)	–	–	(0.6)	–	(0.6)
– Foreign exchange movements	–	0.2	(0.1)	–	0.1
– Reclassification	–	–	–	–	–
Balance at 1 April 2024	–	27.9	10.1	–	38.0
Cash-flows:
– Repayment	(5.2)	–	(2.3)	(4.0)	(11.5)
– Proceeds	3.0	–	–	–	3.0
Non-cash:
– Net additions/(disposals)	–	–	2.1	11.3	13.4
– Foreign exchange movements	–	–	0.1	–	0.1
– Reclassification	27.9	(27.9)	–	–	–
Balance at 31 March 2025	25.7	–	10.0	7.3	43.0

24. FINANCIAL RISK MANAGEMENT

The Group has exposure to credit risk, market risk and liquidity risk from its use of financial instruments.

This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies

and processes for measuring and managing risk. Further quantitative disclosures are included throughout these consolidated

financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Group’s risk management framework.

The Group’s risk policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and

controls, and to monitor risks and adherence to limits.

The Audit Committee oversees how management monitors compliance with the Group’s risk management policies and

procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.

Credit risk

Trade and other receivables

Credit risk is the risk of financial loss if a customer fails to meet its contractual obligations by not paying the receivables due.

The Group’s exposure to credit risk is influenced mainly by the individual characteristics of each customer. The Group does not

have any major customer concentration which reduces risk of significant default.

Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Each new customer

is analysed individually for creditworthiness before the Group’s standard payment conditions and terms are offered. The Group’s

review includes external ratings when available and, in some cases, bank references. Purchase limits are set for customers.

Customers who do not meet the benchmark creditworthiness may transact with the Group only on a prepayment basis.

The Group establishes an allowance for impairment that represents its estimate of expected future losses in respect of trade

and other receivables. Impairment losses are determined having taken into account customer specific circumstances and

financial position, together with Group information about general payment trends and economic factors.

IFRS 9 introduced an expected credit loss (‘ECL’) model for calculating impairment of financial assets and the Group has

applied the simplified approach as permitted by IFRS 9. The ECL model considers the Group’s historical credit loss, factors

specific to each receivable, the current economic environment and expected changes in future forecasts. The trade receivables

balance below is shown net of the provision for bad debts. The Group provides against trade receivables based on an ECL

model, calculated from the probability of default for the remaining life of the asset. ECL of financial assets contain a number

of measurement uncertainties relating to management’s view of the expected future cash flows receivable from financial

assets due from customers and the inherent creditworthiness of those customers. Judgement is based on the Group’s past

experience as well as taking into consideration current market and economic conditions, and any factors relating to a specific

customer or sale. Changes in judgements and assumptions could result in a material adjustment to those estimates in future

reporting periods.

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135

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

24. FINANCIAL RISK MANAGEMENT (CONTINUED)

Exposure to credit risk

The ageing of trade receivables at the reporting date was:

	Gross carrying	Expected credit	Gross carrying	Expected credit
	amount	loss	amount	loss
	31 March	31 March	31 March	31 March
	2025	2025	2024	2024
	$m	$m	$m	$m
Not past due	23.9	–	22.7	–
Past due 0–30 days	3.0	–	4.4	–
Past due 31–120 days	3.5	(1.8)	0.5	–
Past 121+ days	0.3	(0.3)	–	–
Total	30.7	(2.1)	27.6	–

The allowance in respect of trade receivables is used to record forecast impairment losses unless the Group is satisfied that no

recovery of the amount owing is possible, at which point the amount considered irrecoverable is written off against the financial

asset directly. Other non-trade receivables of $2.2m (2024: $8.3m) have been assessed for credit loss. An impairment of $nil

(2024 :$nil) has been recognised on the basis that the probability of default and subsequent loss given default are not material.

The closing balance of the trade receivables loss allowance as at the period end reconciles with the trade receivables loss

allowance opening balance as follows:

	31 March	31 March
	2025	2024
	$m	$m
Loss allowance brought forward	–	–
Loss allowance recognised during the period	(2.1)	–
Loss allowance carried forward	(2.1)	–

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Group’s

income. The objective of market risk management is to manage and control market risk exposures within acceptable

parameters, while optimising the return.

Interest rate risk

The Group’s policy is to accept exposure to interest rate risk on the Group’s borrowings. Interest is based on the Secured

Overnight Financing Rate (‘SOFR’)/Sterling Overnight Index Average (‘SONIA’), depending on the tranche of debt, plus a margin

which varies dependent on the Group’s leverage ratio and a sustainability margin adjustment (see note 23).

Please refer to note 23 for details of the Groups borrowings.

Foreign currency risk

Exposure to currency risk arises in the normal course of the Group’s business.

The Group is exposed to foreign currency risk on sales and purchases that are denominated in a currency other than each

subsidiary’s functional currency. The currencies giving rise to risk are primarily the Euro, Canadian dollar and the US dollar.

Where possible the Group uses natural hedging within the Group to hedge the majority of its foreign currency risk.

Natural hedging is the mechanism whereby the cash inflows in a particular currency are matched to the cash outflows in that

currency at the same business or a different Group company. The Group has borrowing facilities in US dollars in order to match

the currency of the Group’s major market. Foreign exchange contracts may be taken out to manage exposures that are not

mitigated through natural hedging but the Group had no foreign exchange contracts at the balance sheet date.

In respect of other monetary assets and liabilities held in currencies other than GBP sterling, the Group ensures that the net

exposure is kept to an acceptable level by buying or selling foreign currencies at spot rates where necessary to address

short-term imbalances.

The functional currency of the parent company, Dialight plc is GBP sterling. The Company holds monetary assets and liabilities

in US dollars, and as such has exposure to foreign currency risk. See note 6 of the Company accounts.

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Dialight plc Annual Report and Accounts 2025

136

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

24. FINANCIAL RISK MANAGEMENT (CONTINUED)

The Group’s exposure to foreign currency risk was as follows:

	31 March	31 March	31 March	31 March	31 March	31 March	31 March	31 March
	2025	2025	2025	2025	2024	2024	2024	2024
	MXN m	GBP m	CAD m	EUR m	MXN m	GBP m	CAD m	EUR m
Trade receivables	35.0	0.5	4.2	1.2	12.1	0.3	3.5	0.7
Currency cash	12.5	0.2	0.6	0.5	5.2	4.1	0.2	–
Trade payables	–	–	–	(0.2)	–	(2.0)	–	(0.3)
Total	47.5	0.7	4.8	1.5	17.3	2.4	3.7	0.4

The following significant exchange rates applied during the period:

		31 March		31 March
	31 March	2025	31 March	2024
	2025	At balance	2024	At balance
	Average rate	sheet date	Average rate	sheet date
Pound sterling	0.7840	0.7733	0.8010	0.7925
Euro	0.9318	0.9273	0.9240	0.9264
Canadian dollar	1.3911	1.4293	1.3491	1.3540
Mexican peso	19.1539	20.2480	17.5790	16.5558

Liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities

that are settled by delivering cash or another financial asset. The Group’s approach to managing liquidity is to ensure, as far as

possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,

without incurring unacceptable losses or risking damage to the Group’s reputation.

Exposure to liquidity risk

For non-derivative financial liabilities, the Group’s exposure relates principally to trade and other payables and borrowings.

Trade and other payables arise in the normal course of business and there are no unusual or onerous terms and conditions.

The following are the contractual maturities of financial liabilities, including estimated interest payments and excluding the

impact of netting agreements:

	Carrying	Contractual	2 months				More than
	amount	cash flow	or less	2–12 months	1–2 years	2–5 years	5 years
31 March 2025	$m	$m	$m	$m	$m	$m	$m
Non-derivative financial liabilities
Trade and other payables	(18.9)	(18.9)	(13.8)	(2.7)	(1.8)	(0.6)	–
Sanmina liability	(7.3)	(8.0)	–	(4.0)	(4.0)	–	–
Borrowings	(25.7)	(25.7)	–	–	(25.7)	–	–
Lease liabilities	(10.0)	(11.2)	(0.5)	(2.5)	(2.8)	(5.3)	(0.1)
	(61.9)	(63.8)	(14.3)	(9.2)	(34.3)	(5.9)	(0.1)

	Carrying	Contractual	2 months				More than
	amount	cash flow	or less	2–12 months	1–2 years	2–5 years	5 years
31 March 2024	$m	$m	$m	$m	$m	$m	$m
Non-derivative financial liabilities
Trade and other payables	(21.3)	(21.3)	(14.5)	(2.0)	(0.9)	(3.9)	–
Borrowings	(27.9)	(27.9)	–	–	–	(27.9)	–
Lease liabilities	(10.1)	(11.3)	(0.4)	(2.0)	(2.3)	(6.4)	(0.2)
	(59.3)	(60.5)	(14.9)	(4.0)	(3.2)	(38.2)	(0.2)

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Dialight plc Annual Report and Accounts 2025

137

24. FINANCIAL RISK MANAGEMENT (CONTINUED)

Capital management

The Board’s policy is to maintain a strong capital base in order to maintain investor, creditor and market confidence and to

sustain future development of the business. The Board considers consolidated total equity as capital. As at 31 March 2025,

this totalled $47.3m (2024: $63.9m).

The Board is not proposing a final dividend for the period ending 31 March 2025. The Group has a clear capital allocation

discipline and is committed to returning any excess funds to our shareholders via either a future dividend or a share re-purchase.

Sensitivity analysis

In managing interest rate and currency risks the Group aims to reduce the impact of short-term fluctuations on the Group’s

earnings. Over the longer term, however, permanent changes, in particular in foreign exchange rates, would have an impact

on equity value and consolidation earnings.

At 31 March 2025, it is estimated that a change of 5% in the value of the GBP sterling and the Euro against US dollar would

impact operating profit for the period ended 31 March 2025 by approximately $0.4m.

At 31 March 2025, it is estimated that a 1% increase in SOFR/SONIA would lead to approximately an $0.26m change in the

annual interest expense.

Fair values versus carrying amounts

The fair values of financial assets and liabilities, together with the carrying amounts shown in the balance sheet, are as follows:

	Carrying		Carrying
	amount	Fair value	amount	Fair value
	31 March	31 March	31 March	31 March
	2025	2025	2024	2024
	$m	$m	$m	$m
Financial assets
Cash and cash equivalents	7.9	7.9	11.5	11.5
Loans and receivables
Trade and other receivables	31.7	31.7	29.0	29.0
Total financial assets	39.6	39.6	40.5	40.5
Financial liabilities
Trade and other payables	(33.6)	(33.6)	(32.9)	(32.9)
Sanmina liability	(7.3)	(7.3)	–	–
Borrowings	(25.7)	(25.7)	(27.9)	(27.9)
Lease liabilities	(10.0)	(10.0)	(10.1)	(10.1)
Total financial liabilities	(76.6)	(76.6)	(70.9)	(70.9)

Details of the major methods and assumptions used in estimating the fair values of financial instruments reflected in the table

are set out in note 4(w).

25. CAPITAL COMMITMENTS

Capital commitments at the balance sheet date for which no provision has been made in the accounts were:

	31 March	31 March
	2025	2024
	$m	$m
Contracted	2.3	2.5

Capital commitments relate to planned capacity improvements, factory improvements and end-of-life asset replacement.

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

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Dialight plc Annual Report and Accounts 2025

138

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

26. CONTINGENCIES

Sanmina litigation

On 31 March 2025, the Group settled its long-standing litigation with Sanmina for $12.0m to be paid by instalments. This required

payment of $4.0m on 31 March 2025 and eight quarterly payments of $1.0m per quarter with the final payment due on 27 March 2027.

The amount of any outstanding deferred instalments will be automatically increased from $1.0m to $1.5m if Dialight’s market

capitalisation exceeds £100m for 30 consecutive days, subject to the total cumulative instalment payments not exceeding $8.0m.

If these quarterly instalments are not paid on time, or within with a forty-five cure per period, Sanmina has filed with the UK court

a Stipulation (‘Stipulation’) for Entry of Judgement of $22.0m less the cumulative value of payments already made. There are in

addition various triggers, which the Directors believe to be highly unlikely to be triggered, that can activate the Stipulation.

27. RECONCILIATION TO NON-GAAP PERFORMANCE MEASURES

Certain financial information set out in the consolidated year end financial statements and annual report is not defined under

International Financial Reporting Standards (‘IFRS’). These key Alternative Performance Measures (‘APMs’) represent additional

measures in assessing performance and for reporting both internally and to shareholders and other external users. The Group

believes that the presentation of these APMs provides useful supplemental information which, when viewed in conjunction with

IFRS financial information, provides readers with a more meaningful understanding of the underlying financial and operating

performance of the Group.

None of these APMs should be considered as an alternative to financial measures drawn up in accordance with IFRS.

15-month comparatives

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Revenue: 3-month period from January 2023 to March 2023	–	43.9
Revenue: 12-month period from April to March	183.5	182.1
Revenue	183.5	226.0
Gross profit: 3-month period from January 2023 to March 2023	–	12.7
Gross profit: 12-month period from April to March	66.5	54.4
Gross profit	66.5	67.1
Underlying gross profit: 3-month period from January 2023 to March 2023	–	12.7
Underlying gross profit: 12-month period from April to March	65.3	57.4
Underlying gross profit	65.3	70.1
Loss from operating activities: 3-month period from January 2023 to March 2023	–	(2.8)
Loss from operating activities: 12-month period from April to March	(11.6)	(27.4)
Loss from operating activities	(11.6)	(30.2)
Underlying profit/(loss) from operating activities: 3-month period from January 2023 to March 2023	–	(2.7)
Underlying profit/(loss) from operating activities: 12-month period from April to March	4.2	(1.9)
Underlying profit/(loss) from operating activities	4.2	(4.6)
Non-underlying items: 3-month period from January 2023 to March 2023	–	(0.1)
Non-underlying items: 12-month period from April to March	(21.6)	(25.5)
Non-underlying items	(21.6)	(25.6)

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Dialight plc Annual Report and Accounts 2025

139

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

27. RECONCILIATION TO NON-GAAP PERFORMANCE MEASURES (CONTINUED)

Other non-GAAP performance measures

	12-month	15-month
	period ended	period ended
	31 March	31 March
	2025	2024
	$m	$m
Gross profit	66.5	67.1
Non-underlying items (note 6)	(1.2)	3.0
Underlying gross profit	65.3	70.1
Loss from operating activities	(11.6)	(30.2)
Non-underlying items (note 6)	21.6	25.6
Gain on disposal of business	(5.8)	–
Underlying profit/(loss) from operating activities	4.2	(4.6)
Loss from operating activities	(11.6)	(30.2)
Non-underlying items (note 6)	21.6	25.6
Gain on disposal of business	(5.8)	–
Depreciation of property, plant and equipment (note 12)	3.2	4.3
Loss on disposal of property, plant and equipment (note 12)	0.3	–
Amortisation of intangible assets (note 14)	2.6	7.7
Impairment of intangible assets (note 14), not included in non-underlying items	0.1	–
Share-based payments	0.3	1.5
Underlying EBITDA	10.7	8.9
Loss from operating activities	(11.6)	(30.2)
Non-underlying items (note 6)	21.6	25.6
Proceeds on business disposal	(5.8)	–
Depreciation of property, plant and equipment (note 12)	3.2	4.3
Loss on disposal of property, plant and equipment (note 12)	0.3	–
Amortisation of intangible assets (note 14)	2.6	7.7
Impairment of intangible assets (note 14), not included in non-underlying items	0.1	–
Impairment losses of financial assets	2.1	–
Share-based payments	0.3	1.5
Net movement on working capital (inventories, trade and other receivables, trade and other payables)
as per consolidated statement of cash flows	6.7	10.0
Underlying operating cash flow	19.5	18.9

As explained in note 6, the Group incurs costs and earns income that is not considered to be reflective of the underlying

performance of the business. In the assessment of performance of the business units of the Group, management examines

underlying performance, which removes the impact of non-underlying costs and income.

Underlying profit from operating activities and underlying EBIT referred to in the earlier sections of the annual report are the

same measures. Underlying operating cash flow and adjusted operating cash flow referred to in the earlier sections of the annual

report are the same measure.

Net bank debt

Net bank debt is defined as total Group borrowings (excluding lease liabilities recognised under IFRS 16 and the Sanmina

liability) less cash. Net bank debt of $17.8m at the period end (2024: $16.4m) consisted of borrowings of $25.7m (2024: $27.9m)

less cash of $7.9m (2024: $11.5m).

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140

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

28. RELATED PARTIES

The ultimate Parent Company of the Group is Dialight plc. Transactions between the Company and its subsidiaries have been

eliminated on consolidation.

Transactions with key management personnel

Only Directors are considered to be key management personnel and transactions with them are disclosed in note 7. Directors of

the Company and their immediate relatives control less than 1% of the Company.

Other related party transactions

During the period and the prior period, the Company paid for a lease agreement for the previous CEO, Fariyal Khanbabi, which

was cohabited with her son and his partner. The lease ended in May 2024.

29. SUBSIDIARIES

(a) Trading companies

In accordance with Section 409 of the Companies Act 2006, a full list of subsidiaries as at 31 March 2025 is disclosed below.

Those companies stated in table (a) below are those, in the opinion of Directors, which principally affect the revenue, profit

or assets of the Dialight Group. The remaining companies that comprise the Dialight Group are set out in table (b).

Name	Percentage owned	Registered office			Principal activity
Dialight Corporation*	100%	1501		Route, 34	Design, assembly and sale
		South Farmingdale			of Lighting and Signals &
		NJ 07727			Components products
				United States
Dialight Europe Limited**	100%	60 Petty France			Sale of Lighting products
		London
		England SW1H 9EU
Dialight GmbH*	100%	Maximilianstrasse 54			Sale of Lighting products
		80538		Munchen
		Germany
Dialight ILS Australia Pty Limited*	87. 5%	108		Howe Street	Sale of Lighting products
		Perth 6017		Osborne Park
		Australia
Dialight Asia Pte. Ltd*	75%	07–72 Vertex (Tower A)		33 Ubi Avenue 3	Sale of Lighting products
		Singapore, 408868
Dialight Penang Sdn. Bhd.*	100%	No.	1478	B	Assembly and sale of Lighting and
		Lorong Perusahaan Maju 8			Signals & Components products
		Kawasan Perusahaan Perai
		13600	Perai
		Penang, Malaysia
Dialight de Mexico, S. de R.L. de C.V.*	100%	Calle Lirios S/N Colona			Assembly and sale of Lighting and
		Pacheco Ensenada			Signals & Components products
		Baja California
		Mexico
Dialight Latin America, S. de R.L.	100%	Calle Lirios S/N Colona			Sale of Lighting and Signals &
de C.V.*		Pacheco Ensenada			Components product
		Baja California
		Mexico

* The investment is held directly by Dialight plc except for those companies indicated by *.

** These companies are exempt from the requirement to prepare individual audited financial statements in respect of the period ended 31 March 2025, by virtue of Sections 479A and 479C

of the Companies Act 2006.

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141

29. SUBSIDIARIES CONTINUED)

(b) Other companies

Name	Percentage owned	Registered office		Principal activity
Belling Lee Limited**	100%	60 Petty France		Intermediary holding company
		London
		England SW1H 9EU
Roxboro Overseas Limited**	100%	60 Petty France		Non-trading/intermediary
		London		holding company
		England SW1H 9EU
The Roxboro Trust Company Limited** 100%		60 Petty France		Dormant
		London
		England SW1H 9EU
The Roxboro UK Pension	50%	60 Petty France		Corporate pension fund trustee
Trustee Limited*		London
		England SW1H 9EU
Roxboro Holdings Inc.*	100%	The Corporation Trust Co.		Non-trading/intermediary
		Corporation Trust Centre		holding company
		1209	Orange Street City
		of Wilmington
		County of New Castle DE
		United States

* The investment is held directly by Dialight plc except for those companies indicated by *.

** These companies are exempt from the requirement to prepare individual audited financial statements in respect of the period ended 31 March 2025, by virtue of Sections 479A and 479C

of the Companies Act 2006.

In November 2023, the Group dissolved two fully owned dormant entities, Roxboro Analytical Inc and Roxboro Metrology Inc.

30. POST BALANCE SHEET EVENTS

The Group’s multi-currency revolving credit facility of $28.8m with HSBC was extended on 5 June 2025 to 21 July 2027 on the

same terms as the original revolving credit facility agreement.

In May 2025, the Group received an Employee Retention Credit (‘ERC’) of $1.4m. An ERC is a US refundable tax credit for certain

eligible businesses that had employees and were affected during the COVID-19 pandemic. This government grant income has

not been included in this annual report and accounts since as at the balance sheet date it was not known that the credit was

reasonably certain to be received. The claim was filed in 2023.

Notes to the consolidated financial statements continued

for the 12-month period ended 31 March 2025

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Dialight plc Annual Report and Accounts 2025

142

Note

31 March

2025

£m

31 March

2024

£m

Fixed assets

Intangible assets 4 0.1 0.1

Investments 5 37.0 39.4

37.1 39.5

Current assets

Debtors 8 14.8 28.5

Cash and cash equivalents 0.3 8.0

15.1 36.5

Creditors: Amounts falling due within one year 9 (4.3) (25.2)

Net current assets 10.8 11.3

Total assets less current liabilities 47.9 50.8

Creditors: Amounts falling due after more than one year 10 (19.9) –

Net assets 28.0 50.8

Capital and reserves

Called up share capital 11 0.7 0.7

Share premium 12 10.7 10.7

Capital redemption reserve 12 2.2 2.2

Other reserves 12 6.1 5.9

Profit and loss account 12 8.3 31.3

Equity shareholders’ funds 28.0 50.8

As permitted by Section 408 of the Companies Act 2006, a separate profit and loss account of theparent company has not

been presented.

The parent company’s loss for the period was £2 3.0m (2024: loss of £6.9m).

The accompanying notes form part of these financial statements.

These financial statements were approved by the Board of Directors on 23 June 2025 and weresigned on its behalf by:

Steve Blair Mark Fryer

Group Chief Executive Officer Group Chief Financial Officer

Company balance sheet (prepared under FRS 102)

as at 31 March 2025

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Dialight plc Annual Report and Accounts 2025

143

Share capital

£m

Other reserve

capital

contribution

£m

Capital

redemption

reserve

£m

Share premium

£m

Own shares

£m

Retained

earnings

£m

Total

equity

£m

Balance at 1 April 2024 0.7 6.7 2.2 10.7 (0.8) 31.3 50.8

Loss for the period – – – – – (23.0) (23.0)

Total other comprehensive expense – – – – – – –

Total comprehensive expense

fortheperiod

– – – – – (23.0) (23.0)

Transactions with owners,

recordeddirectly in equity

Share-based payments, net of tax – 0.3 – – – – 0.3

Re-purchase of own shares – – – – (0.1) – (0.1)

Issues of shares (note 11 and note 12) – – – – – – –

Total contribution by, and

distribution to, owners

– 0.3 – – (0.1) – 0.2

Balance at 31 March 2025 0.7 7.0 2.2 10.7 (0.9) 8.3 28.0

Share capital

£m

Other reserve

capital

contribution

£m

Capital

redemption

reserve

£m

Share premium

£m

Own shares

£m

Retained

earnings

£m

Total

equity

£m

Balance at 1 January 2023 0.6 5.5 2.2 1.0 (0.8) 38.2 46.7

Loss for the period – – – – – (6.9) (6.9)

Total other comprehensive expense – – – – – – –

Total comprehensive expense

forthe period

– – – – – (6.9) (6.9)

Transactions with owners,

recorded directly in equity

Share-based payments, net of tax – 1.2 – – – – 1.2

Re-purchase of own shares – – – – – – –

Issue of shares (note 11 and note 12) 0.1 – – 9.7 – – 9.8

Total contribution by, and

distribution to, owners

0.1 1.2 – 9.7 – – 11.0

Balance at 31 March 2024 0.7 6.7 2.2 10.7 (0.8) 31.3 50.8

Company statement of changes in equity

for the 12-month period ended 31 March 2025

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Dialight plc Annual Report and Accounts 2025

144

Notes to the company financial statements

for the 12-month period ended 31 March 2025

1. GENERAL INFORMATION

Dialight plc is a company incorporated in the United Kingdom under the Companies Act 2006.

The address of the registered office is given on page 154 of this annual report and accounts.

The Company is a holding company that manages the other trading subsidiaries of the Dialight Group.

The functional currency of Dialight plc is considered to be GBP sterling because that is the currency of the primary economic

environment in which the Company operates.

2. BASIS OF PREPARATION

These financial statements have been prepared in accordance with Financial Reporting Standard 102 The Financial Reporting

Standard applicable in the UK and Republic of Ireland (‘FRS 102’).

Under Section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own profit and loss account.

In these financial statements, the Company is considered to be a qualifying entity (for the purposes of this FRS) and has applied

the exemptions available under FRS 102 in respect of the following disclosures:

• cash flow statement and related notes; and

• key management personnel compensation.

As the consolidated financial statements of the Group include the equivalent disclosures, the Company has also taken the

exemptions under FRS 102 available in respect of the following disclosures:

• certain disclosures required by FRS 102.26 Share-based Payments; and

• certain disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in

respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.

The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these

financial statements.

(a) Going concern

As set out in note 2(b) of the consolidated financial statements, the Directors have identified circumstances which give rise

to a material uncertainty which may cast significant doubt on the entity’s ability to continue as a going concern, meaning it

may be unable to realise it assets and discharge its liabilities in the normal course of business. Notwithstanding this material

uncertainty, the Directors consider it remains appropriate to continue to adopt the going concern basis in the preparation of the

financial statements.

(b) Intangible fixed assets

Intangible assets that have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment

losses. Amortisation is recognised in profit and loss on a straight-line basis over the estimated useful lives of intangible assets

from the date that they are available for use.

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions

ofthe instrument.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered

into. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all

ofits liabilities.

(i) Financial assets and liabilities

All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial

assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction

price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a

financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted

at a market rate of interest for a similar debt instrument.

The Company’s debt instruments are subsequently measured at amortised cost using the effective interest method.

Debt instruments that are classified as payable or receivable within one year on initial recognition, and which meet the above

conditions, are measured at the undiscounted amount of the cash or other consideration expected to be paid or received,

netof impairment.

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Dialight plc Annual Report and Accounts 2025

145

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

2. BASIS OF PREPARATION (CONTINUED)

(ii) Investments

Investments in subsidiaries and associates are measured at cost less impairment. For investments in subsidiaries acquired for

consideration, including the issue of shares qualifying for merger relief, cost is measured by reference to the nominal value of the

shares issued plus the fair value of other consideration. Any premium is ignored.

(iii) Equity instruments

Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable,

netofdirect issue costs.

(d) Impairment of assets

Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there

isobjective evidence of impairment, an impairment loss is recognised in profit or loss.

(e) Taxation

Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the

tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date

where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have

occurred at the balance sheet date.

Timing differences are differences between the Company’s taxable profits and its results as stated in the financial statements

that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised

in the financial statements.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence,

it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the

underlying timing differences can be deducted.

(f) Employee benefits

The Company operates both defined benefit and defined contribution plans. The assets of all arrangements are held separately

from the assets of the Company in independently administered funds. The amount charged against profits in respect of defined

contribution arrangements is the contributions payable to those arrangements in the accounting period.

For the defined benefit arrangements, the assets are measured at market values. The liabilities are measured using the

projected unit credit method, discounted at the current rate of return of a high-quality corporate bond appropriate to the term

and currency of the liability.

The defined benefit scheme surplus or deficit is recognised in full and presented on the face of the balance sheet.

The calculation is performed by an independent qualified actuary using the projected unit credit method. In accordance with

IFRIC 14 – IAS 19 “The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction”, the pension

surplus can be recognised as an asset on the balance sheet, limited to the present value of economic benefits available in the

form of any future refunds from the plan or reductions in future contributions to the plan.

Other long-term employee benefits are measured at the present value of the benefit obligation at the reporting date.

The Group recognises a liability in respect of the best estimate of bonus payable where contractually obliged to or where past

practice has created a constructive obligation.

(g) Foreign currency

Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and

liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing

atthat date.

Exchange differences are recognised in profit or loss in the period in which they arise.

(h) Leases

Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on

such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line

basis over the lease term.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

146

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

2. BASIS OF PREPARATION (CONTINUED)

(i) Share-based payment

The Company grants to its employees rights to the equity instruments of Dialight plc. The fair value of awards granted is

recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and

spread over the period during which the employees become unconditionally entitled to receive the awards. The fair value of the

awards granted is measured using a pricing model, taking into account the terms and conditions upon which the awards were

granted. The amount recognised as an expense is adjusted to reflect the actual value of share awards that vest except where

forfeiture is only due to share prices not achieving the threshold for vesting. Where the Company grants awards over its own

shares to employees of its subsidiaries, it recognises an increase in the cost of investment in its subsidiaries equivalent to the

equity-settled share-based payment charge recognised in its subsidiaries’ financial statements with the corresponding credit

being recognised directly in equity.

(j) Share capital

Dividends are recognised in the period in which they are approved by the Company’s shareholders or, in the case of an interim

dividend, when the dividend is paid. Dividends receivable from subsidiaries are recognised when either received in cash or

applied to reduce a creditor balance with a subsidiary.

Own shares

In accordance with FRS 102 9.33 to 9.37, the results of the employee benefit trusts (‘EBT’) have been incorporated into the

financial statements of the parent company. Purchases of shares by the EBT are therefore held as own shares in the statement of

changes in equity.

(k) Provisions

A provision is recognised in the balance sheet when the Company has a present legal or constructive obligation as a result

ofapast event and it is probable that an outflow of economic benefits will be required to settle the obligation.

3. CRITICAL ACCOUNTING JUDGEMENTS AND KEYS SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Company’s accounting policies, which are described in note 2, the Directors are required to make

judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from

other sources.

The estimates and associated assumptions are based on historical experience and other factors that are considered to be

relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing

basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only

that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Significant judgements

None.

Estimates

Impairment of investments in subsidiaries and loans to subsidiaries

The Directors perform an annual impairment assessment for the investments held in subsidiaries and loans to subsidiaries

bythe Company by performing a review for indicators of impairment by assessing the performance of the subsidiaries against

qualitative and quantitative factors. If any of these factors are present a detailed impairment review is undertaken. A detailed

impairment assessment is performed by assessing the subsidiary’s value-in-use, which requires management to make a

number of estimates. The calculations use five-year discounted cash flow projections based on financial budgets approved

by management.

For investments in subsidiaries, a provision for impairment of £2.0m has been recognised in the current period (2024: £nil)

andfor loans to subsidiaries, a provision for impairment of £5.6m has been recognised in the current period (2024: £nil).

Recoverability of amounts due from subsidiary undertakings

The Directors assess whether amounts due from subsidiary undertakings are recoverable based on the trading results and cash

generation of Group companies. Amounts due are deemed impaired if subsidiaries do not generate sufficient cash to enable

repayment of such balances.

A provision for impairment of £10.0m has been recognised in the current period (2024: £nil).

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

147

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

4. INTANGIBLE ASSETS

Software

£m

Cost

At 1 April 2024 0.2

Additions –

At 31 March 2025 0.2

Amortisation and impairment losses

At 1 April 2024 (0.1)

Amortisation for the period –

At 31 March 2025 (0.1)

Net book value at 31 March 2025 0.1

Net book value at 31 March 2024 0.1

5. INVESTMENTS

Investments in

subsidiaries

£m

Loan to

subsidiaries

£m

Total

£m

Cost

At 1 April 2024 23.1 27.7 50.8

Share-based payments 0.2 – 0.2

Reclassification from current assets – 5.8 5.8

Foreign exchange movements – (0.8) (0.8)

At 31 March 2025 23.3 32.7 56.0

Provisions

At 1 April 2024 (11.4) – (11.4)

Impairment charge for the period (2.0) (5.6) (7.6)

At 31 March 2025 (13.4) (5.6) (19.0)

Net book value at 31 March 2025 9.9 27.1 37.0

Net book value at 31 March 2024 11.7 27.7 39.4

In accordance with Section 26 of FRS 102, the cost of investment is increased to reflect the cost of share options awarded

toemployees of the Company’s subsidiaries. A full list of subsidiaries of the Company is provided in note 29 to the consolidated

financial statements.

During the 12-month period ended 31 March 2025, £5.8m of amounts due from Dialight Penang Sdn. Bhd. have been reclassified

from “Amounts owed by subsidiary undertakings within “Current assets” to “Loans to subsidiaries” within “Investments”. This is

on the basis that it is no longer the intention of the Company to recall this loan, and it is now intended for use on a continuing

basis in the Company’s activities.

At the balance sheet date, an impairment assessment has been performed on this loan with the balance being impaired in

full on the basis that the counterparty is loss-making and not generating sufficient operating cash flows to permit material

loan repayments.

Management assessed the investments in subsidiaries for impairment at the year-end, and concluded there were indicators of

impairment in the investment held in Dialight Europe Limited. A discounted cash flow was prepared, which has led to the full

impairment of this investment.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

148

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

6. FINANCIAL RISK MANAGEMENT

The Company has exposure to market risk and liquidity risk from its use of financial instruments.

The overall framework for managing risk and the interest rate risk that affects the Company is discussed in note 24 to the

consolidated financial statements.

All carrying values are considered to be fair values.

A sensitivity analysis has been carried out in note 24 to the consolidated financial statements, and is considered to not be

materially different for the results of the Company only.

Foreign currency risk

The Company holds monetary assets and liabilities in currencies other than GBP sterling.

The majority of these relate to intercompany balances which provide a natural hedge elsewhere in the Group.

The Company’s exposure to foreign currency risk is as follows:

31 March

2025

US$m

31 March

2025

AU$m

31 March

2024

US$m

31 March

2024

AU$m

Loans to subsidiaries 42.3 – 42.3 –

Amounts owed by subsidiary undertakings 17.5 – 13.3 0.1

Bank loans (24.5) – (26.7) –

Amounts owed to subsidiary undertakings – – – –

35.3 – 28.9 0.1

The exchange rates applied during the year are disclosed in note 24 to the consolidated financial statements.

Liquidity risk

The Company’s exposure to liquidity risk relates to its borrowings. This is discussed in note 24 to the consolidated

financial statements.

7. SHARE-BASED PAYMENTS

Share-based payments are described in full in note 16 to the consolidated financial statements.

PSP, DRSP and VCP

The PSP, DRSP and VCP relating to employees and Directors of the Company is disclosed on page 78 in the Directors’

remuneration report and in note 16 to the consolidated financial statements.

Details on assumptions and inputs used in the calculation of share-based payment amounts are disclosed in note 16 to the

consolidated financial statements.

8. DEBTORS

31 March

2025

£m

31 March

2024

£m

Amounts falling due within one year:

Amounts owed by subsidiary undertakings 12.4 26.8

Other debtors 1.7 1.2

14.1 28.0

Amounts falling due after more than one year:

Pension fund asset (note 13) 0.7 0.5

14.8 28.5

A provision for impairment against amounts owed by subsidiary undertakings of £10.0m has been recognised in the current

period (2024: £nil).

During the 12-month period ended 31 March 2025, £5.8m of amounts due from Dialight Penang Sdn. Bhd. have been reclassified

from “Amounts owed by subsidiary undertakings within “Current assets” to “Loans to subsidiaries” within “Investments”. This is

on the basis that it is no longer the intention of the Company to recall this loan, and it is now intended for use on a continuing

basis in the Company’s activities.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

149

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

9. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31 March

2025

£m

31 March

2024

£m

Bank loans (note 10) – 22.1

Amounts owed to subsidiary undertakings 0.3 0.4

Accruals and deferred income 1.3 0.7

Other creditors 2.7 2.0

4.3 25.2

10. CREDITORS: AMOUNTS FALLING AFTER MORE THAN ONE YEAR

31 March

2025

£m

31 March

2024

£m

Bank loans 19.9 –

Bank loans

The Group’s bank facility comprise a revolving credit facility (‘RCF’) of US$28.8m from HSBC. A balance of US$5.2m was repaid

in August 2024 using the proceeds received from the disposal of the Traffic business, after which the facility was reduced by

acorresponding amount from US$34.0m to US$28.8m. An amount of US$3.0m was drawndown in March 2025.

The facility was extended on 5 June 2025 to 21 July 2027 on the same terms as the original agreement. Aligned with the Group’s

robust commitment to environmental, social, and governance principles, the RCF facility operates as a sustainability-linked loan.

The Group’s bank facility includes security for HSBC by way of fixed and floating charges over all the material companies in

the Group that generate greater than 5% of the turnover, operating profit or net assets of the Group. This was registered at

Companies House on 21 July 2022.

The RCF facility is subject to quarterly covenants encompassing maximum leverage and minimum interest cover. The covenants

for the quarter ending 30 September 2023 were temporarily reset from a leverage ratio maximum target of less than 3x to 4.5x,

and an interest cover minimum target of a maximum 4.0x to 2.5x. The covenants reverted to the original hurdles from quarter

ending 31 December 2023 onwards.

Due to the historical weak trading performance of the Group, in the final quarter of the financial period ending 31 March 2024

HSBC agreed to reduce the interest rate covenant for the third-quarter of FY2025 (only) to 2.5x. The covenant reverted to the

original level of 4.0x from the quarter ending 31 March 2025 onwards.

In the 12-month period to 31 March 2025 the covenants have been complied with and the outstanding borrowings of US$25.7m

have been classified as a non-current liability as at 31 March 2025 in line with the facility expiring in July 2026.

Please refer to note 2(b) of the consolidated financial statements for details of how this has been considered as part of the going

concern assessment.

As agreed, the Group has repaid the £10.0m Covid-19 Large Business Interruption Loan (‘CLBIL’), with the final £2.0m repaid in

the first half of 2023.

12-month

period ended

31 March

2025

£m

15-month

period ended

31 March

2024

£m

As at 1 April 2024/1 January 2023 22.1 23.5

Facility drawdown (RCF – USD) 2.4 4.6

Facility repayment (RCF – USD) (4.1) (0.8)

Facility drawdown (RCF – GBP) – 0.3

Facility repayment (RCF – GBP) – (1.9)

Facility repayment (CLBIL) – (2.0)

Foreign exchange (0.5) (1.6)

As at 31 March 2025/31 March 2024 19.9 22.1

Interest is based on the Secured Overnight Financing Rate (‘SOFR’)/Sterling Overnight Index Average (‘SONIA’), depending on

the tranche of debt, plus a margin which varies dependent on the Group’s leverage ratio and a sustainability margin adjustment.

There are three sustainability key performance indicators (‘KPIs’), being: reduction in absolute gross tonnes CO

e per £1m of

revenue; the percentage of employees who take up a day of paid time to participate in charity days; and reduction in absolute

kilolitres of water usage per £1m of revenue. Margin increases by 0.015% if only one KPI is achieved, by 0.03% if no KPI is met and

decreases by 0.015% if two KPIs achieved and by 0.03% if all three KPIs are met.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

150

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

11. CALLED UP SHARE CAPITAL

31 March

2025

Number

31 March

2025

£m

31 March

2024

Number

31 March

2024

£m

Authorised: Ordinary shares of 1.89p each

As previously stated 40,202,936 0.7 39,828,141 0.7

Adjustment* – – 199,140 –

Ordinary shares of 1.89p each 40,202,936 0.7 40,027,281 0.7

Issued and fully paid:

At the beginning of the period 40,027,281 0.7 32,946,371 0.6

Issued during the period 175,655 – 6,881,770 0.1

At the end of the period: as previously stated 40,202,936 0.7 39,828,141 0.7

Issued during the period: adjustment* – – 199,140 –

At the end of the period: restated 40,202,936 0.7 40,027,281 0.7

On 24 March 2025 a total of 175,655 new ordinary shares of 1.89p each in the capital of the Company were issued.

* On 28 March 2024 a total of 199,140 new ordinary shares of 1.89p each in the capital of the Company were issued. This issue of

shares had been inadvertently omitted from the 2024 annual financial statements.

On 5 April 2023 a total of 246,513 new ordinary shares of 1.89p each in the capital of the Company were issued.

On 31 October 2023 a total of 6,635,257 new ordinary shares of 1.89p each in the capital of the Company were allotted toraise

gross proceeds of approximately £10.5m.

12. CAPITAL AND RESERVES

Share premium

12-month

period ended

31 March

2025

£m

15-month

period ended

31 March

2024

£m

At the beginning of the period 10.7 1.0

Issued during the period – 10.4

Share issue costs – (0.7)

At the end of the period 10.7 10.7

Share premium

In the 15-month period ended 31 March 2024, share issue costs of £0.7m have been netted off against the share premium arising

on the new shares issued.

Dividends

No dividends were declared in the current or the prior period. After the balance sheet date no dividends were proposed by the

Directors and there are no income tax consequences for the Company.

Own shares

Own shares represent shares in the Company that are held by an independent employee benefit trust (‘EBT’) and include

treasury shares. Own shares are held to settle share options in the future. In the period to 31 March 2025 the EBT purchased

69,281 shares on the open market for $0.2m and was allotted a further 175,655 new ordinary shares of 1.89p each.

13. PENSIONS

The Company operates a defined contribution plan and a defined benefit pension arrangement called the Roxboro UK

Executive Pension Fund (the ‘Executive Fund’). The Executive Fund provides benefits based on final salary and length of service

on leaving. The Executive Fund is closed to new members.

The following disclosures exclude any allowance for defined contribution funds operated by the Company.

The Executive Fund is subject to the “Statutory Funding Objective” under the Pensions Act 2004.

An actuarial valuation of the Executive Fund is carried out at least once every three years to determine whether the Statutory

Funding Objective is met.

As part of the process the Company must agree with the Trustees of the Executive Fund the contributions to be paid to address

any shortfall against the Statutory Funding Objective.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

151

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

13. PENSIONS (CONTINUED)

The Company is required to agree a Schedule of Contributions with the Trustees of the Executive Fund following a valuation,

which must be carried out at least once every three years, with the latest valuation in 2022.

Recognised assets for defined benefit arrangements

31 March

2025

£m

31 March

2024

£m

Present value of funded obligations (1.9) (2.0)

Fair value of plan assets 2.6 2.5

Recognised asset for defined benefit arrangements 0.7 0.5

Plan assets consist of the following:

31 March

2025

£m

31 March

2024

£m

Bonds 2.6 2.5

The assets do not include any investments in shares of the Company.

Movements in the present value of defined benefit obligations

31 March

2025

£m

31 March

2024

£m

Liabilities at the start of the period (2.0) (2.1)

Interest cost on obligation (0.1) (0.1)

Benefits paid 0.1 0.1

Changes in financial assumptions 0.1 0.1

Liabilities at the end of the period (1.9) (2.0)

Movements in fair value of plan assets

31 March

2025

£m

31 March

2024

£m

Assets at the start of the period 2.5 2.5

Interest income on assets 0.1 0.1

Employer contributions 0.2 –

Benefits paid (0.1) (0.1)

Return on plan assets less interest (0.1) –

Assets at the end of the period 2.6 2.5

Expense recognised in the profit and loss account

31 March

2025

£m

31 March

2024

£m

Interest cost on obligation 0.1 0.1

Interest income on assets (0.1) (0.1)

Expense recognised in the profit and loss account – –

Actuarial assumptions

The principal assumptions at the balance sheet date are:

31 March

2025

31 March

2024

Discount rate at the end of the period 5.3 4.6

Future pension increases 3.2 3.3

Inflation – RPI 3.3 3.4

Inflation – CPI 2.7 2.7

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

152

13. PENSIONS (CONTINUED)

Weighted average life expectancy to determine benefit obligations

31 March

2025

31 March

2024

Male life expectancy:

Retiring at age 65 now 88.1 88.1

Retiring at age 65 in 20 years 89.0 89.0

Female life expectancy:

Retiring at age 65 now 89.7 89.7

Retiring at age 65 in 20 years 90.8 90.7

For its UK pension arrangements, the Company has for the purpose of calculating its liabilities as at 31 March 2025, used SAPS

S3NMAL mortality tables based on year of birth (as published by the Institute and Faculty of Actuaries).

14. EMPLOYEE EXPENSES

12-month

period ended

31 March

2025

£m

15-month

period ended

31 March

2024

£m

Wages and salaries 2.4 2.7

Social security costs 0.3 0.3

Contributions to defined contribution plans 0.1 0.1

Total charge for defined benefit plans – –

Total personnel expenses 2.8 3.1

The average number of employees during the period was 13 (2024: 17).

Further details on Directors’ remuneration are included in the Directors’ remuneration report on pages 74 to 77.

Notes to the company financial statements continued

for the 12-month period ended 31 March 2025

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

153

Directory and shareholder information

REGISTERED OFFICE, CONTACT DETAILS AND COMMUNICATIONS

Company Secretary and Registered Office

Registered in England and Wales

Company number: 2486024

Company Secretary: Laura Walker

REGISTERED OFFICE

60 Petty France

London SW1H 9EU

CONTACT DETAILS:

Email (Company Secretary):

dsecretary@dialight.com

Email (investor relations): ir@dialight.com

Web: www.dialight.com

WEBSITE

Shareholders are encouraged to visit our website, www.dialight.com, which contains information about Dialight. Any information

on, or linked from, the website is not incorporated by reference into the annual report and accounts unless expressly stated

in this annual report. There is a section designed specifically for investors at www.ir.dialight.com, which includes detailed

coverage of Dialight’s share price and our financial results, historical reporting, announcements and other governance

information. Investors can register for news alerts by email at www.ir.dialight.com/news-and-media/emailalerts/. You can

also review this year’s annual report and accounts. Our share price is also available on the London Stock Exchange’s website,

www.londonstockexchange.com.

ELECTRONIC COMMUNICATIONS

The carbon footprint and cost saving from electronic communications rather than hard copy printing can be very considerable.

We strongly encourage all Dialight shareholders to move to electronic communications. The process to elect for electronic

communications is very simple. To receive notification to your email address or in hard copy, whenever shareholder documents

are available on the Company’s website, please register online by visiting our Registrar’s website, www.shareview.co.uk and

complete your details.

REGISTRARS AND SHARES

Address

Equiniti, Highdown House, Yeoman Way, Worthing, West Sussex BN99 3HH

Telephone

Equiniti’s Shareholder Contact Centre can be contacted by telephone on + 44 (0) 371 384 2495 between 8.30 am and 5.30 pm

Monday to Friday, excluding bank holidays.

Web

You can also access details of your shareholding and a range of other shareholder services by registering at

www.shareview.co.uk.

DEALING SERVICE

Equiniti offers “Shareview Dealing”– a service which allows you to sell your Dialight plc shares or add to your holding if you

are a UK resident. You can deal in your shares on the internet or by telephone. For more information about this service and

for details of their rates, log on to www.shareview.co.uk/dealing or telephone 0345 603 7037 between 8.30 am and 4.30 pm,

Monday to Friday. If you wish to deal, you will need your account/shareholder reference number, which appears on your share

certificate. Alternatively, if you hold a share certificate, you can also use any bank, building society or stockbroker offering

share dealing facilities to buy or sell shares. If you are in any doubt about buying or selling shares, you should seek professional

financial advice.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

154154

Directory and shareholder information continued

ADVISERS:

Financial advisers

Investec Bank plc

30 Gresham Street

London EC2V 7QP

Auditors

Grant Thornton UK LLP

No 1 Whitehall Riverside

Leeds LS1 4BN

Legal advisers

Osborne Clarke

One London Wall

Barbican

London EC2Y 5EB

Principal bankers

HSBC Bank PLC

West London Corporate Centre

1 Beadon Road

London W6 0EA

2025 FINANCIAL CALENDAR

Annual General Meeting: Monday, 1 September 2025.

Any amendments to the financial calendar will be notified on the Company’s website (www.dialight.com).

FORWARD-LOOKING STATEMENTS

Certain sections of this annual report contain forward-looking statements that are subject to risk factors associated with,

amongst other things, the economic and business circumstances occurring from time to time in the countries and sectors

inwhich the Company and its subsidiaries and associates operate. It is believed that the expectations reflected in the annual

report are reasonable, but they may be affected by a wide range of variables which could cause actual results to differ materially

from those currently anticipated.

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

155

Notes

Business overview Strategic Report Governance Financial Statements Other information

Dialight plc Annual Report and Accounts 2025

156

Designed and producedby:

Radley Yeldar | www.ry.com

Dialight plc

60 Petty France

London SW1H 9EU

+44 (0) 203 058 3525

ir@dialight.com

www.dialight.com

Registered in England and Wales

Company number: 2486024