TIDMZYT

RNS Number : 8880Y

Zytronic PLC

14 May 2019

 
   14 May 2019 
 

Zytronic plc

("Zytronic" or the "Company" and, together with its subsidiaries, "Group")

Interim Results for the six months ended 31 March 2019 (unaudited)

Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2019. Comparative data is given for the six months ended 31 March 2018, except where indicated.

Overview

   --    Group revenue of GBP9.5m (2018: GBP10.6m), impacted by decrease in Gaming revenue 

(partially offset by stronger revenues in other sectors)

   --    Profit before tax of GBP1.4m (2018: GBP2.2m) 
   --    Interim dividend maintained at 7.6p per share (2018: 7.6p) 
   --    Basic earnings per share ("EPS") of 7.4p (2018: 11.7p) 
   --    Net cash of GBP12.1m (30 September 2018: GBP14.6m) 

Commenting on the results, Tudor Davies, Chairman said:

"As stated in our recent trading update, whilst historically trading in the second half has shown an improvement over the first half, and there are several projects that should improve performance as they come to fruition, at this stage the Board is taking a cautious and conservative view on an increase in activity levels from the Gaming sector in the second half."

Enquiries:

 
 Zytronic plc 
  Mark Cambridge, Chief Executive 
  Claire Smith, Group Finance Director    0191 414 5511 
 N+1 Singer (Nominated Adviser 
  and Broker) 
  Aubrey Powell, Alex Bond (Corporate 
  Finance) 
  Rachel Hayes (Corporate Broking)        020 7496 3000 
 

Notes to Editors

Zytronic is the developer and manufacturer of a unique range of internationally award-winning and patented touch sensor products, operating from three modern factories totaling 80,000ft(2) near Newcastle-upon-Tyne in the United Kingdom.

Zytronic touch products employ an embedded sensing solution and are readily configurable to enable multi-user and multi-touch touch sensing sizes from five inches to ultra-large 85", making them an ideal solution for system designers' specific requirements, offering significant durability, environmental stability and optical enhancement benefits to touch interactivity for industrial, self-service and public access equipment.

Chairman's statement

Introduction

As announced in the trading update on 2 May 2019, we have experienced lower than expected revenues and profitability in the first half of this year, principally due to considerably slower sales of our touchscreen products into the previously buoyant Gaming sector.

Results

Revenues for the first half to 31 March 2019 were GBP9.5m (2018: GBP10.6m), with profit before tax of GBP1.4m (2018: GBP2.2m).

The reduction in revenues was due to the decline in sales into the Gaming market to GBP3.1m (2018: GBP4.2m) with sales to sectors such as Financial, Vending and Signage showing an increase to GBP5.1m (2018: GBP4.6m), and other sales including Industrial of GBP1.3m (2018: GBP1.8m).

The Gaming revenues were affected by a slower conversion of opportunities to orders of new design projects not replacing the anticipated reduction in volumes from several longer running projects, which had consisted of higher margin larger format products. In volume terms the numbers of touchscreens sold remained at similar levels to last year, but the number of larger panels dropped by 35% and this change in mix contributed toward a decline in gross margin to 34.7% (2018: 39.6%) and had a knock-on effect on profitability.

Cash generation

Net cash generation from operating activities was GBP0.2m (2018: GBP2.4m) as a result of a GBP1.7m increase in working capital. Along with further investment made into capital expenditure during the first half of GBP0.4m and with the payment of the 2018 final dividend of GBP2.4m, this resulted in closing cash balances of GBP12.1m (30 September 2018: GBP14.6m).

Dividend

The Directors have maintained the interim dividend at 7.6p per share (2018: 7.6p), payable on 19 July 2019 to shareholders on the Register on 5 July 2019.

Outlook

As stated in our recent trading update, whilst historically trading in the second half has shown an improvement over the first half, and there are several projects that should improve performance as they come to fruition, at this stage the Board is taking a cautious and conservative view on an increase in activity levels from the Gaming sector in the second half.

Tudor Davies

Chairman

14 May 2019

Consolidated statement of comprehensive income

Unaudited results for the six months to 31 March 2019

 
                                    Six months   Six months        Year to 
                                            to           to 
                                      31 March     31 March   30 September 
                                          2019         2018           2018 
                                     Unaudited    Unaudited        Audited 
                            Notes      GBP'000      GBP'000        GBP'000 
-------------------------  ------  -----------  -----------  ------------- 
 Group revenue                           9,463       10,605         22,288 
 Cost of sales                         (6,178)      (6,408)       (14,047) 
-------------------------  ------  -----------  -----------  ------------- 
 Gross profit                            3,285        4,197          8,241 
 Distribution costs                      (182)        (213)          (461) 
 Administration expenses               (1,755)      (1,806)        (3,639) 
-------------------------  ------  -----------  -----------  ------------- 
 Group trading profit                    1,348        2,178          4,141 
 Finance costs                               -          (3)           (21) 
 Finance revenue                            35           27             68 
-------------------------  ------  -----------  -----------  ------------- 
 Profit before tax                       1,383        2,202          4,188 
 Tax expense                    3        (193)        (330)          (541) 
-------------------------  ------  -----------  -----------  ------------- 
 Profit for the period                   1,190        1,872          3,647 
-------------------------  ------  -----------  -----------  ------------- 
 Earnings per share 
 Basic                          4         7.4p        11.7p          22.7p 
 Diluted                        4         7.4p        11.7p          22.7p 
-------------------------  ------  -----------  -----------  ------------- 
 

All activities are from continuing operations.

Consolidated statement of changes in equity

Unaudited results for the six months to 31 March 2019

 
                                  Called 
                                      up 
                                   share     Share   Retained 
                                 capital   premium   earnings     Total 
                                 GBP'000   GBP'000    GBP'000   GBP'000 
------------------------------  --------  --------  ---------  -------- 
 At 1 October 2018                   160     8,994     17,611    26,765 
 Profit for the period                 -         -      1,190     1,190 
 Dividends                             -         -    (2,439)   (2,439) 
------------------------------  --------  --------  ---------  -------- 
 At 31 March 2019 (unaudited)        160     8,994     16,362    25,516 
------------------------------  --------  --------  ---------  -------- 
 

Consolidated statement of financial position

Unaudited results at 31 March 2019

 
                                             At          At             At 
                                       31 March    31 March   30 September 
                                           2019        2018           2018 
                                      Unaudited   Unaudited        Audited 
                                        GBP'000     GBP'000        GBP'000 
----------------------------------   ----------  ----------  ------------- 
 Assets 
 Non-current assets 
 Intangible assets                        1,460       1,660          1,585 
 Property, plant and equipment            6,566       6,790          6,605 
-----------------------------------  ----------  ----------  ------------- 
                                          8,026       8,450          8,190 
 ----------------------------------  ----------  ----------  ------------- 
 Current assets 
 Inventories                              3,948       2,969          3,021 
 Trade and other receivables              3,856       3,562          3,738 
 Derivative financial assets                  -          28              - 
 Cash and short term deposits            12,060      13,730         14,626 
-----------------------------------  ----------  ----------  ------------- 
                                         19,864      20,289         21,385 
 ----------------------------------  ----------  ----------  ------------- 
 Total assets                            27,890      28,739         29,575 
-----------------------------------  ----------  ----------  ------------- 
 Equity and liabilities 
 Current liabilities 
 Trade and other payables                   978       1,030          1,446 
 Derivative financial liabilities             3           -              7 
 Accruals                                   591         700            767 
 Tax liabilities                            227         175             13 
-----------------------------------  ----------  ----------  ------------- 
                                          1,799       1,905          2,233 
 ----------------------------------  ----------  ----------  ------------- 
 Non-current liabilities 
 Government grants                           13          17             15 
 Deferred tax liabilities (net)             562         608            562 
-----------------------------------  ----------  ----------  ------------- 
                                            575         625            577 
 ----------------------------------  ----------  ----------  ------------- 
 Total liabilities                        2,374       2,530          2,810 
-----------------------------------  ----------  ----------  ------------- 
 Net assets                              25,516      26,209         26,765 
-----------------------------------  ----------  ----------  ------------- 
 Equity 
 Equity share capital                       160         160            160 
 Share premium                            8,994       8,994          8,994 
 Revenue reserve                         16,362      17,055         17,611 
-----------------------------------  ----------  ----------  ------------- 
 Total equity                            25,516      26,209         26,765 
-----------------------------------  ----------  ----------  ------------- 
 

Consolidated cashflow statement

Unaudited results for the six months to 31 March 2019

 
                                                             Six months   Six months        Year to 
                                                                     to           to 
                                                               31 March     31 March   30 September 
                                                                   2019         2018           2018 
                                                              Unaudited    Unaudited        Audited 
                                                     Notes      GBP'000      GBP'000        GBP'000 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Operating activities 
 Profit before tax                                                1,383        2,202          4,188 
 Net finance income                                                (35)         (24)           (47) 
 Depreciation and impairment of property, 
  plant and 
  equipment                                                         361          369            709 
 Amortisation, impairment and write-off 
  of intangible assets                                              205          175            438 
 Amortisation of government grant                                   (3)          (8)           (10) 
 Fair value movement on foreign exchange 
  forward contracts                                                 (4)           26             61 
 Working capital adjustments 
 (Increase)/decrease in inventories                               (927)           27           (25) 
 Increase in trade and other receivables                          (118)         (56)          (232) 
 (Decrease)/increase in trade and other 
  payables and provisions                                         (648)        (165)            295 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash generated from operations                                     214        2,546          5,377 
 Tax received/(paid)                                                 25        (195)          (573) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Net cashflow from operating activities                             239        2,351          4,804 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Investing activities 
 Interest received                                                   30           27             65 
 Payments to acquire property, plant and 
  equipment                                                       (322)        (103)          (273) 
 Payments to acquire intangible assets                             (74)        (202)          (390) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Net cashflow used in investing activities                        (366)        (278)          (598) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Financing activities 
 Interest paid                                                        -          (3)           (21) 
 Dividends paid to equity shareholders 
  of the Parent                                                 (2,439)      (2,439)        (3,658) 
 Net cashflow used in financing activities                      (2,439)      (2,442)        (3,679) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 (Decrease)/increase in cash and cash equivalents               (2,566)        (369)            527 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash and cash equivalents at the beginning 
  of the period                                                  14,626       14,099         14,099 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash and cash equivalents at the end of 
  the period                                             6       12,060       13,730         14,626 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 

Notes to the interim report

Unaudited results for the six months to 31 March 2019

1. Basis of preparation

The financial information in these interim statements is prepared under the historical cost convention and in accordance with international accounting standards. It does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and does not reflect all the information contained in the Group's annual report and financial statements.

The tax charge is calculated by applying the Directors' best estimate of the annual tax rate to the profit for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the annual report and financial statements.

The interim results for the six months to 31 March 2019 are not reviewed by Ernst & Young LLP and accordingly no opinion has been given.

The interim financial statements have been prepared using the same accounting policies and methods of computation used to prepare the 2018 annual report and financial statements.

The financial information for the six months to 31 March 2019 and the comparative financial information for the six months to 31 March 2018 have not been audited. The comparative financial information for the year ended 30 September 2018 has been extracted from the 2018 annual report and financial statements.

The annual report and financial statements for the year ended 30 September 2018, which were approved by the Board of Directors on 10 December 2018, received an unqualified audit report, did not contain a statement under Sections 498(2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

The Group has one reportable business segment comprising the development and manufacture of customised optical products to enhance electronic display performance. Products in this reportable business segment include touch sensors, filters and other laminated products. All revenue, profits or losses before tax and net assets are attributable to this reportable business segment.

2. Basis of consolidation

The Group results consolidate the accounts of Zytronic plc and all its subsidiary undertakings drawn up to 31 March 2019.

3. Tax charge on profit on ordinary activities

The estimated tax rate for the year of 14% has been applied to the half year's profit before tax, in accordance with the Auditing Standard Board's statement on interim reports.

4. Earnings per share

Basic EPS is calculated by dividing the profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period. All activities are continuing operations and therefore there is no difference between EPS arising from total operations and EPS arising from continuing operations.

For the six months to 31 March 2019 and 2018

 
                                              Weighted                          Weighted 
                                               average                           average 
                                                number                            number 
                                  Earnings   of shares        EPS   Earnings   of shares        EPS 
                                  31 March    31 March   31 March   31 March    31 March   31 March 
                                      2019        2019       2019       2018        2018       2018 
                                   GBP'000   Thousands      Pence    GBP'000   Thousands      Pence 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Profit on ordinary activities 
  after tax                          1,190      16,044        7.4      1,872      16,044       11.7 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Basic EPS                           1,190      16,044        7.4      1,872      16,044       11.7 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 

The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option.

 
                                              Weighted                          Weighted 
                                               average                           average 
                                                number                            number 
                                  Earnings   of shares        EPS   Earnings   of shares        EPS 
                                  31 March    31 March   31 March   31 March    31 March   31 March 
                                      2019        2019       2019       2018        2018       2018 
                                   GBP'000   Thousands      Pence    GBP'000   Thousands      Pence 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Profit on ordinary activities 
  after tax                          1,190      16,044        7.4      1,872      16,044       11.7 
 Weighted average number                 -           -          -          -           -          - 
  of shares under option 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Diluted EPS                         1,190      16,044        7.4      1,872      16,044       11.7 
-------------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 

For the year to 30 September 2018

 
                                                               Weighted 
                                                                average 
                                                                 number 
                                                Earnings      of shares            EPS 
                                            30 September   30 September   30 September 
                                                    2018           2018           2018 
                                                 GBP'000      Thousands          Pence 
-----------------------------------------  -------------  -------------  ------------- 
 Profit on ordinary activities after tax           3,647         16,044           22.7 
-----------------------------------------  -------------  -------------  ------------- 
 Basic EPS                                         3,647         16,044           22.7 
-----------------------------------------  -------------  -------------  ------------- 
 

The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option.

 
                                                                      Weighted 
                                                                       average 
                                                                        number 
                                                       Earnings      of shares            EPS 
                                                   30 September   30 September   30 September 
                                                           2018           2018           2018 
                                                        GBP'000      Thousands          Pence 
------------------------------------------------  -------------  -------------  ------------- 
 Profit on ordinary activities after tax                  3,647         16,044           22.7 
 Weighted average number of shares under option               -              -              - 
------------------------------------------------  -------------  -------------  ------------- 
 Diluted EPS                                              3,647         16,044           22.7 
------------------------------------------------  -------------  -------------  ------------- 
 

5. Dividends

The Directors propose the payment of an interim dividend of 7.6p per share (2018: 7.6p), payable on 19 July 2019 to shareholders on the Register on 5 July 2019. This dividend has not been accrued in these interim accounts. The dividend payment will be approximately GBP1.2m.

 
 
                                                  Six months     Six months         Year to 
                                                 to 31 March    to 31 March    30 September 
                                                        2019           2018            2018 
                                                   Unaudited      Unaudited         Audited 
                                                     GBP'000        GBP'000         GBP'000 
---------------------------------------------  -------------  -------------  -------------- 
 Ordinary dividends on equity shares 
 Final dividend of 15.2p per ordinary share 
  paid on 
  9 March 2018                                             -          2,439           2,439 
 Interim dividend of 7.6p per ordinary share 
  paid on 
  20 July 2018                                             -              -           1,219 
 Final dividend of 15.2p per ordinary share 
  paid on 
  22 February 2019                                     2,439              -               - 
---------------------------------------------  -------------  -------------  -------------- 
                                                       2,439          2,439           3,658 
---------------------------------------------  -------------  -------------  -------------- 
 

6. Cash and cash equivalents

 
 
                               Six months     Six months         Year to 
                              to 31 March    to 31 March    30 September 
                                     2019           2018            2018 
                                Unaudited      Unaudited         Audited 
                                  GBP'000        GBP'000         GBP'000 
--------------------------  -------------  -------------  -------------- 
 Cash at bank and in hand          12,060         13,730          14,626 
--------------------------  -------------  -------------  -------------- 
 

For the purpose of the consolidated cashflow statement, cash and cash equivalents comprise the following:

 
 
                                Six months      Six months          Year 
                               to 31 March     to 31 March         to 30 
                                                               September 
                                      2019            2018          2018 
                                 Unaudited       Unaudited       Audited 
                                   GBP'000         GBP'000       GBP'000 
--------------------------  --------------  --------------  ------------ 
 Cash at bank and in hand            5,991          11,382         8,580 
 Short term deposits                 6,069           3,030         6,046 
 Bank overdraft                          -           (682)             - 
--------------------------  --------------  --------------  ------------ 
                                    12,060          13,730        14,626 
--------------------------  --------------  --------------  ------------ 
 

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for variable lengths, being overnight, three months or one year (with break conditions), depending on the immediate cash requirements of the Group, and earn interest at variable rates.

At 31 March 2019 the Group had available a net GBP1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in September 2019.

The fair value of cash and cash equivalents is GBP12.1m (2018: GBP13.7m).

7. Availability of the interim report

A copy of the interim report is available on the Company's website, www.zytronicplc.com, and can be obtained from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear NE21 5NJ. Copies will be made available to shareholders shortly. A copy of the presentation made to institutional investors is also available on the Company's website.

Corporate information

Websites:

www.zytronicplc.com

www.zytronic.co.uk

www.zytronic-inc.com

www.zytronic.cn

www.zytronic.jp

Secretary

Claire Smith

Email: claire.smith@zytronic.co.uk

Registered office

Whiteley Road

Blaydon-on-Tyne

Tyne and Wear

NE21 5NJ

   Tel:   0191 414 5511 
   Fax:   0191 414 0545 

Registration number

3881244

Stockbroker and Nominated Adviser

N+1 Singer

One Bartholomew Lane

London

EC2N 2AX

Registrars

Computershare Investor Services PLC

The Pavilions

Bridgwater Road

Bristol

BS13 8AE

Auditor

Ernst & Young LLP

Citygate

St James' Boulevard

Newcastle-upon-Tyne

NE1 4JD

Bankers

Barclays Bank plc

71 Grey Street

Newcastle-upon-Tyne

NE99 1JP

Handelsbanken

8 Keel Row

The watermark

Gateshead

NE11 9SZ

Santander Corporate Banking

Baltic Place

South Shore Road

Gateshead

NE8 3AE

Yorkshire Bank

131-135 Northumberland Street

Newcastle-upon-Tyne

NE1 7AG

Regions Bank

2653 Marietta Hwy

Canton, GA

30114

USA

Solicitors

Ward Hadaway

Sandgate House

102 Quayside

Newcastle-upon-Tyne

NE1 3DX

Muckle LLP

Time Central

32 Gallowgate

Newcastle-upon-Tyne

NE1 4BF

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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