REG - Zytronic PLC - Interim Results

ZytronicAnnouncement

11/05/2021 07:00

RNS Number : 1503Y
  
Zytronic PLC
  
11 May 2021
  
 





 


11 May 2021




 
 
Zytronic plc
("Zytronic" or the "Company" and, together
 with its subsidiaries, the "Group")
Interim Results for the six months ended 31 March 2021 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2021.  Comparative data is given for the six months ended 31 March 2020, except where indicated.
Overview
·    Group revenue of £4.8m (2020: £7.4m), impacted by the Coronavirus pandemic
·    EBITDA of £0.2m (2020: £1.0m)
·    Loss before tax of £0.3m (2020: profit of £0.5m)
·    Basic (loss)/earnings per share of (1.2)p (2020: 2.5p)
·    Positive operating cashflow of £0.4m (2020: £1.9m)
·    Net cash of £7.8m (30 September 2020: £14.0m), after payment of £6.7m in respect of the return of capital
 
 
Commenting on the results, Tudor Davies, Chairman said:
"Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post COVID-19."
 
Enquiries:




Zytronic plc
Mark Cambridge, Chief Executive
Claire Smith, Group Finance Director
 


0191 414 5511




N+1 Singer (Nominated Adviser and Broker)
Aubrey Powell, Rachel Hayes, Amanda Gray (Investment Banking)
 


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 80,000ft2 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
 
In the January trading update, we explained that sales continued to be badly affected by the Coronavirus pandemic, but the prior year's reorganisation and cost reduction measures were enabling us to maintain a positive EBITDA, and there were some signs of an improvement in the order intake.  
 
We are pleased to report a continuation of the improvement in order intake and sales during the remainder of the first half to 31 March 2021, and now expect a gradual return to profitability as long as the Coronavirus pandemic continues to be controlled in our major markets of Europe, Asia and the Americas. 
 
Trading 
 
Revenues for the half year ended 31 March 2021 were £4.8m (2020: £7.4m), with gross margin of 27.0% (2020: 30.3%), EBITDA of £0.2m (2020: £1.0m) and after depreciation and amortisation the loss before tax was £0.3m (2020: profit of £0.5m). 
 
Whilst the drop in revenues of 35% is significant when compared with the same period last year, the comparison with a pre-COVID-19 period only provides an indicator of more normal historic trading levels.  A better indicator of progress at this stage is the order intake, and from April last year we had continued to experience a consistently low order intake level.  However, from January onwards we have seen an improving monthly average order intake, and it is particularly pleasing that the Gaming and Financial sectors have made a major contribution to the improvement. 
 
Cash position
 
The Board decided that the £14.0m cash balances as at 30 September 2020, arising from the Company's 16-year record of unbroken profitability prior to the pandemic, and despite a 15-year unbroken dividend, should provide the opportunity for shareholders to either participate in a return of surplus cash, or to maintain their shareholdings. 
 
Following the conclusion of the Tender Offer on 25 February 2021, the number of shares in issue reduced by 28.8% to 11,419,152 as 4,624,889 shares were purchased at a price of 145p and a cost of £6.7m. 
 
We continue to be in a strong financial position with cash balances of £7.8m (30 September 2020: £14.0m) and are pleased that despite the considerable downturn we have generated £0.4m.
 
Outlook
 
Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post-COVID-19.
 
 
 
Tudor Davies 
Chairman
11 May 2021
 
 
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2021




 


 


Six months to


Six months to


Year to




 


 


31 March


31 March


30 September




 


 


2021


2020


2020




 


 


Unaudited


Unaudited


Audited




 


Notes


£'000


£'000


£'000




Group revenue


 


4,784


7,378


12,680




Cost of sales


 


(3,490)


(5,146)


(10,130)




Cost of sales excluding exceptional items


 


(3,490)


(5,146)


(9,015)




Exceptional items


3a


-


-


(1,115)




Gross profit


 


1,294


2,232


2,550




Distribution costs


 


(66)


(135)


(196)




Administration expenses


 


(1,542)


(1,679)


(3,318)




Administration expenses excluding exceptional items


 


(1,542)


(1,679)


(3,060)




Exceptional items


3b


-


-


(258)




Group trading (loss)/profit


 


(314)


418


(964)




Exceptional other income


4


-


-


500




Group operating (loss)/profit


 


(314)


418


(464)




Finance revenue


 


-


40


41




(Loss)/profit before tax


 


(314)


458


(423)




Tax credit/(expense)


5


130


(64)


129




(Loss)/profit for the period


 


(184)


394


(294)




(Loss)/earnings per share


 


 


 


 




Basic


6


(1.2)p


2.5p


(1.8)p




Diluted


6


(1.2)p


2.5p


(1.8)p




All activities are from continuing operations.
 
 
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2021
 




 


Called up


 


 


 




 


share


Share


Retained


 




 


capital


premium


earnings


Total




 


£'000


£'000


£'000


£'000




At 1 October 2020


160


8,994


13,911


23,065




Loss for the period


-


-


(184)


(184)




Repurchase and cancellation of shares


(46)


-


(6,660)


(6,706)




At 31 March 2020 (unaudited)


114


8,994


7,067


16,175




 
 
 
 
Consolidated statement of financial position
Unaudited results at 31 March 2021




 


 


At


At


At




 


 


31 March


31 March


30 September




 


 


2021


2020


2020




 


 


Unaudited


Unaudited


Audited




 


Notes


£'000


£'000


£'000




Assets


 


 


 


 




Non-current assets


 


 


 


 




Intangible assets


 


875


1,208


1,043




Property, plant and equipment


 


5,490


6,126


5,820




 


 


6,365


7,334


6,863




Current assets


 


 


 


 




Inventories


 


1,621


2,713


2,332




Trade and other receivables


 


1,912


3,357


1,888




Derivative financial assets


 


8


-


-




Cash and short term deposits


8


7,752


12,369


14,038




 


 


11,293


18,439


18,258




Total assets


 


17,658


25,773


25,121




Equity and liabilities


 


 


 


 




Current liabilities


 


 


 


 




Trade and other payables


 


489


650


591




Derivative financial liabilities


 


-


93


-




Provisions


 


-


-


582




Accruals


 


489


636


376




Government grants


 


25


-


27




Tax liabilities


 


-


125


-




 


 


1,003


1,504


1,576




Non-current liabilities


 


 


 


 




Deferred tax liabilities (net)


 


480


516


480




 


 


480


516


480




Total liabilities


 


1,483


2,020


2,056




Net assets


 


16,175


23,753


23,065




Capital and reserves


9


 


 


 




Equity share capital


 


114


160


160




Share premium


 


8,994


8,994


8,994




Retained earnings


 


7,067


14,599


13,911




Total equity


 


16,175


23,753


23,065




 
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2021




 


 


Six months to


Six months to


Year to




 


 


31 March


31 March


30 September




 


 


2021


2020


2020




 


 


Unaudited


Unaudited


Audited




 


Notes


£'000


£'000


£'000




Operating activities


 


 


 


 




(Loss)/profit before tax


 


(314)


458


(423)




Finance income


 


-


(40)


(41)




Depreciation and impairment of property, plant and 
equipment


 


333
 


365
 


718
 




Amortisation, impairment and write-off of intangible assets


 


188


213


457




Amortisation of government grant


 


(2)


-


(442)




Fair value movement on foreign exchange forward contracts


 


8


72


(21)




Working capital adjustments


 


 


 


 




Decrease in inventories


 


711


321


702




Decrease in trade and other receivables


 


47


770


2,360




(Decrease)/increase in trade and other payables and provisions 


 


(589)


(170)


88




Cash generated from operations


 


382


1,989


3,398




Tax received/(paid)


 


61


(127)


(220)




Net cashflow from operating activities


 


443


1,862


3,178




Investing activities


 


 


 


 




Interest received


 


-


31


41




Payments to acquire property, plant and equipment


 


(3)


(106)


(153)




Payments to acquire intangible assets


 


(20)


(122)


(201)




Net cashflow used in investing activities


 


(23)


(197)


(313)




Financing activities


 


 


 


 




Dividends paid to equity shareholders of the Parent


 


-


(2,439)


(2,439)




Receipt of government grants


 


-


-


469




Repurchase and cancellation of shares


 


(6,706)


-


-




Net cashflow used in financing activities


 


(6,706)


(2,439)


(1,970)




(Decrease)/increase in cash and cash equivalents


 


(6,286)


(774)


895




Cash and cash equivalents at the beginning of the period


 


14,038


13,143


13,143




Cash and cash equivalents at the end of the period


8


7,752


12,369


14,038




 
 
 
Notes to the interim report 
Unaudited results for the six months to 31 March 2021
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 2021 are not reviewed by Crowe U.K. 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 2020 annual report and financial statements.
The financial information for the six months to 31 March 2021 and the comparative financial information for the six months to 31 March 2020 have not been audited. The comparative financial information for the year ended 30 September 2020 has been extracted from the 2020 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2020, which were approved by the Board of Directors on 7 December 2020, 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 2021.
3. Exceptional costs
(a) Cost of sales




 


 


 


 




 


Six months to 31 March


Six months to 31 March


Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Costs of restructuring


-


-


652




Costs of Furlough


-


-


463




Total exceptional costs


-


-


1,115




These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.
(b) Administration expenses




 


 


 


 




 


Six months to 31 March


Six months to 31 March


Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Costs of restructuring


-


-


144




Costs of Furlough


-


-


114




Total exceptional costs


-


-


258




These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.
 
4. Exceptional other income
 




 


 


 


 




 


Six months to 31 March


Six months to 31 March


Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Grant monies received


-


-


500




Total grant monies received


-


-


500




The income received and accrued as above is as a result of claims made under the CJRS for when personnel were on Furlough leave.
5. Tax charge on (loss)/profit on ordinary activities
The estimated tax rate for the year of 41% has been applied to the half year's loss before tax, in accordance with the Auditing Standards Board's statement on interim reports.
6. (Loss)/earnings per share ("LPS" / "EPS")
Basic LPS/EPS is calculated by dividing the (loss)/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 LPS/EPS arising from total operations and LPS/EPS arising from continuing operations.
For the six months to 31 March 2021 and 2020




 


 


Weighted


 


 


Weighted


 




 


 


average


 


 


average


 




 


 


number


 


 


number


 




 


Loss


of shares


LPS


Earnings


of shares


EPS




 


31 March


31 March


31 March


31 March


31 March


31 March




 


2021


2021


2021


2020


2020


2020




 


£'000


Thousands


Pence


£'000


Thousands


Pence




(Loss)/profit on ordinary activities after tax


(184)


15,273


(1.2)


394


16,044


2.5




Basic LPS/EPS


(184)


15,273


(1.2)


394


16,044


2.5




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




 


 


Weighted


 


 


Weighted


 




 


 


average


 


 


average


 




 


 


number


 


 


number


 




 


Loss


of shares


LPS


Earnings


of shares


EPS




 


31 March


31 March


31 March


31 March


31 March


31 March




 


2021


2021


2021


2020


2020


2020




 


£'000


Thousands


Pence


£'000


Thousands


Pence




(Loss)/profit on ordinary activities after tax


(184)


15,273


(1.2)


394


16,044


2.5




Weighted average number of shares under option 


-


-


-


-


-


-




Diluted LPS/EPS


(184)


15,273


(1.2)


394


16,044


2.5




 
For the year to 30 September 2020




 


 


Weighted


 




 


 


average


 




 


 


number


 




 


Loss


of shares


LPS




 


30 September


30 September


30 September




 


2020


2020


2020




 


£'000


Thousands


Pence




Loss on ordinary activities after tax


(294)


16,044


(1.8)




Basic LPS


(294)


16,044


(1.8)




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




 


 


Weighted


 




 


 


average


 




 


 


number


 




 


Loss


of shares


LPS




 


30 September


30 September


30 September




 


2020


2020


2020




 


£'000


Thousands


Pence




Loss on ordinary activities after tax


(294)


16,044


(1.8)




Weighted average number of shares under option


-


-


-




Diluted LPS


(294)


16,044


(1.8)




 
7. Dividends
Under the present circumstances, the Directors consider that it is appropriate to defer returns to shareholders until there is clear evidence of a return towards normality.  Accordingly, no interim dividend is proposed for the period (2020: Nil).  The table below reflects historic dividend payments.




 


 


 


 




 


Six months to 31 March


Six months to 31 March


Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Ordinary dividends on equity shares


 


 


 




Final dividend of 15.2p per ordinary share paid on

7 February 2020


 
-


 
2,439


 
2,439




 


-


2,439


2,439




 
8. Cash and cash equivalents




 


 


 


 




 


Six months to 31 March


Six months to 31 March


Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Cash at bank and in hand


7,752


12,369


14,038




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




 


 


 


 




 


 Six months to 31 March


 Six months to 31 March


 Year to 30 September




 


2021


2020


2020




 


Unaudited


Unaudited


Audited




 


£'000


£'000


£'000




Cash at bank and in hand


7,752


9,839


11,503




Short term deposits


-


2,530


2,535




 


7,752


12,369


14,038




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 2021 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in July 2021. 
The fair value of cash and cash equivalents is £7.8m (2020: £12.4m).
9. Capital and reserves
On 1 February 2021 the Company announced a proposed return of up to £10.0m of capital by way of a Tender Offer which was accepted by shareholders on 25 February 2021.  As a result, 4,624,889 shares were purchased and subsequently cancelled by the Company at a price of 145p per share, returning £6.7m of the Company's cash.
10. Availability of the interim report
A copy of the interim report and interim results presentation is available on the Company's corporate website, www.zytronicplc.com. Copies can be requested from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear NE21 5NJ.  

 
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