REG - Zytronic PLC - Interim Results
17/05/2022 07:00
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RNS Number : 6950L Zytronic PLC 17 May 2022
17 May 2022
Zytronic plc
("Zytronic" or the "Company" and, together
with its subsidiaries, the "Group")
Interim Results for the six months ended 31 March 2022 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces
its consolidated interim results for the six months ended 31 March 2022.
Comparative data is given for the six months ended 31 March 2021, except where
indicated.
Overview
· Group revenue of £5.9m (2021: £4.8m)
· EBITDA of £0.8m (2021: £0.2m)
· Profit before tax of £0.4m (2021: loss of £0.3m)
· Basic earnings per share of 3.0p (2021: loss per share 1.2p)
· Positive cash generated from operations £0.1m (2021: £0.4m)
· Net cash of £7.5m (30 September 2021: £9.2m)
Commenting on the results, David Buffham, Chair said:
"While the previously noted post-pandemic issues look likely to present a
headwind for the remainder of the financial year, the Group remains well
positioned to progress in its recovery, particularly now as global sales and
marketing activities resume and provide the basis for the generation of new
future opportunities."
Enquiries:
Zytronic plc 0191 414 5511
Mark Cambridge, Chief Executive
Claire Smith, Group Finance Director
Singer Capital Markets (Nominated Adviser and Broker) 020 7496 3000
Aubrey Powell, Rachel Hayes, Amanda Gray (Investment Banking)
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.
Chair statement
Introduction
The Group continued to make encouraging progress over the first half of the
current year in its recovery from the impacts of the Covid-19 pandemic,
evidenced by the 24% year-on-year increase in sales to £5.9m (2021: £4.8m).
However, the ongoing travel restrictions in many of its key geographic markets
had the effect of further impeding its sales and marketing activities over the
period, with the unfortunate postponement of several key tradeshows. Also as
previously reported, the considerable disruption to global supply chains
continues, particularly in the electronics components sector from which the
Group buys and also supplies, adding upward pressure particularly on materials
and logistics costs. Customer confidence is shown to have improved in certain
markets, such as Gaming and Vending, which has benefited both sales and gross
margin through the volume increase in large and shaped format sensors.
Results
Group revenue for the half year ended 31 March 2022 was £5.9m (2021: £4.8m),
remaining in line with the AGM trading update published on 3 March 2022. The
gross margin was 31.7% (2021: 27.0%), with EBITDA of £0.8m (2021: £0.2m) and
profit before tax of £0.4m (2021: loss of £0.3m). Basic earnings per share
was 3.0p (2021: loss per share 1.2p).
Sales have shown improvement, particularly in Gaming and Vending, which has
consequently resulted in improvements in both the APAC and Americas
territories. Innovation in the technical capabilities of, and the products
offered, remains a key driver, with a further patent granted and a new
application lodged. Tradeshow participation has yet again been very restricted
over the period; albeit the Group continues to observe improvements in its
level of opportunities being addressed, particularly in Vending, with
significant global potential from future deployments of commercial electric
vehicle charging stations.
The Group is mindful of the situation with the conflict in Ukraine and
although the Group's revenue from the directly affected countries is not
material, it has withdrawn from any trading opportunities into Russia. It
will continue to monitor and take advice from the government on these matters.
Cash
The Board announced on 17 February 2022, following further consideration of
the level of the Group's cash balances, that it was in the interests of
shareholders to again distribute surplus cash. It was agreed that this was
best achieved by way of share buybacks in the market, utilising the headroom
remaining under the authority used for the Tender Offer implemented last year
until its expiry, and subsequently utilising the new authority granted by
shareholders at the 2022 AGM held on 3 March. By 31 March 2022, 750,500 shares
had been purchased under the buyback at an average price of 153.5p per share,
returning £1.2m of cash. These purchases have continued since the end of the
half year.
Payments of a final dividend of £0.2m and capital expenditure totalling
£0.2m, alongside the cash returned under the buyback programme, served to
offset the small amount of cash generated from operations (which itself was
impacted by an increase in working capital of £0.7m). These factors
contributed to the net reduction in cash over the half year period of £1.6m
(2021: £6.3m). Excluding the effects of the returns of cash via the Tender
and buybacks in the relevant periods, the net movement in cash was a decrease
of £0.5m (2021: increase of £0.4m), the principal shift being the absorption
of working capital during the recovery in activity levels.
The Board considers the cash balances as of 31 March 2022 of £7.5m (30
September 2021: £9.2m) to be more than adequate for operational purposes and
the funding of further share buybacks using the remaining headroom under the
existing authority.
Dividends
The Board, having returned to paying dividends, with a final dividend for 2021
paid in March 2022, has decided that, as per last year, it will again not pay
an interim dividend and will consider recommending a final dividend dependent
on the full-year performance of the Group.
Outlook
While the previously noted post-pandemic issues look likely to present a
headwind for the remainder of the financial year, the Group remains well
positioned to progress in its recovery, particularly now as the global sales
and marketing activities resume and provide the basis for the generation of
new future opportunities.
David Buffham
Chair
17 May 2022
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2022
Six months to Six months to Year to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Group revenue 5,910 4,784 11,683
Cost of sales (4,034) (3,490) (8,146)
Gross profit 1,876 1,294 3,537
Distribution costs (132) (66) (183)
Administration expenses (1,345) (1,542) (2,901)
Group trading profit/(loss) 399 (314) 453
Group operating profit/(loss) 399 (314) 453
Profit/(loss) before tax 399 (314) 453
Tax (expense)/credit 3 (56) 130 (47)
Profit/(loss) for the period 343 (184) 406
Other comprehensive income - - -
Total comprehensive income/(loss) 343 (184) 406
Earnings/(loss) per share
Basic 4 3.0p (1.2)p 3.0p
All activities are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2022
Called up Capital
share Share redemption Retained
capital premium reserve earnings Total
£'000 £'000 £'000 £'000 £'000
At 1 October 2021 114 8,994 46 7,611 16,765
Profit for the period - - - 343 343
Dividends - - - (170) (170)
Repurchase and cancellation of shares (8) - 8 (1,152) (1,152)
At 31 March 2022 (unaudited) 106 8,994 54 6,632 15,786
Consolidated statement of financial position
Unaudited results at 31 March 2022
At At At
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Assets
Non-current assets
Intangible assets 635 875 733
Property, plant and equipment 5,310 5,490 5,370
5,945 6,365 6,103
Current assets
Inventories 2,093 1,621 1,435
Trade and other receivables 2,078 1,912 2,200
Derivative financial assets - 8 -
Cash and short term deposits 6 7,538 7,752 9,157
11,709 11,293 12,792
Total assets 17,654 17,658 18,895
Equity and liabilities
Current liabilities
Trade and other payables 881 489 1,080
Derivative financial liabilities 18 - 16
Accruals 580 489 551
Government grants - 25 26
Tax liabilities 53 - 121
1,532 1,003 1,794
Non-current liabilities
Deferred tax liabilities (net) 336 480 336
336 480 336
Total liabilities 1,868 1,483 2,130
Net assets 15,786 16,175 16,765
Capital and reserves 7
Equity share capital 106 114 114
Share premium 8,994 8,994 8,994
Capital redemption reserve 54 46 46
Retained earnings 6,632 7,021 7,611
Total equity 15,786 16,175 16,765
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2022
Six months to Six months to Year to
31 March 31 March 30 September
2022 2021 2021
Unaudited Unaudited Audited
Notes £'000 £'000 £'000
Operating activities
Profit/(loss) before tax 399 (314) 453
Depreciation and impairment of property, plant and 279 333 629
equipment
Amortisation, impairment and write-off of intangible assets 121 188 379
Amortisation of government grant (26) (2) (1)
Fair value movement on foreign exchange forward contracts 2 8 16
Loss on disposal of asset - - 23
Working capital adjustments
(Increase)/decrease in inventories (658) 711 897
Decrease/(increase) in trade and other receivables 122 47 (433)
(Decrease)/increase in trade and other payables and provisions (169) (589) 85
Cash generated from operations 70 382 2,048
Tax (paid)/received (125) 61 48
Net cashflow (used in)/from operating activities (55) 443 2,096
Investing activities
Payments to acquire property, plant and equipment (219) (3) (179)
Payments to acquire intangible assets (23) (20) (92)
Net cashflow used in investing activities (242) (23) (271)
Financing activities
Dividends paid to equity shareholders of the Parent (170) - -
Repurchase and cancellation of shares (1,152) (6,706) (6,706)
Net cashflow used in financing activities (1,322) (6,706) (6,706)
Decrease in cash and cash equivalents (1,619) (6,286) (4,881)
Cash and cash equivalents at the beginning of the period 9,157 14,038 14,038
Cash and cash equivalents at the end of the period 6 7,538 7,752 9,157
Notes to the interim report
Unaudited results for the six months to 31 March 2022
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 2022 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 2021 annual report and
financial statements.
The financial information for the six months to 31 March 2022 and the
comparative financial information for the six months to 31 March 2021 have not
been audited. The comparative financial information for the year ended 30
September 2021 has been extracted from the 2021 annual report and financial
statements.
The annual report and financial statements for the year ended 30 September
2021, which were approved by the Board of Directors on 6 December 2021,
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 2022.
3. Tax charge on profit/(loss) 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 Standards Board's statement
on interim reports.
4. Earnings/(loss) per share ("EPS" / "LPS")
Basic EPS/LPS is calculated by dividing the profit/(loss) 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/LPS arising from
total operations and EPS/LPS arising from continuing operations.
For the six months to 31 March 2022 and 2021
Weighted Weighted
average average
number number
Profit of shares EPS Loss of shares LPS
31 March 31 March 31 March 31 March 31 March 31 March
2022 2022 2022 2021 2021 2021
£'000 Thousands Pence £'000 Thousands Pence
Profit/(loss) on ordinary activities after tax 343 11,357 3.0 (184) 15,273 (1.2)
Basic EPS/LPS 343 11,357 3.0 (184) 15,273 (1.2)
For the year to 30 September 2021
Weighted
average
number
Profit of shares EPS
30 September 30 September 30 September
2021 2021 2021
£'000 Thousands Pence
Profit on ordinary activities after tax 406 13,346 3.0
Basic EPS 406 13,346 3.0
5. Dividends
As the Group recovers from the effects of the Covid-19 pandemic, the Directors
considered it prudent not to pay an interim dividend. Accordingly, no
interim dividend is proposed for the period (2021: Nil). The table below
reflects historic dividend payments.
Six months to 31 March Six months to 31 March Year to 30 September
2022 2021 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Ordinary dividends on equity shares
Final dividend of 1.5p per ordinary share paid on
18 March 2022
170 - -
170 - -
6. Cash and cash equivalents
Six months to 31 March Six months to 31 March Year to 30 September
2022 2021 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash at bank and in hand 7,538 7,752 9,157
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
2022 2021 2021
Unaudited Unaudited Audited
£'000 £'000 £'000
Cash at bank and in hand 7,267 7,752 8,886
Short term deposits 271 - 271
7,538 7,752 9,157
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 2022 the Group had available a net £1.0m (cash less overdrawn
accounts) overdraft facility from Barclays Bank plc, which will fall for
review in October 2022.
The fair value of cash and cash equivalents is £7.5 (2021: £7.8m).
7. 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.
On 17 February 2022 the Company announced a further proposed return of
capital, via a share buyback programme, under the authorities obtained at the
Company's last AGM held on 25 February 2021. The Company subsequently
purchased 115,500 shares at an average price of 151.0p. The Company then held
its 2022 AGM on 3 March 2022 and the authorities to continue the buyback were
again granted, enabling the Company to further purchase up to 1,141,915
shares. Since the 2022 AGM, the Company has purchased 635,000 shares, at an
average price of 153.9p, up until 31 March 2022. The total amount of cash
returned to shareholders in the first half of this financial year is £1.2m.
8. Availability of the interim report
The interim report and interim results presentation are 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.
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
Singer Capital Markets
1 Bartholomew Lane
London
EC2N 2AX
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Auditor
Crowe U.K. LLP
Black Country House
Rounds Green Road
Oldbury
B69 2DJ
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
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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
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