REG - Zytronic PLC - Trading Update

ZytronicAnnouncement

04/05/2023 07:00

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RNS Number : 3364Y  Zytronic PLC  04 May 2023

Zytronic plc

("Zytronic" or the "Company", together with Zytronic Displays Ltd "the Group")

Trading Update

Zytronic, a leading specialist manufacturer of touch sensors, provides the
following trading update ahead of the planned release of its Interim Results
on 16 May 2023.

 

Trading conditions to the end of April 2023 continue to be impacted by the
numerous headwinds previously reported on, most recently on 9 February 2023 at
the time of the AGM. As well as the continuing decline in the contribution
from the Group's Financial segment, Zytronic is now experiencing unpredicted
significant turmoil in its Gaming market.

 

The sources of volatility in Gaming have been two-fold. First, one customer
has recognised an over-stocking position of Zytronic curved touch sensors,
supplied during the year to 30 September 2022 ("FY22"), resulting in first
half revenues of the current financial year ("FY23") not being recognised at
the level that management expected.  Any other associated orders for this
customer are now expected to be delayed, possibly into the start of financial
year 2024 ("FY24").  Second, the position has been more significantly
exacerbated by other customers whose end market customer is Aruze Gaming
America Inc ("AGA"), which in February 2023 filed a voluntary petition under
Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for
the State of Nevada.

 

This Chapter 11 filing has affected the recovery of approximately £0.3m in
aggregate of trade receivables from two sources, originally due in February
and March 2023, one being a direct AGA affiliate, Aruze Philippines
Manufacturing Inc. ("APMI") and the second being a South Korean display system
integrator, used by APMI to purchase Zytronic touch products and supply them
as an integrated touch monitor solution to APMI.

 

Although Zytronic has been closely monitoring the situation with weekly
updates from APMI, the Board believes it should now take a prudent and
conservative position and recognise these amounts as doubtful debts, as well
as fully writing down goods manufactured and in progress for existing purchase
orders that were due for delivery to these parties, being £0.2m of stock
value.  The Group is currently seeking to recover all of these amounts.

 

Zytronic had until recently expected further order placements for products for
AGA as an end customer over the second half period, for delivery before the
year end, from two of its display integrator customers in South Korea.
Management now considers that these orders will not materialise.  Overall,
the Zytronic Board does not anticipate that Gaming segment revenues will
recover in terms of performance before the end of the current financial year.

 

The above factors have therefore not only had a significant impact on
management's expectations for the first half performance, but also the
predicted improvement that management had expected would occur in the second
half.

 

As a result, Zytronic now expects to report first half FY23 revenue of
approximately £4.7m, and top line performance for the year as a whole of
approximately £8.0m - £8.8m.

 

The Company's balance sheet remains strong with net cash as at 30 April 2023
of £5.4m (30 September 2022: £6.4m).

 

This announcement contains inside information for the purposes of Article 7 of
EU Regulation 596/2014 (which forms part of domestic UK law pursuant to the
European Union (Withdrawal) Act 2018).

 

Enquiries:

 

 Zytronic plc                              0191 414 5511

 Mark Cambridge, Chief Executive Officer

 Claire Smith, Group Finance Director

 Singer Capital Markets                    020 7496 3000

 Nominated Adviser and Broker

 Aubrey Powell, Alex Bond, Alex Emslie

 About Zytronic

 

Zytronic is a world-renowned developer and manufacturer of a unique range of
internationally award-winning, optically transparent, interactive touch sensor
overlay products for use with electronic displays in industrial, self-service
and public access equipment.

Zytronic's products employ a sensing solution that is readily configurable and
embedded in a laminate core that offers significant durability, environmental
stability and optical enhancement benefits to meet systems-specific design
requirements.

Zytronic has continually developed process and technological know-how and IP
since the late 1990s around two sensing methodologies: the first being single
touch self-capacitive, which Zytronic markets as PCT™ ("Projected Capacitive
Technology"), and the second being multi-touch, multi-user mutual-capacitive
which Zytronic markets as MPCT™ ("Mutual Projected Capacitive Technology"),
in which Zytronic holds 12 internationally granted patents.

Zytronic operates from a single site near Newcastle-upon-Tyne in the United
Kingdom, providing its manufactured products globally through a number of
sales channel partners. Zytronic is relatively unique in the touch eco-system
as it offers a complete one-stop solution including the processing internally
of the form and factor of the glass and film substrates, the assembly of the
associated touch overlay products in environmentally controlled cleanrooms to
customers' specific requirements, and the development of the bespoke firmware,
software and electronic hardware which links the manufactured touch
interactive overlays to a customer's integrated system and product.

For more information about the Group's technologies and products, please see
www.zytronic.co.uk  and for information about the Group, please see
www.zytronicplc.com .

 

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