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 £9.5m (2018: £10.6m), impacted by decrease in Gaming revenue
(partially offset by stronger revenues in other sectors)
· Profit before tax of £1.4m (2018: £2.2m)
· 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 £12.1m (30 September 2018: £14.6m)
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 80,000ft2 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
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 £9.5m (2018: £10.6m), with profit before tax of £1.4m (2018: £2.2m).
The reduction in revenues was due to the decline in sales into the Gaming market to £3.1m (2018: £4.2m) with sales to sectors such as Financial, Vending and Signage showing an increase to £5.1m (2018: £4.6m), and other sales including Industrial of £1.3m (2018: £1.8m).
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 £0.2m (2018: £2.4m) as a result of a £1.7m increase in working capital. Along with further investment made into capital expenditure during the first half of £0.4m and with the payment of the 2018 final dividend of £2.4m, this resulted in closing cash balances of £12.1m (30 September 2018: £14.6m).
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 to
Six months to
Year to
31 March
31 March
30 September
2019
2018
2018
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'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
£'000
£'000
£'000
£'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
£'000
£'000
£'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 to
Six months to
Year to
31 March
31 March
30 September
2019
2018
2018
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'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
£'000
Thousands
Pence
£'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
£'000
Thousands
Pence
£'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
£'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
£'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 £1.2m.
Six months to 31 March
Six months to 31 March
Year to 30 September
2019
2018
2018
Unaudited
Unaudited
Audited
£'000
£'000
£'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 to31 March
Six months to 31 March
Year to 30 September
2019
2018
2018
Unaudited
Unaudited
Audited
£'000
£'000
£'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 to 31 March
Six months to 31 March
Year to 30 September
2019
2018
2018
Unaudited
Unaudited
Audited
£'000
£'000
£'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 £1.0m (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 £12.1m (2018: £13.7m).
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
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Barclays Bank plc
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USA
Solicitors
Ward Hadaway
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