REG - Zytronic PLC - Interim Results
12 May 2020
Zytronic plc
("Zytronic" or the "Company" and, together
with its subsidiaries, the "Group")
Interim Results for the six months ended 31 March 2020 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2020. Comparative data is given for the six months ended 31 March 2019, except where indicated.
Overview
· Group revenue of £7.4m (2019: £9.5m), impacted by decreases in Gaming, Financial and Vending revenues
· Profit before tax of £0.5m (2019: £1.4m)
· No interim dividend due to COVID-19 (2019: 7.6p)
· Basic earnings per share ("EPS") of 2.5p (2019: 7.4p)
· Positive operating cashflow of £2.0m (2019: £0.2m)
· Net cash of £12.4m (30 September 2019: £13.1m), reflecting payment of final dividend of £2.4m in respect of the prior financial year
Commenting on the results, Tudor Davies, Chairman said:
"We shall keep shareholders informed of any material developments, but in common with all businesses we are facing difficult and unprecedented circumstances with anything except very short term forecasts challenging. Management will continue to respond accordingly to ensure operations are maintained in a safe manner and will utilise any Government assistance to safeguard the employment of our workforce."
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 we indicated in December 2019 and at the AGM in February, the first half results are, as management expected, lower than the previous year as a result of a low conversion of opportunities into orders and sales. However, we were expecting an upturn as the year progressed, and in February and March the order book and sales improved considerably and until the impact of COVID-19, we were well on track for a second half at significantly improved levels.
Trading
Revenues for the half year ended 31 March 2020 were £7.4m (2019: £9.5m), EBITDA was £1.0m (2019: £1.9m) and profits for the half year before tax were £0.5m (2019: £1.4m).
The decline in revenues principally arose from a low level of order intake in the latter part of 2019 which, as expected, recovered significantly thereafter. In January, February and March 2020 order intake was 15% higher than the same period in 2019, resulting in an order book of £2.7m at 31 March 2020 (2019: £2.0m).
In normal circumstances this improved order position would have formed the basis for a good performance in the second half and a much better result for the year as a whole. However, in recent weeks the effect of the COVID-19 pandemic has begun to affect supplies, deliveries and a deferral in orders. In common with most other businesses it is far too early for us to be able to assess how long this situation will last for. On a more positive note, our growth markets within the APAC countries where the pandemic has had the earliest effects will hopefully return to normality quicker than others.
Subsequently, our operations have continued, at reduced levels of activity, without needing to shut the factory following appropriate adjustments to working practices and the cost base. Since 31 March we have in stages reduced factory hourly labour from 101 to 32 persons and staff from 63 to 35, principally through utilisation of the Government Job Retention Scheme (Furlough), and reduced other expenditure accordingly, with everything under constant review.
Cash and dividend
We continue to be in a strong financial position with cash balances of £12.4m (30 September 2019 £13.1m), although as we explained in December 2019, with the recent downturn in results we were uncomfortable continuing to pay an uncovered dividend, which we had done for the prior two years. In considering an interim dividend we are cognisant of the relatively low profits for the year to date and the extremely uncertain prospects for the remainder of the year as a whole and have decided that in these circumstances we should not pay an interim dividend and returns to shareholders should be deferred until there is a return towards normality.
Outlook
We shall keep shareholders informed of any material developments, but in common with all businesses we are facing difficult and unprecedented circumstances with anything except very short term forecasts challenging, and as each month progresses without a real change of circumstances, the opportunity to benefit from what was an improving and promising situation to produce a positive return during this financial year is remote.
Tudor Davies
Chairman
12 May 2020
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2020
Six months to
Six months to
Year to
31 March
31 March
30 September
2020
2019
2019
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'000
Group revenue
7,378
9,463
20,104
Cost of sales
(5,146)
(6,178)
(13,311)
Gross profit
2,232
3,285
6,793
Distribution costs
(135)
(182)
(350)
Administration expenses
(1,679)
(1,755)
(3,462)
Group trading profit
418
1,348
2,981
Finance revenue
40
35
76
Profit before tax
458
1,383
3,057
Tax expense
3
(64)
(193)
(366)
Profit for the period
394
1,190
2,691
Earnings per share
Basic
4
2.5p
7.4p
16.8p
Diluted
4
2.5p
7.4p
16.8p
All activities are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2020
Called up
share
Share
Retained
capital
premium
earnings
Total
£'000
£'000
£'000
£'000
At 1 October 2019
160
8,994
16,644
25,798
Profit for the period
-
-
394
394
Dividends
-
-
(2,439)
(2,439)
At 31 March 2020 (unaudited)
160
8,994
14,599
23,753
Consolidated statement of financial position
Unaudited results at 31 March 2020
At
At
At
31 March
31 March
30 September
2020
2019
2019
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Assets
Non-current assets
Intangible assets
1,208
1,460
1,299
Property, plant and equipment
6,126
6,566
6,385
7,334
8,026
7,684
Current assets
Inventories
2,713
3,948
3,034
Trade and other receivables
3,357
3,856
4,127
Cash and short term deposits
12,369
12,060
13,143
18,439
19,864
20,304
Total assets
25,773
27,890
27,988
Equity and liabilities
Current liabilities
Trade and other payables
650
978
962
Derivative financial liabilities
93
3
21
Accruals
636
591
499
Tax liabilities
125
227
192
1,504
1,799
1,674
Non-current liabilities
Government grants
-
13
-
Deferred tax liabilities (net)
516
562
516
516
575
516
Total liabilities
2,020
2,374
2,190
Net assets
23,753
25,516
25,798
Capital and reserves
Equity share capital
160
160
160
Share premium
8,994
8,994
8,994
Retained earnings
14,599
16,362
16,644
Total equity
23,753
25,516
25,798
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2020
Six months to
Six months to
Year to
31 March
31 March
30 September
2020
2019
2019
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'000
Operating activities
Profit before tax
458
1,383
3,057
Net finance income
(40)
(35)
(76)
Depreciation and impairment of property, plant and
equipment
365
361
726
Amortisation, impairment and write-off of intangible assets
213
205
430
Amortisation of government grant
ꟷ
(3)
(15)
Fair value movement on foreign exchange forward contracts
72
(4)
14
Working capital adjustments
Decrease/(increase) in inventories
321
(927)
(13)
Decrease/(increase) in trade and other receivables
770
(118)
(389)
Decrease in trade and other payables and provisions
(170)
(648)
(742)
Cash generated from operations
1,989
214
2,992
Tax (paid)/received
(127)
25
(238)
Net cashflow from operating activities
1,862
239
2,754
Investing activities
Interest received
31
30
71
Payments to acquire property, plant and equipment
(106)
(322)
(506)
Payments to acquire intangible assets
(122)
(74)
(144)
Net cashflow used in investing activities
(197)
(366)
(579)
Financing activities
Dividends paid to equity shareholders of the Parent
(2,439)
(2,439)
(3,658)
Net cashflow used in financing activities
(2,439)
(2,439)
(3,658)
Decrease in cash and cash equivalents
(774)
(2,566)
(1,483)
Cash and cash equivalents at the beginning of the period
13,143
14,626
14,626
Cash and cash equivalents at the end of the period
6
12,369
12,060
13,143
Notes to the interim report
Unaudited results for the six months to 31 March 2020
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 2020 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 2019 annual report and financial statements.
The financial information for the six months to 31 March 2020 and the comparative financial information for the six months to 31 March 2019 have not been audited. The comparative financial information for the year ended 30 September 2019 has been extracted from the 2019 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2019, which were approved by the Board of Directors on 9 December 2019, 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 2020.
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 2020 and 2019
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
2020
2020
2020
2019
2019
2019
£'000
Thousands
Pence
£'000
Thousands
Pence
Profit on ordinary activities after tax
394
16,044
2.5
1,190
16,044
7.4
Basic EPS
394
16,044
2.5
1,190
16,044
7.4
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
2020
2020
2020
2019
2019
2019
£'000
Thousands
Pence
£'000
Thousands
Pence
Profit on ordinary activities after tax
394
16,044
2.5
1,190
16,044
7.4
Weighted average number of shares under option
-
-
-
-
-
-
Diluted EPS
394
16,044
2.5
1,190
16,044
7.4
For the year to 30 September 2019
Weighted
average
number
Earnings
of shares
EPS
30 September
30 September
30 September
2019
2019
2019
£'000
Thousands
Pence
Profit on ordinary activities after tax
2,691
16,044
16.8
Basic EPS
2,691
16,044
16.8
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
2019
2019
2019
£'000
Thousands
Pence
Profit on ordinary activities after tax
2,691
16,044
16.8
Weighted average number of shares under option
-
-
-
Diluted EPS
2,691
16,044
16.8
5. Dividends
As explained above, and 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 (2019: 7.6p per share). The table below reflects historic dividend payments.
Six months to 31 March
Six months to 31 March
Year to 30 September
2020
2019
2019
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Ordinary dividends on equity shares
Final dividend of 15.2p per ordinary share paid on
22 February 2019-
2,439
2,439
Interim dividend of 7.6p per ordinary share paid on
19 July 2019-
-
1,219
Final dividend of 15.2p per ordinary share paid on
7 February 20202,439
-
-
2,439
2,439
3,658
6. Cash and cash equivalents
Six months to 31 March
Six months to 31 March
Year to 30 September
2020
2019
2019
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Cash at bank and in hand
12,369
12,060
13,143
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
2020
2019
2019
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Cash at bank and in hand
9,839
5,991
7,351
Short term deposits
2,530
6,069
5,792
12,369
12,060
13,143
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 2020 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 2020.
The fair value of cash and cash equivalents is £12.4m (2019: £12.1m).
7. 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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