TIDMZYT
RNS Number : 7542U
Zytronic PLC
07 December 2021
7 December 2021
Zytronic plc
("Zytronic" or the "Company"
and, together with its subsidiaries, the "Group")
Final Results for the year ended 30 September 2021 (audited)
Zytronic plc, a leading specialist manufacturer of touch sensors
, announces its audited full year results for the period ended 30
September 2021.
Overview
-- Recovery in H2 revenue of 44% with growth from Gaming 99%,
Vending 63% and Financial 29%
-- Gross margin improved to 30.3% (2020: 20.1%) due to
production efficiencies from restructuring in 2020
-- EBITDA of GBP1.4m (2020: GBP0.7m) and a return to
profitability with profit before tax of GBP0.5m (2020: loss of
GBP0.4m)
-- Earnings per share of 3.0p (2020: loss per share of 1.8p)
-- Dividend proposed of 1.5p (2020: Nil)
-- Successful Share Tender offer, returning GBP6.7m cash and
cancellation of 4.6m shares
-- Closing net cash of GBP9.2m (2020: GBP14.0m)
Commenting on the outlook, Chairman, Tudor Davies said:
" The first two months of the year have seen an improvement in
order intake, and with the improved margins and levels of demand
across most sectors, this provides the basis for good progress in
the coming year."
Enquiries:
Zytronic plc
Mark Cambridge, Chief Executive
Claire Smith, Group Finance Director (0191 414 5511)
Singer Capital Markets (Nominated Adviser
& Broker) (020 7496 3000)
Aubrey Powell, Amanda Gray (Corporate
Finance)
Rachel Hayes (Corporate Broking)
Notes to Editors
Zytronic is a 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 is embedded in a laminate core which offers
significant durability, environmental stability and optical
enhancement benefits to system designers' specific
requirements.
Zytronic has continually developed process and technological
know-how and IP since the late 1990's around two sensing
methodologies; the first being single-touch self-capacitive which
Zytronic markets as PCT(TM) ("Projected Capacitive Technology") and
the second being multi-touch, multi-user mutual-capacitive which
Zytronic markets as MPCT(TM) ("Mutual Projected Capacitive
Technology"), in which Zytronic holds a number of GB and
international granted patents.
Operating from a single site near Newcastle-upon-Tyne in the
United Kingdom, Zytronic is relatively unique in the touch
eco-system as it offers a complete one-stop solution from
processing internally the form and factor of the glass substrates,
assembles their touch overlay products to customers specific
requirements, in environmentally controlled cleanrooms and develops
the bespoke firmware, software and electronic hardware to link the
interactive overlays to customer's integrated systems and
products.
Further information on the Group can be found on the Company's
corporate website www.zytronicplc.com , and additional information
on the Company's technology and products is available at
www.zytronic.co.uk
2021 Chairman's review
Introduction
I am pleased to report that the year to 30 September 2021 has
seen a significant increase in gross margins from last year's
restructuring and a return to profitability, driven by a much
improved second half with sales increasing by 44% to GBP6.9m from
GBP4.8m in the first half.
Results
The results for the year produced a Group EBITDA of GBP1.4m
(2020: GBP0.7m) and Group operating profit of GBP0.5m (2020: loss
of GBP0.5m) on reduced revenue of GBP11.7m (2020: GBP12.7m) with an
increase in earnings per share to 3.0p (2020: loss of 1.8p) with
16% of this year's earnings per share arising from the reduction in
share capital following the tender offer and buyback completed in
February 2021.
Whilst sales for the year were lower than last year the recovery
in second half trading with a 44% increase in sales versus first
half was particularly encouraging with the larger markets
increasing the most: Gaming by 99%, Vending by 63%, Financial by
29%.
The improvement in operating profit this year principally arose
from the considerable increase in gross margins from 20.1% to
30.3%, following the extensive reorganisations initiated in July
and September 2020 in response to the second half downturn
following the effects of the Coronavirus pandemic.
Current trading
The first two months have seen the positive recovery in our
markets continue. Revenue and profits are ahead of the comparable
period last year. The order intake for October and November is a
very encouraging 77% ahead and, although this does include some
large orders for the Gaming market for delivery over several
months, provides a sound basis for revenue for the coming months.
However, there are still challenges from the well-publicised
shortages and supply chain issues, particularly of electronic
components.
Cash
The cash position is still strong at GBP9.2m (2020: GBP14.0m) as
even after distributing GBP6.7m by way of a share buyback, cash of
GBP2.0m (2020: GBP3.4m) was generated from operations and control
of working capital.
Dividend/return to shareholders
In February 2021 the Board decided it was in shareholders'
interests to use our surplus cash balances to fund a tender offer
and share buyback at 145p per Ordinary Share which resulted in 4.6
million shares, 28.8% of the then issued share capital, being
purchased at a cost of GBP6.7m.
In the light of a return to profitability and the recent
improvement to current trading the Board has decided to recommend a
final dividend of 1.5p per share.
Board changes
As announced on 17 November 2021, having remained on the Board
past the nine-year corporate governance guidelines whilst the
business navigated the significant challenges posed by the COVID-19
pandemic, I shall step down at the AGM when David Buffham,
currently a Non-executive Director will take over as Chair. We are
in the process of recruiting an additional independent
Non-executive Director to take over David's current
responsibilities.
Outlook
The first two months of the year have seen an improvement in
order intake, and with the improved margins and levels of demand
across most sectors, this provides the basis for good progress in
the coming year.
Tudor Davies
Chairman
6 December 2021
2021 Chief Executive review
I would like to begin this review by thanking all of the
employees of Zytronic Displays Limited ("ZDL"), the operating
subsidiary of the Group, for their understanding of the various
decisions made during the course of the year, in what has been one
of the most difficult trading years for Zytronic. In particular,
for everyone's efforts in turning an expectation at the start of
the fiscal year of a potential trading loss before tax of GBP0.9m,
into the actual reported position of a profit before tax of
GBP0.5m.
There is little doubt that the turmoil caused by the ongoing
global effects of the COVID-19 pandemic from its start in FY20
continued into and throughout FY21. Therefore, drawing comparisons
between the performance metrics of FY21 with that of FY20 is of
limited value. A more thoughtful comparison can be drawn from the
half year periods starting H2 FY20.
The mapping of how COVID-19 impacted the business and how it
continued to impact is more readily observable by looking at how
order intake patterns significantly altered from April 2020 onwards
and the resultant measures taken within the business, to mitigate
and control the dynamically changing environment.
As with most global manufacturing businesses, April 2020 became
an almost overnight watershed moment, having experienced supply
chain turmoil manifesting out of Asia and the near closing down of
global economies, which for ZDL displayed initially as order delay
requests, then order cancellations and subsequently fewer new order
placements. The outcome of the above was an order intake value for
H2 FY20 of GBP3.7m being 59% lower than H1 FY20.
As previously reported, this prompted management to look at
combinations of the government's Job Retention Scheme through to
the end of September 2020, single day shift working as opposed to
our normal four-shift pattern and four-day working weeks to balance
the declining workload, restructuring and as a last measure
redundancy, at various appropriate stages over that period.
As the business moved into the start of FY21, the restructuring
process concluded, but the single shift four-day working week
continued through to the end of Q1. The reasons for this can be
observed by analysing the order intake over H1, which although at
GBP6.4m represented a substantial 72% increase compared to that of
H2 FY20, was skewed somewhat when looking at the individual
quarters. Therefore, when comparing the respective order intake
value ratio of Q3 FY20 against that of Q4 FY20, Q1 FY21 and Q2
FY21, the ratio of 0.9:1.0:2.3 is more revealing. What occurred
over Q2 FY21, was an initial reinstatement of the order delays and
cancellations that arose at the start of the COVID-19 pandemic,
particularly from our Gaming market customers. In addition, some
customers placed longer lead time orders as the news of electronic
component shortages emerged. This is further supported by the
observed 11% decrease of the H2 FY21 order intake at GBP5.7m
compared to H1.
Although variations in order intake occurred over the year, the
manpower controls put in place very much allowed for more of an
operational balance in the month-to-month output levels from the
end of February 2021 onwards. Unfortunately, production was
negatively impacted as the year progressed by the significant
down-shift in electronic component supplies, which resulted in
significant and well documented major global supply issues and
inevitable delays. Due to ZDL's operational size, this left ZDL
exposed to major market fluctuations and where necessary to ensure
the continuation of some supply volume, our supply chain utilised
grey market purchasing for hand-to-mouth component volumes, causing
an almost inevitable drag on the achievable production output.
Total FY21 sales revenue of GBP11.7m was GBP1.0m lower than that
of FY20, but although order intake varied considerably, the
business was able to utilise the higher order intake of H1 FY20, to
buffer the output through H2 FY20 and whilst the lower order intake
of H2 FY20 had an effect on the output of H1 FY21, the combined
higher order intake of Q2 and H2 FY21 enabled the significant 44%
growth in H2 FY21 revenue compared to H1.
Of our four major contributory markets being Gaming, Financial,
Vending and Industrial, it was only Vending which showed
year-on-year growth in sales against FY20, with the revenue decline
in Financial providing the biggest negative impact. However, when
reviewing the FY21 data and comparing H2 against H1, pleasingly,
all of the major contributory markets showed a material
improvement.
Market 2021 2020 % Var H1 FY21 H2 FY21 % Var
(A) (A)
---------- ---------- -------- --------
Other GBP1.0m GBP0.9m 18 GBP0.5m GBP0.4m (25)
Signage GBP0.7m GBP1.1m (38) GBP0.3m GBP0.4m 27
Industrial GBP1.6m GBP1.6m (0) GBP0.7m GBP0.9m 31
Vending GBP2.6m GBP2.2m 18 GBP1.0m GBP1.6m 63
Gaming GBP2.9m GBP3.1m (7) GBP1.0m GBP1.9m 99
Financial GBP2.9m GBP3.8m (24) GBP1.3m GBP1.6m 29
---------- ---------- ------ -------- -------- ------
Total GBP11.7m GBP12.7m (8) GBP4.8m GBP6.9m 44
---------- ---------- ------ -------- -------- ------
Note: all GBP values in the above table are rounded to
nearest GBP0.1m whilst % variance is based on actual
values.
As we consider that the Financial market was probably only
slightly impacted by COVID-19 and the true market effect we
continue to experience is related to the now well established major
move towards a cashless society (digital and mobile banking) and
with ZDL not being awarded with the new platform design wins for
both of the major ATM global customers several years ago, which
have since been launched, a sustained year-on-year decline is more
likely and not reverse despite the H2 recovery.
Gaming, although still behind that of FY20, experienced a
much-improved performance from February/March onwards, which is
reflected in the H2/H1 FY21 comparator data. This market benefited
from a resumption of unit builds for our Japanese, USA and
Australian based end customers for the Las Vegas markets, which is
predominantly where ZDL product finally resides. Pleasingly around
that time, the development teams of our end customers also began to
look at re-starting previously delayed programmes.
Vending, as previously indicated, was our only market to show
annual growth against FY20, but again, the growth in FY21 was much
more skewed to H2. The majority of this is a result of our European
customers resuming demand, particularly through our channel
partners in Italy and France for traditional style vending. We also
saw a resumption of demand for a drinks fountain unit project in
the USA.
As can be seen from the data, Industrial was little affected in
comparison, whilst Signage in percentage terms showed the greatest
decrease, mostly being attributable to a decline in the supply of
large format size units for previously well performing smart city
street furniture kiosk programmes through our Asian channels for
deployment in the USA.
In total across all markets, we shipped 76.5k touch sensor units
in FY21, compared to 78k units in FY20. The mix being more skewed
to smaller sized <14.9" diagonal units (FY21 39%: FY20 24%) than
the large size. A similar volume of the premium MPCT(TM) units were
supplied at circa 13k units. Although Gaming resumed stronger
growth in H2, the volume of curved units for Gaming customers was
53% lower in FY21 compared to FY20, at 3.4k units (FY20:7.2k
units).
Although the necessary restructuring in ZDL impacted every
department including R&D and sales and marketing, it did not
over the course of the year diminish the work undertaken by both to
continue the innovation within the product offerings and the
marketing efforts to increase news flow etc. under very different
circumstances.
Over the course of the year, a significant amount of time has
been spent by the R&D team in identifying, approving and in
some instances redesigning, to accommodate the various electronic
component shortages that manifested; a number of key development
projects were concluded, including finalising the release of the
now multi-industry award-winning ZYBRID(R)hover (non-touch)
technology and productionising the developed ZYBRID(R)edge
controllers for multi-stacked sensor video wall designs, for formal
release at the ISE expo in Spain during Q2 FY22.
In combination with the above, a significant amount of effort
has also been undertaken to bring the developed ElectroglaZ(TM)
concept to market, and although we have demonstrated facets of the
technology at some of the FY21 digital signage and touch trade
shows undertaken, it is intended to be more appropriately
demonstrated at its own market-specific Light + Building expo in
Germany during Q2 FY22.
COVID-19 has had a profound effect on the sales and marketing
function over the fiscal period, beyond the restructuring
programmes undertaken. As has previously been well documented, our
major marketing efforts are normally centred around undertaking
numerous end-market and region-specific trade shows and expositions
yearly. Such events provide substantial networking and showcasing
potential and bolster the consultative technical prospecting nature
of the sales and business development process, generally in
combination with our substantial channel partner network.
Unfortunately, the numerous travel bans and restrictions, have
impacted the sales process, as work from home policies followed by
a lot of our customers made and continue to make physical meetings
impossible. Similarly, physical trade shows and the like, were also
affected during H2 FY20 and H1 FY21, with numerous service
providers experimenting pretty unsuccessfully with virtual
attendance and participation. It was only towards the latter part
of FY21 that physical trade shows reappeared, but unfortunately
either the UK or destination country travel restrictions prevented
any UK personnel attendance. ZDL did undertake two physical trade
shows in that period, Digital Signage Japan and Touch Taiwan, both
being solely serviced by our locally based employees.
Over the period, the marketing efforts became much more social
media and digital content focused. Consequently, time has been
spent in digital content creation, using our own in-house studio
and an increase in the number of successful applications made for
several electronic media-based industry awards. Details of all
relevant news including customer testimonials, thought pieces,
technology updates and event attendance, can be referenced at:
https://www.zytronic.co.uk/news/.
Due to the hiatus in travel and the subsequent restrictions
imposed since April 2020 the effect on our sales prospecting and
normal marketing activities, as detailed above, has meant that the
volume and value of our dynamic CRM opportunities log has been
affected, as new opportunity entries were at a lower rate than the
conversion of existing opportunities to production.
As of 30 September 2021, there were 391 opportunities in our CRM
log, with a potential forecasted lifetime value of GBP28.0m, 17
being classified as "Project" which is the status of an opportunity
when a high probability of moving to production at a future point
is flagged, which at that point in time are projected to generate
GBP1.5m of revenue over their future production cycle. Over the
course of FY21, we had 135 total "Project"' status opportunities
move to production with a projected revenue generation potential of
GBP2.6m over their production cycle. These being additive to
existing business as they move through their production
lifecycle.
The CRM opportunities log is a very dynamic system, which
changes daily, based on new entries and status updates. Two months
on from the year-end, on 30 November 2021, it is encouraging to see
that the log has positively increased to 420 opportunities with a
potential forecasted lifetime value of GBP31.4m, 23 at "Project"
status, projected to generate GBP3.5m of future revenue over their
production cycle.
Mark Cambridge
Chief Executive Officer
6 December 2021
2021 Financial review
Financial review
The global effects of the COVID-19 pandemic have continued to
impact the financial performance of the Group over the year with
revenue decreasing from that of financial year 2020 of GBP12.7m to
a reported GBP11.7m. However, what is pleasing is that the Group
returned a reported profit before tax of GBP0.5m (2020: loss of
GBP0.4m) as a result of its previously announced restructuring
programme and internal efforts to control costs. Reported EBITDA
grew by GBP0.7m to GBP1.4m (2020: GBP0.7m) which generated an
increase in cash, excluding the payment of GBP6.7m for the share
tender and GBP0.6m for the restructuring, of GBP2.4m to close at
GBP9.2m (2020: GBP14.0m).
Group revenue
Group revenue decreased by 8% for the year to GBP11.7m (2020:
GBP12.7m) as the impact of the pandemic continued alongside the
well highlighted shortage of electronic component supplies
impacting not only the Group, but also the customer base it serves.
The Chief Executive Officer's review talks in more detail around
revenue.
Gross margin
Reported gross margin for the year ended 30 September 2021
improved to 30.3% ( 2020: 20.1%) as a result of the following:
-- The prior year's restructuring enabled savings in gross
margin over the year and with the reduction in trading over the Q1
period, the Group operated on single day-shift working and four-day
working weeks, which also improved margin;
-- The introduction of the four-day working week also saw
savings of GBP0.1m in general factory expenditure; and
-- Efficiencies were achieved throughout production and with
lower year-on-year scrap rates this contributed to an improved
margin
Group trading result
Group trading in the year increased to an operating profit of
GBP0.5m (2020: loss of GBP1.0m), mainly as a result of the
restructuring and cost control measures. Distribution costs were in
line with last year at GBP0.2m as sales where the Group is
responsible for carriage were similarly consistent. Administration
costs reduced by GBP0.4m to GBP2.9m (2020: GBP3.3m) as the Group
saw savings in its salary, marketing and travel expenditure.
Marketing and travel costs over the year continued to be reflective
of the pandemic as it was not permitted to attend many of the usual
exhibitions and travel restrictions were still imposed in a number
of key market territories. As the world continues to open up, the
Group would expect costs over these areas to increase over the
coming year. The Group is also mindful of the rising costs of
living which may also impact across the salary costs (and margins)
in the year ahead.
Exceptional other income
In the previous year the Group benefited from government support
of GBP0.5m for employees who were furloughed under the CJRS and for
our US personnel under the Paycheck Protection Programme ("PPP").
This was not utilised in the current year and so consequently the
Group reports no other income received.
Tax
The Group utilises the reliefs available to it, which positively
impacts the reported tax charge, which for the year is less than
GBP0.1m (2020: credit of GBP0.1m). The prior year tax loss, at the
time of the last annual report, was being proposed to be carried
back to recover cash already paid. However, following the
announcement to raise the corporation tax rate to 25% in 2023, the
Group made the decision to instead carry forward the loss to obtain
future relief at a higher rate of tax. Given the healthy cash
position, the Board believe this is appropriate.
Earnings/loss per share
The opening issued shares of 16,044,041 were reduced by
4,624,889 shares following the Tender Offer capital reduction
exercise undertaken in H1, leaving 11,419,152 ordinary shares of 1p
remaining. With the profit after tax of GBP0.4m this has resulted
in an EPS of 3.0p (2020: LPS of 1.8p) which is calculated on the
weighted average shares of 13,346,189 for the year.
Dividend
The Board announced at the time of its last annual report that
it would not be considering the resumption of the payment of
dividends until there is a return towards normality and at the time
of the interim report for FY21 it declared a zero dividend payment.
Following the results for the year the Board has proposed a final
dividend of 1.5p per share for the year ended 30 September 2021,
being the total dividend for the year (2020: Nil). Subject to
approval by shareholders, the dividend will be paid on Friday 18
March 2022 to shareholders on the register as at the close of
business on Friday 4 March 2022, with an ex-dividend date of
Thursday 3 March 2022. The Board believes that this is an
appropriate level of payment given the performance for the
year.
Capital expenditure
The Group continued to spend on capital investments over the
year totalling GBP0.3m (2020: GBP0.4m) across both tangible and
intangible expenditure. GBP0.1m (2020: GBP0.2m) of this was
incurred to further develop ElectroglaZ(TM) and its ZYBRID(R)hover
product offerings to enable market launches during the year, and
also commence new patent applications. GBP0.2m (2020: GBP0.2m) was
spent on tangible acquisitions with an approval being granted for a
second laser bonding machine, of which GBP0.1m of the total cost of
GBP0.4m was incurred in 2021. The remaining GBP0.1m spend occurred
across a number of replacement pieces of kit. Depreciation and
amortisation reduced over the year to GBP1.0m (2020: GBP1.2m).
Cash position
Despite the impact of the COVID-19 pandemic, the Group was in a
comfortable cash position and conti nued to strategically assess
its operations to improve future returns for shareholders. In early
February 2021 the Company announced a proposed return of up to
GBP10.0m of capital by way of a Tender Offer. This Tender Offer
concluded later in the month of February and resulted in a
reduction of 28.8% in the number of shares to 11,419,152 (2020:
16,044,041 shares) and returned GBP6.7m of cash to
shareholders.
The Group also announced in the prior year a significant
restructuring programme which completed in late October and early
November of this financial year, the costs of which at GBP0.6m were
provided for in the 2020 results but the cash was paid out during
this financial year.
The cash position opened at GBP14.0m and closed at GBP9.2m,
which adjusting for the one-off items above of GBP7.3m, generated
an increase to cash of GBP2.4m. Net cash from operating activities
was GBP2.1m, GBP0.6m of which arose from the unwinding of the
working capital (2020: GBP3.2m) and GBP1.0m from depreciation and
amortisation. Stocks decreased by GBP0.9m over the year as the
Group utilised its supply of raw materials and reduced its value of
goods manufactured for invoicing post year end. Creditors also
increased by GBP0.1m as the orders placed with suppliers increased
in the later months of the year, with the previous year's stock
being sufficient to fulfil the earlier demand. Debtors, however,
saw an increase as the sales made in H2 were considerably higher,
and with a mix of credit terms being offered, this elevated the
year-end debtor position. No bad debts materialised over the period
and the excellent work in cash collection continues.
Cashflow used in investing activities was GBP0.3m (2020:
GBP0.3m), wholly due to the costs of investment in capital
expenditure, and cashflow used in financing activities was GBP6.7m
(2020: GBP2.0m) due to the payment for the return of cash in the
Tender Offer.
The Group maintains its overdraft facility, which is available
for use in any of its three currencies. The Group also has an FX
policy in place whereby it is hedged in both US Dollars and Euros
for a period of four months ahead to correspond with its working
capital policies and currency requirements.
The Group remains debt free at the year end and despite the
continuing uncertainty the Group remains in a strong financial
position for the year ahead.
Claire Smith
Group Finance Director
6 December 2021
Consolidated statement of comprehensive income
For the year ended 30 September 2021
2021 2020
Notes GBP'000 GBP'000
---------------------------------------------- ------ ------------- -------------
Group revenue 3 11,683 12,680
Cost of sales (8,146) (10,130)
---------------------------------------------- ------ ------------- -------------
Cost of sales excluding exceptional
items (8,146) (9,015)
Exceptional items 4(a) - (1,115)
---------------------------------------------- ------ ------------- -------------
Gross profit 3,537 2,550
Distribution costs (183) (196)
Administration expenses (2,901) (3,318)
---------------------------------------------- ------ ------------- -------------
Administration expense excluding exceptional
items (2,901) (3,060)
Exceptional items 4(b) - (258)
---------------------------------------------- ------ ------------- -------------
Group trading profit/(loss) 453 (964)
Exceptional other income 5 - 500
---------------------------------------------- ------ ------------- -------------
Group operating profit/(loss) 453 (464)
Finance revenue - 41
---------------------------------------------- ------ ------------- -------------
Profit/(loss) before tax 453 (423)
Tax (expense)/credit 6 (47) 129
---------------------------------------------- ------ ------------- -------------
Profit/(loss) for the year 406 (294)
Other comprehensive income - -
---------------------------------------------- ------ ------------- -------------
Total comprehensive income/(loss) 406 (294)
---------------------------------------------- ------ ------------- -------------
Earnings/(loss) per share
Basic 8 3.0p (1.8p)
---------------------------------------------- ------ ------------- -------------
All activities are from continuing operations.
Consolidated statement of changes in equity
For the year ended 30 September 2021
Equity Capital
share Share redemption Retained
capital premium reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- -------- ----------- --------- --------
At 1 October 2019 160 8,994 - 16,644 25,798
Loss for the year - - - (294) (294)
Dividends - - - (2,439) (2,439)
-------- -------- ----------- --------- --------
At 30 September 2020 160 8,994 - 13,911 23,065
Profit for the year - - - 406 406
Repurchase and cancellation
of shares (46) - 46 (6,706) (6,706)
----------------------------- -------- -------- ----------- --------- --------
At 30 September 2021 114 8,994 46 7,611 16,765
----------------------------- -------- -------- ----------- --------- --------
Consolidated statement of financial position
At 30 September 2021
2021 2020
Notes GBP'000 GBP'000
---------------------------------- ------- -------- --------
Assets
Non-current assets
Intangible assets 733 1,043
Property, plant and equipment 5,370 5,820
6,103 6,863
------------------------------------------ -------- --------
Current assets
Inventories 1,435 2,332
Trade and other receivables 2,200 1,888
Cash and short term deposits 9,157 14,038
------------------------------------------- -------- --------
12,792 18,258
------------------------------------------ -------- --------
Total assets 18,895 25,121
------------------------------------------- -------- --------
Equity and liabilities
Current liabilities
Trade and other payables 1,080 591
Derivative financial liabilities 16 -
Provisions - 582
Accruals 551 376
Government grants 26 27
Tax liabilities 121 -
1,794 1,576
------------------------------------------ -------- --------
Non-current liabilities
Deferred tax liabilities (net) 336 480
336 480
------------------------------------------ -------- --------
Total liabilities 2,130 2,056
------------------------------------------- -------- --------
Net assets 16,765 23,065
------------------------------------------- -------- --------
Capital and reserves
Equity share capital 114 160
Share premium 8,994 8,994
Capital redemption reserve 46 -
Retained earnings 7,611 13,911
------------------------------------------- -------- --------
Total equity 16,765 23,065
------------------------------------------- -------- --------
Consolidated cashflow statement
For the year ended 30 September 2021
2021 2020
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Operating activities
Profit/(loss) before tax 453 (423)
Finance income - (41)
Depreciation and impairment of property,
plant and equipment 629 718
Amortisation, impairment and write-off of
intangible assets 379 457
Amortisation of government grant (1) (442)
Fair value movement on foreign exchange
forward contracts 16 (21)
Loss on disposal of asset 23 -
Working capital adjustments
Decrease in inventories 897 702
(Increase)/decrease in trade and other receivables (433) 2,360
Increase in trade and other payables and
provisions 85 88
---------------------------------------------------- -------- --------
Cash generated from operations 2,048 3,398
Tax received/(paid) 48 (220)
---------------------------------------------------- -------- --------
Net cashflow from operating activities 2,096 3,178
---------------------------------------------------- -------- --------
Investing activities
Interest received - 41
Payments to acquire property, plant and
equipment (179) (153)
Payments to acquire intangible assets (92) (201)
---------------------------------------------------- -------- --------
Net cashflow used in investing activities (271) (313)
---------------------------------------------------- -------- --------
Financing activities
Dividends paid to equity shareholders of
the Parent - (2439)
Receipt of government grants - 469
Repurchase and cancellation of shares (6,706) -
Net cashflow used in financing activities (6,706) (1,970)
---------------------------------------------------- -------- --------
(Decrease)/increase in cash and cash equivalents (4,881) 895
---------------------------------------------------- -------- --------
Cash and cash equivalents at the beginning
of the year 14,038 13,143
---------------------------------------------------- -------- --------
Cash and cash equivalents at the year end 9,157 14,038
---------------------------------------------------- -------- --------
Notes to the consolidated financial statements
1. Basis of preparation
The preliminary results for the year ended 30 September 2021
have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting
Standards ("IFRS") as endorsed by the European Union regulations as
they apply to the financial statements of the Group for the year
ended 30 September 2021. Whilst the financial information included
in this preliminary announcement has been computed in accordance
with the recognition and measurement requirements of IFRS, this
announcement does not itself contain sufficient information to
comply with IFRS. The accounting policies adopted are consistent
with those of the previous year.
The financial information set out in this announcement does not
constitute the statutory accounts for the Group within the meaning
of Section 435 of the Companies Act 2006. The statutory accounts
for the year ended 30 September 2020 have been filed with the
Registrar of Companies. The statutory accounts for the year ended
30 September 2021 will be filed in due course. The auditors' report
on these accounts was not qualified or modified and did not contain
any statement under sections 498(2) or (3) of the Companies Act
2006 or any preceding legislation.
Each of the Directors confirms that, to the best of their
knowledge, the financial statements, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Group and the undertakings included in the consolidation
taken as a whole; and the Group results, Operational review and
Financial review includes a fair review of the development and
performance of the business and the position of the Group and the
undertakings included in the consolidation taken as a whole,
together with a description of the principal risks and
uncertainties that they face
2. Basis of consolidation and goodwill
The Group results comprise the financial statements of Zytronic
plc and its subsidiaries as at 30 September each year. They are
presented in Sterling and all values are rounded to the nearest
thousand pounds (GBP'000) except where otherwise indicated.
3. Group revenue and segmental analysis
Revenue represents the invoiced amount of goods sold and
services provided, stated net of value-added tax, rebates and
discounts.
For management purposes, the Chief Operating Decision Maker
considers that it has a single business unit comprising the
development and manufacture of customised optical filters to
enhance electronic display performance. All revenue, profits or
losses before tax and net assets are attributable to this single
reportable business segment.
The Board monitors the operating results of its entire business
for the purposes of making decisions about resource allocation and
performance assessment. Business performance is evaluated based on
operating profits.
All manufacturing takes place in the UK and accordingly all
segment assets are located in the UK. The analysis of segment
revenue by geographical area based on the location of customers is
given below:
30 September 2021 30 September 2020
----------------------------------------------------- ------------------- -------------------
Touch Non-touch Touch Non-touch
----------------------------------------------------- -------- --------- -------- ---------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- -------- --------- -------- ---------
Sale of goods - Americas (excluding
USA) 273 13 154 31
* USA 1,683 183 2,419 175
- EMEA (excluding UK and Hungary) 3,658 220 3,513 239
- Hungary 757 165 1,263 223
- UK 233 257 316 241
- APAC (excluding South Korea) 1,230 299 918 89
- South Korea 2,544 168 2,956 143
----------------------------------------------------- -------- --------- -------- ---------
10,378 1,305 11,539 1,141
----------------------------------------------------- -------- --------- -------- ---------
Total revenue 11,683 12,680
----------------------------------------------------- ------------------- -------------------
Individual revenues from three major customers exceeded 10% of
total revenue for the year. The total amount of revenue was GBP4.3m
(2020: GBP4.9m).
The individual revenues from each of these three customers were:
GBP1.6m (2020: GBP1.9m); GBP1.4m (2020: GBP1.1m); and GBP1.3m
(2020: GBP1.9m).
4. Exceptional costs
(a) Cost of sales
30 September 30 September
2021 2020
GBP'000 GBP'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
30 September 30 September
2021 2020
GBP'000 GBP'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.
5. Exceptional other income
30 30
September September
2021 2020
GBP'000 GBP'000
---------------------------- ---------- ----------
Grant monies received - 500
---------------------------- ---------- ----------
Total grant monies received - 500
---------------------------- ---------- ----------
The income received as above is as a result of claims made under
the CJRS for when personnel were on Furlough leave.
6. Tax
30 September 30 September
2021 2020
GBP'000 GBP'000
--------------------------------------------------- ------------- -------------
Current tax
UK corporation tax 122 (92)
Tax due on foreign subsidiary 1 2
Corporation tax under/(over)-provided in
prior years 70 (4)
--------------------------------------------------- ------------- -------------
Total current tax charge/(credit) 193 (94)
--------------------------------------------------- ------------- -------------
Deferred tax
Origination and reversal of temporary differences (106) (108)
Movement related to change in tax rates 26 60
Movement related to prior year adjustments (66) 13
--------------------------------------------------- ------------- -------------
Total deferred tax credit (146) (35)
--------------------------------------------------- ------------- -------------
Tax charge/(credit) in the statement of
comprehensive income 47 (129)
--------------------------------------------------- ------------- -------------
Reconciliation of the total tax charge/(credit)
The effective tax rate of the tax charge in the statement of
comprehensive income for the year is 10% (2020: credit of 30%)
compared with the average rate of corporation tax charge in the UK
of 19% (2020: 19%). The differences are reconciled below:
30 September 30 September
2021 2020
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Accounting profit/(loss) before tax 453 (423)
-------------------------------------------- ------------- -------------
Accounting profit/(loss) multiplied by the
average UK rate of corporation tax of 19%
(2020: 19%) 86 (80)
Effects of:
Expenses not deductible for tax purposes 19 1
Depreciation in respect of non-qualifying
items 19 19
Enhanced tax reliefs - R&D (100) (140)
Effect of deferred tax rate reduction and
difference in tax rates 18 60
Tax under-provided in prior years 4 9
Tax due on foreign subsidiary 1 2
-------------------------------------------- ------------- -------------
Total tax expense/(credit) reported in the
statement of comprehensive income 47 (129)
-------------------------------------------- ------------- -------------
Factors that may affect future tax charges
The main rate of corporation tax has remained at 19% throughout
the period ended 30 September 2021. An increase in the main rate of
corporation tax to 25% was enacted prior to the year end. This is
applicable from 1 April 2023, and therefore the Group has
considered the timing of the unwind of its deferred tax and has
calculated its deferred tax balances at the rates at which they are
expected to unwind. This has resulted in a range of rates from 19%
- 25% being applied to deferred tax balances at the year end. As a
result of the impending increase in the main rate of corporation
tax, the Group expects its effective tax rate to increase in the
medium term.
The Patent Box regime allows companies to apply a rate of
corporation tax of 10% to profits earned from patented inventions
and similar intellectual property. Zytronic generates such profits
from the sale of products incorporating patented components. The
Group has determined that all relevant criteria has been satisfied
for bringing income within the regime. While the loss-making
position of the Group in 2020 meant that there was no benefit from
the regime in 2020 and 2021, the Group will continue to make Patent
Box claims and expects to obtain tax deductions from such claims
from 2022 onwards.
7. Dividends
The Directors propose the payment of a final dividend of 1.5p
per ordinary share for this year's results. This will bring the
total dividend for the year to 1.5p (2020: Nil).
30 September 30 September
2021 2020
GBP'000 GBP'000
-------------------------------------------- -------------- -------------
Ordinary dividends on equity shares
Final dividend of 15.2p per ordinary share
paid on 7 February 2020 - 2,439
2,439
----------------------------------------------------------- -------------
8. Earnings/(loss) per share
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
year. 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.
Weighted Weighted
average average
number number
Profit of shares EPS Loss of shares LPS
30 September 30 September 30 September 30 September 30 September 30 September
2021 2021 2021 2020 2020 2020
GBP'000 Thousands Pence GBP'000 Thousands Pence
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss)
on ordinary
activities
after tax 406 13,346 3.0 (294) 16,044 (1.8)
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Basic EPS/LPS 406 13,346 3.0 (294) 16,044 (1.8)
--------------- ------------- ------------- ------------- ------------- ------------- -------------
There are no dilutive or potentially dilutive instruments.
9. Capital and reserves
On 1 February 2021 the Company announced a proposed return of up
to GBP10.0m of capital by way of a Tender Offer to all
shareholders. This was approved by shareholders on 25 February
2021. As a result, 4,624,889 shares were purchased on 26 February
2021 and subsequently cancelled by the Company at a price of 145p
per share, returning GBP6.7m of the Company's cash to participating
shareholders.
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END
FR DKABQBBDBBBK
(END) Dow Jones Newswires
December 07, 2021 02:00 ET (07:00 GMT)
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