TIDMZYT

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 GBP5.9m (2021: GBP4.8m) 
   --    EBITDA of GBP0.8m (2021: GBP0.2m) 
   --    Profit before tax of GBP0.4m (2021: loss of GBP0.3m) 
   --    Basic earnings per share of 3.0p (2021: loss per share 1.2p) 
   --    Positive cash generated from operations GBP0.1m (2021: GBP0.4m) 
   --    Net cash of GBP7.5m (30 September 2021: GBP9.2m) 

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 
 Mark Cambridge, Chief Executive                        0191 414 
 Claire Smith, Group Finance Director                    5511 
Singer Capital Markets (Nominated Adviser and 
 Broker) 
 Aubrey Powell, Rachel Hayes, Amanda Gray (Investment   020 7496 
 Banking)                                                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 80,000ft(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 GBP5.9m (2021: GBP4.8m). 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 GBP5.9m (2021: GBP4.8m), 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 GBP0.8m (2021: GBP0.2m) and profit before tax of GBP0.4m (2021: loss of GBP0.3m). 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 GBP1.2m of cash. These purchases have continued since the end of the half year.

Payments of a final dividend of GBP0.2m and capital expenditure totalling GBP0.2m, 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 GBP0.7m). These factors contributed to the net reduction in cash over the half year period of GBP1.6m (2021: GBP6.3m). 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 GBP0.5m (2021: increase of GBP0.4m), 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 GBP7.5m (30 September 2021: GBP9.2m) 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  Six months       Year to 
                                                   to          to 
                                             31 March    31 March  30 September 
                                                 2022        2021          2021 
                                            Unaudited   Unaudited       Audited 
                                    Notes     GBP'000     GBP'000       GBP'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              Capital 
                                      up 
                                   share    Share  redemption  Retained 
                                 capital  premium     reserve  earnings    Total 
                                 GBP'000  GBP'000     GBP'000   GBP'000  GBP'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    GBP'000    GBP'000       GBP'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  Six months       Year to 
                                                            to          to 
                                                      31 March    31 March  30 September 
                                                          2022        2021          2021 
                                                     Unaudited   Unaudited       Audited 
                                             Notes     GBP'000     GBP'000       GBP'000 
Operating activities 
Profit/(loss) before tax                                   399       (314)           453 
Depreciation and impairment of property, 
 plant and 
 equipment                                                 279         333           629 
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 
                             GBP'000  Thousands     Pence   GBP'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 
                                               GBP'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    Six months        Year to 
                                                 to 31 March   to 31 March   30 September 
                                                        2022          2021           2021 
                                                   Unaudited     Unaudited        Audited 
                                                     GBP'000       GBP'000        GBP'000 
Ordinary dividends on equity shares 
Final dividend of 1.5p per ordinary share paid 
 on                                                      170             -              - 
 18 March 2022 
                                                         170             -              - 
 

6. Cash and cash equivalents

 
 
                             Six months    Six months        Year to 
                            to 31 March   to 31 March   30 September 
                                   2022          2021           2021 
                              Unaudited     Unaudited        Audited 
                                GBP'000       GBP'000        GBP'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     Six months         Year 
                             to 31 March    to 31 March        to 30 
                                                           September 
                                    2022           2021         2021 
                               Unaudited      Unaudited      Audited 
                                 GBP'000        GBP'000      GBP'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 GBP1.0m (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 GBP7.5 (2021: GBP7.8m).

7. 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 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 GBP6.7m 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 GBP1.2m.

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

NE8 3AE

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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IR MZGMKZVKGZZZ

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May 17, 2022 10:04 ET (14:04 GMT)

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