TIDMZYT
RNS Number : 8419H
Zytronic PLC
08 December 2020
8 December 2020
Zytronic plc
("Zytronic" or the "Company"
and, together with its subsidiaries, the "Group")
Final Results for the year ended 30 September 2020 (audited)
Zytronic plc, a leading specialist manufacturer of touch sensors
, announces its audited full year results for the period ended 30
September 2020.
Overview
-- Group revenue of GBP12.7m (2019: GBP20.1m), primarily
impacted by the Coronavirus pandemic, as previously announced
-- Gross margin reduced to 20.1% (2019: 33.7%), impacted mainly
by the exceptional costs of Furlough and restructuring, and lower
sales of higher margin products
-- Loss before tax of GBP0.4m (2019: profit of GBP3.1m)
-- Basic (loss)/earnings per share of (1.8p) (2019: 16.8p)
-- No dividend paid or proposed during the year (2019:
22.8p)
-- Increased cash generation from operating activities at
GBP3.2m (2019: GBP2.8m), predominantly driven by a reduction in
working capital
-- Closing net cash of GBP14.0m (2019: GBP13.1m)
Commenting on the outlook, Chairman, Tudor Davies said:
" Whilst we are only two months into the financial year, we have
adjusted our operations to the lower levels of demand as it is
likely to take several months for the Coronavirus vaccines to allow
a return to more normal living and then further time for our
customers to operate fully and sales to return. "
It is intended that the Annual General Meeting will take place
on 25 February 2021 at 9.30am. Notice of the AGM will be sent to
shareholders with the annual report and accounts in due course.
Enquiries:
Zytronic plc
Mark Cambridge, Chief Executive
Claire Smith, Group Finance Director (0191 414 5511)
N+1 Singer (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
2020 Chairman's review
Introduction
As previously announced on 21 October 2020, the second half of
the year has been severely affected by the Coronavirus pandemic,
but the business has remained profitable for the year as a whole
before exceptional costs, and our financial position remains strong
with increased cash balances of GBP14.0m.
Results
The Group produced a small operating profit of GBP0.4m (2019:
GBP3.0m) before exceptional costs of GBP1.4m and exceptional income
of GBP0.5m, on much reduced revenues of GBP12.7m (2019: GBP20.1m)
and a reported loss before tax for the year of GBP0.4m (2019:
profit of GBP3.1m).
The exceptional costs and income relate to Furlough and
redundancy with a reduction in headcount from 164 to 97 in the
second half as we adjusted staffing levels to the lower levels of
demand, as average monthly sales reduced from GBP1.2m in H1, to
GBP0.8m in the last quarter.
The decline in revenues in the second half, when the Coronavirus
pandemic started to bite, was across all sectors with significant
declines and postponements from the larger Gaming and Financial
customers, with Vending being the only sector to show an increase
in second half sales. Further detail can be obtained in the Chief
Executive Officer's statement.
Current trading
Sales are still running at similar levels to the last quarter of
last year, but even at these low levels, the actions we took to
reduce staff levels have enabled us to improve gross margins to
close to historic levels, and with reduced overheads produce a
positive EBITDA.
On the order front we have experienced some increase in
enquiries and activity levels which is encouraging, although we
would not expect any material change until the pandemic is under
control.
Cash
Cash generation from operating activities was a positive GBP3.2m
(2019: GBP2.8m), with virtually all the benefit coming from a
reduction in working capital, and after payment of dividends of
GBP2.4m relating to the final dividend from 2019, the cash position
increased to GBP14.0m (2019: GBP13.1m).
Dividend
In May 2020 at the time of our Interim Results we explained that
we should not pay a dividend and returns to shareholders should be
deferred until there is a return towards normality.
Whilst at this stage there has not been a return to anywhere
near to normal trading, we have managed and implemented a
reorganisation, in the face of a severe downturn, with our cash
balances remaining at a very high level.
The Board considers that a large proportion of these cash
balances are surplus to current requirements, and it may be
appropriate to distribute this surplus cash by a share buy back,
and will seek shareholder approval for the requisite authorities at
the next general meeting.
Outlook
Whilst we are only two months into the financial year, we have
adjusted our operations to the lower levels of demand as it is
likely to take several months for the Coronavirus vaccines to allow
a return to more normal living and then further time for our
customers to operate fully and sales to return.
Tudor Davies
Chairman
7 December 2020
2020 Chief Executive Officer's review
The information detailed provides insights into the key aspects
of Zytronic Displays Limited ("ZDL"), our wholly owned operating
subsidiary, that have influenced the reported trading performance
over the fiscal year, drawing comparisons with the prior periods
where applicable.
Coronavirus ("COVID-19")
The most dramatic bearing on the performance of the business
over the course of the fiscal year has been the unprecedented
effects of the COVID-19 global pandemic, the initial effects of
which were felt as early as January. The early impact was seen in
ordering patterns and material availabilities from Chinese and
Asian suppliers, with the major operational impacts of COVID-19 on
ZDL occurring from April onwards, making most data comparisons
beyond that period non-meaningful.
At the time of the interim results announced on 12 May 2020, a
number of comments were made regarding the effects that the
COVID-19 pandemic had on the business up to April 2020; the
mitigating actions which had been taken by management to minimise
trading impacts, which included an early imposition of global
travel restrictions, significant introduction of revised working
practices to align with the required stringent social distancing
measures and the utilisation of the government's Coronavirus Job
Retention Scheme ("CJRS"), as the impacts of customer order
deferrals and raw material supply constraints began to affect
productive output and expected full year performance
As the second half of the year progressed, the effects of
COVID-19 on the order input profile became ever more pronounced,
particularly in the Gaming sector, due mostly to COVID-19 effects
on the global casino industries and hence their supply chains (our
customers). A restructuring of the business in late June was
implemented to align with what at that time was considered to be
the emergence of a new normal, which resulted in the termination of
17 UK employees across a number of disciplines by reason of
redundancy.
The continuing suppression thereafter of both physical product
markets and geographical regions due to COVID-19 and an expectation
that the effects of which are very likely to continue at least
through the first half of fiscal 2021, coupled with the expected
conclusion of the CJRS, resulted in an additional restructuring
across multiple departments in late September, the outcome of which
was the termination of employment by reason of redundancy of a
further 43 employees in the UK and the termination of the
employment of one of our USA-based sales persons, to re-align costs
within the business
Sales
Although the beginning of the fiscal year got off to a
comparatively slow start, principally from a low level of order
intake in the latter part of 2019, as demand from new Gaming
projects was slower than anticipated, this recovered strongly
thereafter with the order intake of Q2 being 15% higher than the
same period in 2019 and resulted in an order book of GBP2.7m at 31
March 2020 (31 March 2019: GBP2.0m), providing in normal
circumstances a solid base for the remainder of the year. Ho wever,
as a consequence of the almost immediate and dramatic impacts of
COVID-19 as detailed earlier, and the levels of order intake during
Q3 of GBP1.9m and Q4 of GBP2.0m, sales for the year were
significantly suppressed at GBP12.7m, compared with GBP20.1m in
2019, with the historical norm of a stronger performing H2 not
being observed in 2020 with H1 and H2 contributing GBP7.4m and
GBP5.3m respectively (2019 H1: GBP9.5m; H2: GBP10.6m), with H2
sales being 50% lower than those of H2 2019.
In comparison with 2019 it is therefore unsurprising that all of
our major application markets have reported a year-on-year decline,
the largest being Gaming which reduced by 51% (2020: GBP3.1m; 2019:
GBP6.4m), followed by 45% in Vending (2020: GBP2.2m; 2019: GBP4.0m)
due to the non-repeat of the Saudi Arabian rail ticketing machine
project that significantly benefitted H2 2019 and 38% in Financial
(2020: GBP3.8m; 2019: GBP6.2m), Signage was 6% lower (2020:
GBP1.1m; 2019: GBP1.1m) and Industrial 4% (2020: GBP1.6m; 2019:
GBP1.7m). However, when comparing the H2 results with those of H1,
the level of decline is more pronounced with a decline of 67% for
Gaming (H1 GBP2.3m; H2: GBP0.8m), 28% in Financial (H1: GBP2.2m; H2
GBP1.6m), 25% in Industrial (H1: GBP0.9m; H2: GBP0.7m) and 10% in
Signage (H1: GBP0.6m; H2 GBP0.5m), whereas Vending actually
performed better in H2 than H1, exhibiting 28% growth (H1: GBP1.0m;
H2: GBP1.2m), mostly attributable to sales into the USA for
fountain drink dispensing in H2.
Due to the changes in supplies to some upstream customers in the
Gaming sector, UK sales were always expected to be dramatically
reduced in 2020, which ultimately resulted in an increase in our
export levels. Exports accounted for 96% of all invoiceable goods
in 2020 (2019: 90%)
When evaluating ZDL's sales mix, several intrinsically linked
factors have a significant and well-documented influence on both
revenues and gross margin, primarily the number of touch sensor
units produced and their mix based on size, shape and sensing
technology formats, across the diverse set of applications and
markets.
The volumes and respective revenue generated purely from touch
sensors based on size range are presented in the table below.
2020 2019 Variance
Sensor Sizes Units Sales Units Sales Units Sales
('000) (GBPm) ('000) (GBPm) ('000) (GBPm)
-------- -------- -------- -------- --------
Small ( <= 14.9") 19 1.3 30 1.6 (11) (0.3)
-------- -------- --------
Medium (15.0 -
29.9") 50 5.5 79 8.7 (29) (3.2)
-------- -------- -------- --------
Large ( >= 30.0") 9 3.2 15 6.0 (8) (2.8)
-------- -------- -------- --------
Total 78 10.0 124 16.3 (46) (6.3)
-------- -------- -------- --------
Within the size ranges several shape and technology variants in
the medium and large sensor categories are produced, where the
sensors can be any combinations of either flat or curved and either
PCT(TM) (single-touch) or MPCT(TM) (multi-touch) in functionality.
Of the total units supplied, 14,000 units were of an MPCT(TM)
configuration (2019: 17,000), of which 4,000 were of a curved
format (2019: 7,000), the reductions being mainly attributed to the
lower level of demand in Gaming,
Strategic sales and marketing initiatives
The strategic sales and marketing initiatives planned for 2020
had to significantly adjust due to COVID-19, which brought global
sales travel and attendance at trade expos, to an almost immediate
halt from March 2020 onwards.
Prior to the impact of COVID-19, the Group had continued to
utilise trade expo attendance as its primary marketing initiative,
having directly exhibited at G2E in Las Vegas in October 2019 and
ISE in Amsterdam in February 2020. Indirectly through our various
global partners we also had a presence at Digital Big Bank in
Bangkok in October 2019, ICE London and Embedded World in Nuremburg
in February 2020. Further direct expo participation was scheduled
for DSE Japan and DSE in Las Vegas in April 2020, both of which
were ultimately cancelled.
COVID-19 has had a very dramatic impact on trade expos across
numerous industries, with several organisers having now gone into
administration. ZDL will be re-evaluating this landscape once
travel and attendance at such events is back to a more normal
footing.
The lack of international travel has resulted in the need for an
improved digital marketing presence, with a release of a refresh of
both the ZDL and Zytronic plc websites being imminent. Further
investment has been made into digital photography and video
equipment to create an internal studio in support of product and
innovation releases through the various ZDL social media channels,
all being readily accessible alongside pertinent case studies,
whitepapers and thought pieces at ZDL's website, viewable online at
https://www.zytronic.co.uk.
Opportunities analysis
Due to the recognised, long maturation, project-based and
bespoke nature of our business, the creation and monitoring of
opportunities is critical to ongoing business performance. The
procedure for the analysis of opportunities within ZDL has been
well documented in prior years and we continue to utilise our
tailored Customer Relationship Management ("CRM") system to manage
their dynamically changing status from lead generation through
"Enquiry", "Prospect" and "Project" status to production with only
the sensitised data of "Projects" incorporated into our active
quarterly forecasting model.
With the final key metric in determining "Project" status being
high probability of productive success, it is unsurprising that as
the second half of the year progressed, several key "Projects" were
re-classified due to COVID-19 uncertainty and therefore the
relative level of "Projects" is lower than at the start of the
year. However, pleasingly the volume and value of total
opportunities remain strong.
As at 30 September 2020, there were 557 opportunities in the
system with a projected value of GBP67m, 36 classified as
"Projects", which are expected to generate GBP2.5m of sales over
their future production cycle. This compares with data as at 30
September 2019 of 494, GBP83m, 58 and GBP13.4m respectively.
Strategic research and development
The research and development team has crucially continued to
innovate throughout the period especially in answering a key
question that has inevitably arisen because of the COVID-19
pandemic regarding the physical nature of touching interactive
surfaces.
A general market consideration in response to this is the
proposition of surface protection. ZDL continues to work with and
evaluate several material proposals that are either additive such
as a coating or provided at source by the substrate manufacturer to
prevent micro-organism growth and contagion viral load. Although
very much in their infancy, equipment providers are hesitant to use
such solutions whilst the cost delta is so high. Initial preference
appears to be for contactless interactivity, which ZDL's engineers
readily evolved using our proprietary hardware, firmware and
manufacturing techniques. Several key customers are presently
evaluating sample kits of our new ZYBRID(R) (hover) solution that
can detect interactions up to 30mm away from the surface of the
sensor.
Another key interactive product development during the year,
centering around advanced electronics and algorithm design, has
been large format multi-monitor stacking to create immersive large
surface area interactive video walls, where the physical no-touch
border contact area must be minimal and the interactive movement
between one monitor and those adjacent, indistinguishable. After
showing a not-for-sale concept at the ISE show, a more formal
product launch had been originally planned of ZYBRID(R) (edge) at
DSE in Las Vegas prior to its cancellation.
Under development and in conjunction with Cohda Design Ltd is
the use of our knowledge for the lamination and processing of
metallised transparent coatings to provide clear glazed products to
be brand marketed as electroglasZ(TM) to which various powered
devices can be fitted without the need for any obtrusive cabling,
such as in lighting structures for museum cabinetry, etc.
Operations
Over the course of the second half of 2020, the productive
labour headcount has been dramatically affected by the impacts of
COVID-19. At the start of the year, the direct productive labour
headcount stood at 98 persons, which at the time of reporting on
the 2019 preliminary results in December 2019 had been temporarily
reduced by 15, all of which had returned by February 2020, at which
point we were actively looking to recruit as the order book began
to significantly recover. However, with the impact of COVID-19
shortly thereafter, the productive headcount was reduced, initially
by the utilisation of the CJRS and subsequently by reason of
redundancy. Over the H2 period the average direct productive
headcount was 46 persons.
We have protected the three active apprentice training schemes
covering technical, quality and maintenance roles during the
period, albeit by placing them on furlough under the CJRS.
Another operational concern during the COVID-19 H2 period was
the potential impact to process yields over the period due to the
significant reduction in manpower as internal control processes and
efficiencies were inevitably stretched. Whilst we did see a 4%
decline when comparing H2 against H1, pleasingly the year in total
did exhibit an 11% improvement against that achieved over 2019,
predominantly due to the reduction in the volume of the complex
product shapes and designs produced.
BREXIT
With the ongoing uncertainty around BREXIT, the Group is
continuing to assess its position around the supply of raw
materials into it, to ensure that production is not impacted by any
delays at borders. All of our EU sales at present are on an EXW
basis which passes control for transportation to the customer and
so we should see no impact on this side of the business in terms of
revenue recognition. We have assessed our internal resources and
feel that we are in a strong place to cope with any changes as they
occur, particularly as we have been a global exporter for many
years.
Finally, I would like to conclude the review by thanking all ZDL
employees for their understanding and valued contribution to the
business over the course of this unprecedented and difficult period
and for their continuing commitment to ZDL.
Mark Cambridge
Chief Executive Officer
7 December 2020
2020 Financial review
Financial Review
The financial results for the year have been significantly
impacted by the global COVID-19 pandemic due to the Group serving a
worldwide customer base, with a number of customers and suppliers
forced into closure at some point. Whilst the Group continued to
operate throughout the UK lockdown, its operations have been
significantly impacted which has driven the reporting period to a
loss before tax of GBP0.4m (GBP2019: profit before tax of
GBP3.1m).
Group revenue
Total Group revenue for the year decreased by GBP7.4m to
GBP12.7m (2019: GBP20.1m), with H2, which in normal times is
usually stronger than H1, being wholly impacted by the COVID-19
pandemic with revenue of GBP5.3m compared to GBP7.4m in the first
half (2019: H1: GBP9.5m; H2: GBP10.6m). The decline is as a result
of a number of our customers being closed and, hence, delaying
orders that had been scheduled for delivery or postponing the
placing of new orders. The Chief Executive Officer's review
highlights this in more detail.
Gross margin
Reported gross margin for the year ended 30 September 2020 was
20.1% ( 2019: 33.7%) as a result of the following:
-- The Group utilised the government's CJRS scheme from April
2020 onwards in order to align headcount with output. In previous
periods where revenue has been lean the Group would have instead
initiated a lay-off situation, as it did in the December 2019
through January 2020 period. The CJRS support enabled the Group to
protect the employment of certain personnel over the year. However,
the Group also had to undertake restructuring exercises as it
managed the changing landscape and became more aware that revenues
were still a long way off returning to normal and that the CJRS in
its earlier form was to be discontinued. These restructurings were
initiated in June and September with subsequent redundancies made
in early July and late October and early November. These
exceptional costs of both running the CJRS and the restructuring
totalled GBP1.1m and 9% of margin and are included in the year-end
numbers.
-- The Group also saw an 8,000-unit volume drop in its larger
format sensors over the year, over a number of customers,
particularly Gaming, and which are higher margin products for the
Group.
The underlying gross margin for the year was 28.9% (2019:
33.7%).
Group trading
Group trading in the year fell to a reported loss of GBP1.0m
(2019: profit of GBP3.0m), wholly as a result of the reduced levels
of sales. Distribution costs fell by GBP0.2m to GBP0.2m (2019:
GBP0.4m) as a result of fewer sales where the Group is responsible
for the costs of carriage. Administration costs also declined by
GBP0.2m over the year to GBP3.3m (2019: GBP3.5m) despite the costs
of restructuring and the CJRS scheme totalling GBP0.3m. Due to the
impacts of the COVID-19 pandemic the Group unfortunately also had
to undertake restructuring within its administration personnel. The
cost benefits arising from this restructuring will be reflected in
the financial year 2021 in both margin and administration expenses.
The Group-wide travel ban that was imposed earlier in the year also
helped to save costs and contracts for necessary business
expenditure were also renegotiated where possible to make further
savings over the financial year.
The underlying Group trading position was a profit of GBP0.4m
(2019: GBP3.0m).
Exceptional other income
The Group benefited from government support during the year of
GBP0.5m (2019: GBPNil) for employees who were furloughed under the
CJRS and for our US personnel under the Paycheck Protection
Programme ("PPP"). The CJRS grant provided for support for 80% (up
to a cap) of employees' wage costs with the Group paying the
employer national insurance and pension contributions (increased as
a consequence of operating a salary sacrifice pension scheme). The
PPP scheme provided support for the salary costs of the employment
of the US employees.
Tax
The tax credit arising on the loss before tax totals GBP0.1m
(2019: charge of GBP0.4m). The Group is proposing to apply for
backwards relief to recover cash paid against the prior year.
Loss/earnings per share
The issued share capital of 16,044,041 ordinary shares of 1.0p
has remained constant over the year with the associated LPS being
1.8p (2019: EPS of 16.8p).
Dividend
In the first half of the year the Group paid a final dividend
for 2019 of 15.2p per share totalling GBP2.4m of cash (2019 total
dividend: GBP3.7m). The Directors proposed at the time of the
interims that the Group would not pay an interim dividend for the
financial year 2020 due to the uncertainty arising from the
COVID-19 pandemic. The Directors maintain this position as at the
year end.
Capital expenditure
The Group continued to make capital investments over the year
totalling GBP0.4m compared to GBP0.6m in the previous year. GBP0.2m
was spent on internal R&D over a number of new innovative
products and GBP 0.2m was also spent on tangible acquisitions for
replacement and enhancement of plant and machinery. Depreciation
and amortisation for the year was the same as last year at GBP1.2m
(2019: GBP1.2m).
Cash and debt
The Group announced in last year's annual results that it was
undertaking a strategic review of its operations to improve future
returns for shareholders and, as part of that review, the subject
of the appropriate level of future distributions compared with
earnings and cash resources. Work continued into H1 with regard to
that review but was postponed as the COVID-19 pandemic began to
impact. The Directors are continuing to assess this situation and
will advise shareholders accordingly.
Despite the earlier noted problems arising from the COVID-19
pandemic the Group has generated an increase to net cash over last
year of GBP0.9m to GBP14.0m (2019: GBP13.1m). The reduction to
working capital over the year of GBP3.2m has helped this position
arise. Debtors decreased by GBP2.4m over the period as a result of
not only lower revenues but also excellent cash collection despite
some customers being temporarily closed, with no bad debts
occurring. Stocks also reduced by GBP0.7m despite there being a
large volume of committed purchase orders in place at the end of
H1, which filtered into the business over H2 where delays were not
possible. Creditors increased over the period by GBP0.1m with trade
payables reducing but the decrease being offset by an increase
arising from the provision for restructuring that was initiated in
September of GBP0.6m.
Cashflow used in investing activities was GBP0.3m (2019:
GBP0.6m), primarily due to the costs of investment in capital
expenditure of GBP0.4m. Cashflow used in financing activities was
GBP2.0m, with the payment of the 2019 final dividend of GBP2.4m
offsetting the receipt of the government grants of GBP0.5m (2019:
GBP3.7m).
The Group maintains an 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 and opted not to consider the
government's Coronavirus Business Interruption Loan Scheme
("CBILS") due to it having a significant cash position. The Group
is also in a position of receiving VAT refunds and so could not
utilise the deferment of VAT payments that were available to it
under the government scheme.
Despite the ongoing uncertainty the Group remains in a strong
financial position for the year ahead.
Claire Smith
Group Finance Director
7 December 2020
Consolidated statement of comprehensive income
For the year ended 30 September 2020
2020 2019
Notes GBP'000 GBP'000
---------------------------------------------- ------ --------- ---------
Group revenue 3 12,680 20,104
Cost of sales (10,130) (13,311)
---------------------------------------------- ------ --------- ---------
Cost of sales excluding exceptional
items (9,015) (13,311)
Exceptional items 4(a) (1,115) -
---------------------------------------------- ------ --------- ---------
Gross profit 2,550 6,793
Distribution costs (196) (350)
Administration expenses (3,318) (3,462)
---------------------------------------------- ------ --------- ---------
Administration expense excluding exceptional
items (3,060) (3,462)
Exceptional items 4(b) (258) -
---------------------------------------------- ------ --------- ---------
Group trading (loss)/profit (964) 2,981
Exceptional other income 5 500 -
---------------------------------------------- ------ --------- ---------
Group operating (loss)/profit (464) 2,981
Finance revenue 41 76
---------------------------------------------- ------ --------- ---------
(Loss)/profit before tax (423) 3,057
Tax credit/(expense) 6 129 (366)
---------------------------------------------- ------ --------- ---------
(Loss)/profit for the year (294) 2,691
Other comprehensive income - -
---------------------------------------------- ------ --------- ---------
Total comprehensive (loss)/income (294) 2,691
---------------------------------------------- ------ --------- ---------
(Loss)/earnings per share
Basic 8 (1.8p) 16.8p
Diluted 8 (1.8p) 16.8p
---------------------------------------------- ------ --------- ---------
All profits are from continuing operations.
Consolidated statement of changes in equity
For the year ended 30 September 2020
Called
up share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------- --------- -------- --------- --------
At 1 October 2018 160 8,994 17,611 26,765
Profit for the year - - 2,691 2,691
Dividends - - (3,658) (3,658)
--------- -------- --------- --------
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
---------------------- --------- -------- --------- --------
Consolidated statement of financial position
At 30 September 2020
2020 2019
Notes GBP'000 GBP'000
---------------------------------- ------- -------- --------
Assets
Non-current assets
Intangible assets 1,043 1,299
Property, plant and equipment 5,820 6,385
6,863 7,684
------------------------------------------ -------- --------
Current assets
Inventories 2,332 3,034
Trade and other receivables 1,888 4,127
Cash and short term deposits 14,038 13,143
------------------------------------------- -------- --------
18,258 20,304
------------------------------------------ -------- --------
Total assets 25,121 27,988
------------------------------------------- -------- --------
Equity and liabilities
Current liabilities
Trade and other payables 591 962
Derivative financial liabilities - 21
Provisions 582 -
Accruals 376 499
Government grants 27 -
Tax liabilities - 192
1,576 1,674
------------------------------------------ -------- --------
Non-current liabilities
Deferred tax liabilities (net) 480 516
480 516
------------------------------------------ -------- --------
Total liabilities 2,056 2,190
------------------------------------------- -------- --------
Net assets 23,065 25,798
------------------------------------------- -------- --------
Capital and reserves
Equity share capital 160 160
Share premium 8,994 8,994
Retained earnings 13,911 16,644
------------------------------------------- -------- --------
Total equity 23,065 25,798
------------------------------------------- -------- --------
Consolidated cashflow statement
For the year ended 30 September 2020
2020 2019
GBP'000 GBP'000
---------------------------------------------------- -------- --------
Operating activities
(Loss)/profit before tax (423) 3,057
Finance income (41) (76)
Depreciation and impairment of property,
plant and equipment 718 726
Amortisation, impairment and write-off of
intangible assets 457 430
Amortisation of government grant (442) (15)
Fair value movement on foreign exchange
forward contracts (21) 14
Working capital adjustments
Decrease/(increase) in inventories 702 (13)
Decrease/(increase) in trade and other receivables 2,360 (389)
Increase/(decrease) in trade and other payables
and provisions 88 (742)
---------------------------------------------------- -------- --------
Cash generated from operations 3,398 2,992
Tax paid (220) (238)
---------------------------------------------------- -------- --------
Net cashflow from operating activities 3,178 2,754
---------------------------------------------------- -------- --------
Investing activities
Interest received 41 71
Payments to acquire property, plant and
equipment (153) (506)
Payments to acquire intangible assets (201) (144)
---------------------------------------------------- -------- --------
Net cashflow used in investing activities (313) (579)
---------------------------------------------------- -------- --------
Financing activities
Dividends paid to equity shareholders of
the Parent (2,439) (3,658)
Receipt of government grants 469 -
Net cashflow used in financing activities (1,970) (3,658)
---------------------------------------------------- -------- --------
Increase/(decrease) in cash and cash equivalents 895 (1,483)
---------------------------------------------------- -------- --------
Cash and cash equivalents at the beginning
of the year 13,143 14,626
---------------------------------------------------- -------- --------
Cash and cash equivalents at the year end 14,038 13,143
---------------------------------------------------- -------- --------
Notes to the consolidated financial statements
1. Basis of preparation
The preliminary results for the year ended 30 September 2020
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 2020. 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 2019 have been filed with the
Registrar of Companies. The statutory accounts for the year ended
30 September 2020 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
IFRS as adopted by EU standards, 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 2020 30 September 2019
----------------------------------------------------- ------------------------------ -------------------
Touch Non-touch Touch Non-touch
----------------------------------------------------- ------------- --------------- -------- ---------
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------------------- ------------- --------------- -------- ---------
Sale of goods - Americas (excluding
USA) 154 31 300 23
* USA 2,419 175 3,152 257
- EMEA (excluding UK and Hungary) 3,513 239 5,735 223
- Hungary 1,263 223 1,718 172
- UK 316 241 1,609 455
- APAC (excluding South Korea) 918 89 1,883 174
- South Korea 2,956 143 4,327 76
----------------------------------------------------- ------------- --------------- -------- ---------
11,539 1,141 18,724 1,380
----------------------------------------------------- ------------- --------------- -------- ---------
Total revenue 12,680 20,104
----------------------------------------------------- ------------------------------ -------------------
Individual revenues from three major customers exceeded 10% of
total revenue for the year. The total amount of revenue was GBP5.2m
(2019: GBP9.7m).
The individual revenues from each of these three customers were:
GBP1.9m (2019: GBP3.5m); GBP1.9m (2019: GBP2.4m); and GBP1.4m
(2019: GBP3.8m).
4. Exceptional costs
(a) Cost of sales
30 September 30 September
2020 2019
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
2020 2019
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 September 30 September
2020 2019
GBP'000 GBP'000
---------------------------- ------------ ------------
Grant monies received 500 -
---------------------------- ------------ ------------
Total grant monies received 500 -
---------------------------- ------------ ------------
The income received and accrued 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
2020 2019
GBP'000 GBP'000
--------------------------------------------------- ------------- -------------
Current tax
UK corporation tax (92) 420
Tax due on foreign subsidiary 2 2
Corporation tax over-provided in prior years (4) (10)
--------------------------------------------------- ------------- -------------
Total current tax (credit)/charge (94) 412
--------------------------------------------------- ------------- -------------
Deferred tax
Origination and reversal of temporary differences (108) (46)
Movement related to change in tax rates 60 -
Movement related to prior year adjustments 13 -
--------------------------------------------------- ------------- -------------
Total deferred tax credit (35) (46)
--------------------------------------------------- ------------- -------------
Tax (credit)/charge in the statement of
comprehensive income (129) 366
--------------------------------------------------- ------------- -------------
Reconciliation of the total tax (credit)/charge
The effective tax rate of the tax credit in the statement of
comprehensive income for the year is 30% (2019: charge of 12.0%)
compared with the average rate of corporation tax charge in the UK
of 19% (2019: 19%). The differences are reconciled below:
30 September 30 September
2020 2019
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Accounting (loss)/profit before tax (423) 3,057
-------------------------------------------- ------------- -------------
Accounting (loss)/profit multiplied by the
average UK rate of corporation tax of 19%
(2019: 19%) (80) 581
Effects of:
Expenses not deductible for tax purposes 1 1
Depreciation in respect of non-qualifying
items 19 22
Enhanced tax reliefs - R&D (140) (147)
Enhanced tax reliefs - Patent Box - (70)
Effect of deferred tax rate reduction and
difference in tax rates 60 (13)
Tax under/(over)-provided in prior years 9 (10)
Tax due on foreign subsidiary 2 2
-------------------------------------------- ------------- -------------
Total tax (credit)/expense reported in the
statement of comprehensive income (129) 366
-------------------------------------------- ------------- -------------
Factors that may affect future tax charges
Under current tax legislation, some of the amortisation of
licences will continue to be non-deductible for tax purposes.
There are no tax losses to carry forward at 30 September 2020
(2019: GBPNil).
The main rate of corporation tax in the UK has been in force
since 1 April 2017. A reduction in the rate to 17% effective from 1
April 2020 was substantively enacted before the prior year's
statement of financial position date, and was applied to the
deferred tax assets and liabilities as at September 2019. In March
2020, the reduction in the rate was cancelled and therefore the
main rate of corporation tax has remained at 19% throughout the
period ended 30 September 2020. The 19% rate has been applied to
deferred tax assets and liabilities arising at the statement of
financial position date.
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. Consequently, Patent Box
claims have been made for 2014 to 2019 accounting periods, and the
2020 benefit has been estimated.
7. Dividends
The Directors propose no payment of a dividend for this year's
results.
30 September 30 September
2020 2019
GBP'000 GBP'000
--------------------------------------------- ------------- -------------
Ordinary dividends on equity shares
Final dividend of 15.2p per ordinary share
paid on 22 February 2019 - 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 2,439 -
paid on 7 February 2020
2,439 3,658
--------------------------------------------- ------------- -------------
8. (Loss)/earnings per share
Basic LPS/EPS is calculated by dividing the (loss)/profit
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 LPS/EPS arising from total operations and
LPS/EPS arising from continuing operations.
Weighted Weighted
average average
number number
Loss of shares LPS Earnings of shares EPS
30 September 30 September 30 September 30 September 30 September 30 September
2020 2020 2020 2019 2019 2019
GBP'000 Thousands Pence GBP'000 Thousands Pence
--------------- ------------- ------------- ------------- ------------- ------------- -------------
(Loss)/profit
on ordinary
activities
after tax (294) 16,044 (1.8) 2,691 16,044 16.8
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Basic LPS/EPS (294) 16,044 (1.8) 2,691 16,044 16.8
--------------- ------------- ------------- ------------- ------------- ------------- -------------
The weighted average number of shares for diluted LPS/EPS is
calculated by including the weighted average number of potentially
dilutive shares under option.
Weighted Weighted
average average
number number
Loss of shares LPS Earnings of shares EPS
30 September 30 September 30 September 30 September 30 September 30 September
2020 2020 2020 2019 2019 2019
GBP'000 Thousands Pence GBP'000 Thousands Pence
----------------- ------------- ------------- ------------- ------------- ------------- -------------
(Loss)/profit
on ordinary
activities
after tax (294) 16,044 (1.8) 2,691 16,044 16.8
Weighted - - - - - -
average number
of shares
under option
----------------- ------------- ------------- ------------- ------------- ------------- -------------
Diluted LPS/EPS (294) 16,044 (1.8) 2,691 16,044 16.8
----------------- ------------- ------------- ------------- ------------- ------------- -------------
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END
FR DDBDDRSGDGGR
(END) Dow Jones Newswires
December 08, 2020 02:00 ET (07:00 GMT)
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