TIDMZYT

RNS Number : 1503Y

Zytronic PLC

11 May 2021

 
   11 May 2021 
 

Zytronic plc

("Zytronic" or the "Company" and, together

with its subsidiaries, the "Group")

Interim Results for the six months ended 31 March 2021 (unaudited)

Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2021. Comparative data is given for the six months ended 31 March 2020, except where indicated.

Overview

   --    Group revenue of GBP4.8m (2020: GBP7.4m), impacted by the Coronavirus pandemic 
   --    EBITDA of GBP0.2m (2020: GBP1.0m) 
   --    Loss before tax of GBP0.3m (2020: profit of GBP0.5m) 
   --    Basic (loss)/earnings per share of (1.2)p (2020: 2.5p) 
   --    Positive operating cashflow of GBP0.4m (2020: GBP1.9m) 

-- Net cash of GBP7.8m (30 September 2020: GBP14.0m), after payment of GBP6.7m in respect of the return of capital

Commenting on the results, Tudor Davies, Chairman said:

"Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post COVID-19."

Enquiries:

 
 Zytronic plc 
  Mark Cambridge, Chief Executive 
  Claire Smith, Group Finance Director    0191 414 5511 
 N+1 Singer (Nominated Adviser 
  and Broker) 
  Aubrey Powell, Rachel Hayes, Amanda 
  Gray (Investment Banking)               020 7496 3000 
 

Notes to Editors

Zytronic is the developer and manufacturer of a unique range of internationally award-winning and patented touch sensor products, operating from three modern factories totaling 80,000ft(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.

Chairman's statement

Introduction

In the January trading update, we explained that sales continued to be badly affected by the Coronavirus pandemic, but the prior year's reorganisation and cost reduction measures were enabling us to maintain a positive EBITDA, and there were some signs of an improvement in the order intake.

We are pleased to report a continuation of the improvement in order intake and sales during the remainder of the first half to 31 March 2021, and now expect a gradual return to profitability as long as the Coronavirus pandemic continues to be controlled in our major markets of Europe, Asia and the Americas.

Trading

Revenues for the half year ended 31 March 2021 were GBP4.8m (2020: GBP7.4m), with gross margin of 27.0% (2020: 30.3%), EBITDA of GBP0.2m (2020: GBP1.0m) and after depreciation and amortisation the loss before tax was GBP0.3m (2020: profit of GBP0.5m).

Whilst the drop in revenues of 35% is significant when compared with the same period last year, the comparison with a pre-COVID-19 period only provides an indicator of more normal historic trading levels. A better indicator of progress at this stage is the order intake, and from April last year we had continued to experience a consistently low order intake level. However, from January onwards we have seen an improving monthly average order intake, and it is particularly pleasing that the Gaming and Financial sectors have made a major contribution to the improvement.

Cash position

The Board decided that the GBP14.0m cash balances as at 30 September 2020, arising from the Company's 16-year record of unbroken profitability prior to the pandemic, and despite a 15-year unbroken dividend, should provide the opportunity for shareholders to either participate in a return of surplus cash, or to maintain their shareholdings.

Following the conclusion of the Tender Offer on 25 February 2021, the number of shares in issue reduced by 28.8% to 11,419,152 as 4,624,889 shares were purchased at a price of 145p and a cost of GBP6.7m.

We continue to be in a strong financial position with cash balances of GBP7.8m (30 September 2020: GBP14.0m) and are pleased that despite the considerable downturn we have generated GBP0.4m.

Outlook

Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post-COVID-19.

Tudor Davies

Chairman

11 May 2021

Consolidated statement of comprehensive income

Unaudited results for the six months to 31 March 2021

 
                                                          Six months   Six months        Year to 
                                                                  to           to 
                                                            31 March     31 March   30 September 
                                                                2021         2020           2020 
                                                           Unaudited    Unaudited        Audited 
                                                  Notes      GBP'000      GBP'000        GBP'000 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Group revenue                                                 4,784        7,378         12,680 
 Cost of sales                                               (3,490)      (5,146)       (10,130) 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Cost of sales excluding exceptional 
  items                                                      (3,490)      (5,146)        (9,015) 
 Exceptional items                                   3a            -            -        (1,115) 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Gross profit                                                  1,294        2,232          2,550 
 Distribution costs                                             (66)        (135)          (196) 
 Administration expenses                                     (1,542)      (1,679)        (3,318) 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Administration expenses excluding exceptional 
  items                                                      (1,542)      (1,679)        (3,060) 
 Exceptional items                                   3b            -            -          (258) 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Group trading (loss)/profit                                   (314)          418          (964) 
 Exceptional other income                             4            -            -            500 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 Group operating (loss)/profit                                 (314)          418          (464) 
 Finance revenue                                                   -           40             41 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 (Loss)/profit before tax                                      (314)          458          (423) 
 Tax credit/(expense)                                 5          130         (64)            129 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 (Loss)/profit for the period                                  (184)          394          (294) 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 (Loss)/earnings per share 
 Basic                                                6       (1.2)p         2.5p         (1.8)p 
 Diluted                                              6       (1.2)p         2.5p         (1.8)p 
-----------------------------------------------  ------  -----------  -----------  ------------- 
 

All activities are from continuing operations.

Consolidated statement of changes in equity

Unaudited results for the six months to 31 March 2021

 
                                           Called 
                                               up 
                                            share     Share   Retained 
                                          capital   premium   earnings     Total 
                                          GBP'000   GBP'000    GBP'000   GBP'000 
---------------------------------------  --------  --------  ---------  -------- 
 At 1 October 2020                            160     8,994     13,911    23,065 
 Loss for the period                            -         -      (184)     (184) 
 Repurchase and cancellation of shares       (46)         -    (6,660)   (6,706) 
---------------------------------------  --------  --------  ---------  -------- 
 At 31 March 2020 (unaudited)                 114     8,994      7,067    16,175 
---------------------------------------  --------  --------  ---------  -------- 
 

Consolidated statement of financial position

Unaudited results at 31 March 2021

 
                                                    At          At             At 
                                              31 March    31 March   30 September 
                                                  2021        2020           2020 
                                             Unaudited   Unaudited        Audited 
                                     Notes     GBP'000     GBP'000        GBP'000 
----------------------------------  ------  ----------  ----------  ------------- 
 Assets 
 Non-current assets 
 Intangible assets                                 875       1,208          1,043 
 Property, plant and equipment                   5,490       6,126          5,820 
----------------------------------  ------  ----------  ----------  ------------- 
                                                 6,365       7,334          6,863 
----------------------------------  ------  ----------  ----------  ------------- 
 Current assets 
 Inventories                                     1,621       2,713          2,332 
 Trade and other receivables                     1,912       3,357          1,888 
 Derivative financial assets                         8           -              - 
 Cash and short term deposits            8       7,752      12,369         14,038 
----------------------------------  ------  ----------  ----------  ------------- 
                                                11,293      18,439         18,258 
----------------------------------  ------  ----------  ----------  ------------- 
 Total assets                                   17,658      25,773         25,121 
----------------------------------  ------  ----------  ----------  ------------- 
 Equity and liabilities 
 Current liabilities 
 Trade and other payables                          489         650            591 
 Derivative financial liabilities                    -          93              - 
 Provisions                                          -           -            582 
 Accruals                                          489         636            376 
 Government grants                                  25           -             27 
 Tax liabilities                                     -         125              - 
----------------------------------  ------  ----------  ----------  ------------- 
                                                 1,003       1,504          1,576 
----------------------------------  ------  ----------  ----------  ------------- 
 Non-current liabilities 
 Deferred tax liabilities (net)                    480         516            480 
----------------------------------  ------  ----------  ----------  ------------- 
                                                   480         516            480 
----------------------------------  ------  ----------  ----------  ------------- 
 Total liabilities                               1,483       2,020          2,056 
----------------------------------  ------  ----------  ----------  ------------- 
 Net assets                                     16,175      23,753         23,065 
----------------------------------  ------  ----------  ----------  ------------- 
 Capital and reserves                    9 
 Equity share capital                              114         160            160 
 Share premium                                   8,994       8,994          8,994 
 Retained earnings                               7,067      14,599         13,911 
----------------------------------  ------  ----------  ----------  ------------- 
 Total equity                                   16,175      23,753         23,065 
----------------------------------  ------  ----------  ----------  ------------- 
 

Consolidated cashflow statement

Unaudited results for the six months to 31 March 2021

 
                                                             Six months   Six months        Year to 
                                                                     to           to 
                                                               31 March     31 March   30 September 
                                                                   2021         2020           2020 
                                                              Unaudited    Unaudited        Audited 
                                                     Notes      GBP'000      GBP'000        GBP'000 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Operating activities 
 (Loss)/profit before tax                                         (314)          458          (423) 
 Finance income                                                       -         (40)           (41) 
 Depreciation and impairment of property, 
  plant and 
  equipment                                                         333          365            718 
 Amortisation, impairment and write-off 
  of intangible assets                                              188          213            457 
 Amortisation of government grant                                   (2)            -          (442) 
 Fair value movement on foreign exchange 
  forward contracts                                                   8           72           (21) 
 Working capital adjustments 
 Decrease in inventories                                            711          321            702 
 Decrease in trade and other receivables                             47          770          2,360 
 (Decrease)/increase in trade and other 
  payables and provisions                                         (589)        (170)             88 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash generated from operations                                     382        1,989          3,398 
 Tax received/(paid)                                                 61        (127)          (220) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Net cashflow from operating activities                             443        1,862          3,178 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Investing activities 
 Interest received                                                    -           31             41 
 Payments to acquire property, plant and 
  equipment                                                         (3)        (106)          (153) 
 Payments to acquire intangible assets                             (20)        (122)          (201) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Net cashflow used in investing activities                         (23)        (197)          (313) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Financing activities 
 Dividends paid to equity shareholders 
  of the Parent                                                       -      (2,439)        (2,439) 
 Receipt of government grants                                         -            -            469 
 Repurchase and cancellation of shares                          (6,706)            -              - 
 Net cashflow used in financing activities                      (6,706)      (2,439)        (1,970) 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 (Decrease)/increase in cash and cash equivalents               (6,286)        (774)            895 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash and cash equivalents at the beginning 
  of the period                                                  14,038       13,143         13,143 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 Cash and cash equivalents at the end of 
  the period                                             8        7,752       12,369         14,038 
--------------------------------------------------  ------  -----------  -----------  ------------- 
 

Notes to the interim report

Unaudited results for the six months to 31 March 2021

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 2021 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 2020 annual report and financial statements.

The financial information for the six months to 31 March 2021 and the comparative financial information for the six months to 31 March 2020 have not been audited. The comparative financial information for the year ended 30 September 2020 has been extracted from the 2020 annual report and financial statements.

The annual report and financial statements for the year ended 30 September 2020, which were approved by the Board of Directors on 7 December 2020, 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 2021.

3. Exceptional costs

(a) Cost of sales

 
 
                               Six months      Six months         Year to 
                              to 31 March     to 31 March    30 September 
                                     2021            2020            2020 
                                Unaudited       Unaudited         Audited 
                                  GBP'000         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

 
 
                               Six months      Six months         Year to 
                              to 31 March     to 31 March    30 September 
                                     2021            2020            2020 
                                Unaudited       Unaudited         Audited 
                                  GBP'000         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.

4. Exceptional other income

 
 
                                   Six months      Six months         Year to 
                                  to 31 March     to 31 March    30 September 
                                         2021            2020            2020 
                                    Unaudited       Unaudited         Audited 
                                      GBP'000         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.

5. Tax charge on (loss)/profit on ordinary activities

The estimated tax rate for the year of 41% has been applied to the half year's loss before tax, in accordance with the Auditing Standards Board's statement on interim reports.

6. (Loss)/earnings per share ("LPS" / "EPS")

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 period. 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.

For the six months to 31 March 2021 and 2020

 
                                          Weighted                          Weighted 
                                           average                           average 
                                            number                            number 
                                  Loss   of shares        LPS   Earnings   of shares        EPS 
                              31 March    31 March   31 March   31 March    31 March   31 March 
                                  2021        2021       2021       2020        2020       2020 
                               GBP'000   Thousands      Pence    GBP'000   Thousands      Pence 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 (Loss)/profit on ordinary 
  activities after tax           (184)      15,273      (1.2)        394      16,044        2.5 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Basic LPS/EPS                   (184)      15,273      (1.2)        394      16,044        2.5 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 

The weighted average number of shares for diluted LPS/EPS is calculated by including the weighted average number of shares under option.

 
                                          Weighted                          Weighted 
                                           average                           average 
                                            number                            number 
                                  Loss   of shares        LPS   Earnings   of shares        EPS 
                              31 March    31 March   31 March   31 March    31 March   31 March 
                                  2021        2021       2021       2020        2020       2020 
                               GBP'000   Thousands      Pence    GBP'000   Thousands      Pence 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 (Loss)/profit on ordinary 
  activities after tax           (184)      15,273      (1.2)        394      16,044        2.5 
 Weighted average number             -           -          -          -           -          - 
  of shares under option 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 Diluted LPS/EPS                 (184)      15,273      (1.2)        394      16,044        2.5 
---------------------------  ---------  ----------  ---------  ---------  ----------  --------- 
 

For the year to 30 September 2020

 
                                                             Weighted 
                                                              average 
                                                               number 
                                                  Loss      of shares            LPS 
                                          30 September   30 September   30 September 
                                                  2020           2020           2020 
                                               GBP'000      Thousands          Pence 
---------------------------------------  -------------  -------------  ------------- 
 Loss on ordinary activities after tax           (294)         16,044          (1.8) 
---------------------------------------  -------------  -------------  ------------- 
 Basic LPS                                       (294)         16,044          (1.8) 
---------------------------------------  -------------  -------------  ------------- 
 

The weighted average number of shares for diluted LPS is calculated by including the weighted average number of shares under option.

 
                                                                      Weighted 
                                                                       average 
                                                                        number 
                                                           Loss      of shares            LPS 
                                                   30 September   30 September   30 September 
                                                           2020           2020           2020 
                                                        GBP'000      Thousands          Pence 
------------------------------------------------  -------------  -------------  ------------- 
 Loss on ordinary activities after tax                    (294)         16,044          (1.8) 
 Weighted average number of shares under option               -              -              - 
------------------------------------------------  -------------  -------------  ------------- 
 Diluted LPS                                              (294)         16,044          (1.8) 
------------------------------------------------  -------------  -------------  ------------- 
 

7. Dividends

Under the present circumstances, the Directors consider that it is appropriate to defer returns to shareholders until there is clear evidence of a return towards normality. Accordingly, no interim dividend is proposed for the period (2020: Nil). The table below reflects historic dividend payments.

 
 
                                                  Six months     Six months         Year to 
                                                 to 31 March    to 31 March    30 September 
                                                        2021           2020            2020 
                                                   Unaudited      Unaudited         Audited 
                                                     GBP'000        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 
--------------------------------------------  --------------  -------------  -------------- 
                                                           -          2,439           2,439 
 -----------------------------------------------------------  -------------  -------------- 
 

8. Cash and cash equivalents

 
 
                               Six months     Six months         Year to 
                              to 31 March    to 31 March    30 September 
                                     2021           2020            2020 
                                Unaudited      Unaudited         Audited 
                                  GBP'000        GBP'000         GBP'000 
--------------------------  -------------  -------------  -------------- 
 Cash at bank and in hand           7,752         12,369          14,038 
--------------------------  -------------  -------------  -------------- 
 

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 
                                      2021            2020          2020 
                                 Unaudited       Unaudited       Audited 
                                   GBP'000         GBP'000       GBP'000 
--------------------------  --------------  --------------  ------------ 
 Cash at bank and in hand            7,752           9,839        11,503 
 Short term deposits                     -           2,530         2,535 
                                     7,752          12,369        14,038 
--------------------------  --------------  --------------  ------------ 
 

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 2021 the Group had available a net GBP1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in July 2021.

The fair value of cash and cash equivalents is GBP7.8m (2020: GBP12.4m).

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 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.

10. Availability of the interim report

A copy of the interim report and interim results presentation is available on the Company's corporate website, www.zytronicplc.com. Copies can be requested from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear NE21 5NJ.

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