(Alliance News) - Shares in Zytronic PLC fell sharply on Tuesday, after a number of setbacks resulted in disappointing revenue for the year.
Shares in the Tyne & Wear, England-based touch sensors manufacturer were down 26% at 59.00 pence each in London on Tuesday morning.
Zytronic's revenue dropped 30% to GBP8.6 million from GBP12.3 million the year before. Gaming and vending market headwinds also slashed the company's sales in these two sectors, which declined by GBP2.3 million and GBP1.0 million, respectively.
The group attributes the disappointing sales results to a number of externalities. Electronic component shortages, a lack of trade events in previous years due to the Covid pandemic and the resignation of several key staff, including Zytronic's sales and marketing director, have also inhibited recovery, the company said.
As an export-oriented business, with 92% of sales outside the UK in 2023, ongoing impacts to transnational supply chains have also stunted sales.
Zytronic swung to a pretax loss of GBP2.0 million from a GBP700,000 profit in 2022. The group's closing net cash was down to GBP4.7 million from GBP6.4 million in 2022.
The group has decided not to pay a final dividend for 2023.
Zytronic's gross margin including exceptional costs also narrowed to 17% from 31%.
Exceptional costs of GBP200,000 for the year resulted from the writing off of orders for Aruze Gaming America Inc. Aruze, a "major end customer" in the gaming market, entered chapter 11 bankruptcy in May, suspending all orders with Zytronic for the remainder of the year.
Exceptional costs also arose from the group's decision to impair its goodwill of over GBP200,000 related to the 2001 acquisition of Intasolve Ltd.
Administration costs also increased by GBP700,000 over the 12-month period, with GBP300,000 of this relating to Aruze's bankruptcy. Aruze and its affiliates owed Zytronic over GBP300,000 million at the end of 2023.
Since the end of the period under review, Aruze has received a partial repayment, but is still in the process of recovering the remaining balance.
Non-Executive Chair Chris Potts said: "With the trends exhibited in the second half of the full year 2023 continuing in the first quarter of the full year 2024, revenues in the current year to date are lower than the same period last year. Nevertheless, the group benefits from a strong balance sheet and has good visibility over its cost base over the next twelve-month period. With reinvigoration of the group's business development function and differentiated technology and products, there are grounds for cautious optimism over the medium term."
By Hugh Cameron, Alliance News reporter
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Zytronic (ZYT)