Zytronic Regulatory News (ZYT)

25 May 2006 07:01

Zytronic PLC25 May 2006 For Immediate Release 25 May 2006 ZYTRONIC PLC Interim Results for the Six Months to 31 March 2006 Zytronic Plc, a leading specialist manufacturer of touchscreens and opticalfilters for electronic displays, announces its interim results for the sixmonths to 31 March 2006. Financial Highlights • Group turnover of £5.7m showed growth of 11% (2005: £5.1m); • Profit before tax increased 6% to £464,000 (2005: £437,000); • Proposed interim dividend of 1.0p per share (2005: Interim 0.5p); • Basic earnings per share increased 14% to 2.4p (2005: 2.1p). Operational Highlights • Strong growth in touchscreen orders; • ZYPOS (R) touchscreens being specified in several projects already; • Completed acquisition of adjacent freehold factory premises in January 2006 to provide dedicated facility for future manufacture of ZYPOS(R) touchscreens. Commenting on outlook, John Kennair, Chairman, said: "The very significant growth in new orders received in the first half of thisyear, combined with the enthusiastic reception that ZYPOS(R) has received in themarket place, particularly in the Far East, leads the Directors to havecontinued confidence in the future prospects of the Group." Enquiries: Zytronic Plc (Today: 020 7466 5000; thereafter 0191 414 5511)John Kennair, Chief ExecutiveDenis Mullan, Finance Director Buchanan Communications 020 7466 5000Richard Darby, Isabel Podda Notes to Editors Zytronic is an industry leader in the development and manufacture of customisedoptical filters to enhance electronic display performance. It is also aninnovator in the production of specialised and transparent laminates for nichemarkets. Based on this lamination expertise, Zytronic has developed a unique range oftouchscreen products employing Projected Capacitive Technology(TM) which enablesthe pointing device to sense through an anti-vandal screen in front of thedisplay. This system offers significant benefits to electronic displaymanufacturers. Operating from two modern factories near Newcastle-upon-Tyne in England,Zytronic assembles touchscreens and filters, utilising special glass and plasticmaterials, in environmentally controlled clean rooms. CHAIRMAN'S STATEMENT In the six months to 31 March 2006, the business has again shown solidimprovement over the corresponding period last year. Results Sales at £5.7m (2005: £5.1m) grew by 11% producing a 6% increase in pre-taxprofits to £464,000 (2005: £437,000). Trading New orders received in the first half have grown by 33% over the same periodlast year. The primary growth in orders has come from the touchscreen sector andhas been fairly evenly spread over the territories of North America, the FarEast and Europe. This growth in orders has necessitated putting additionalproduction facilities in place and training new staff which, in turn, hascontributed to a temporary reduction in gross profit margins of 2.5% over thecorresponding period last year. These additional production facilities willbenefit output and improve margins in the second half. ZYPOS(R) As I reported in my statement of 20 January 2006, the Directors anticipate thatthe sales of the new ZYPOS(R) product will begin to impact on the businesstowards the end of the 2006 financial year. Nevertheless, sales of approximately£100,000 were achieved in the first half. Significant interest has been shown inthe product, particularly in the Far East and North America. The number ofenquiries received, and the number of projects in which this new technology hasnow been specified, lead the Directors to be optimistic about the future growthin this product sector. The production facilities already in place for ZYPOS(R) within the existingfactory will be adequate for the rest of this calendar year. As indicated in mystatement in January 2006, the conversion of part of the factory premisesacquired in January will proceed in the October/December quarter of 2006. Cash In the six months to 31 March 2006, £1.5m has been spent on fixed assets,including the purchase of the adjoining factory premises at £775,000. Inaddition, working capital has increased by £313,000 resulting from the strengthin the order book as we prepare for the second half. These investments have beenfunded by a £750,000 medium term loan and from the Group's cash resources. Dividend The Directors have declared an interim dividend of 1.0p per share (2005: 0.5pper share) payable on 30 June 2006 to shareholders on the Register at 9 June2006. Outlook The very significant growth in new orders received in the first half of thisyear, combined with the enthusiastic reception that ZYPOS(R) has received in themarket place, particularly in the Far East, leads the Directors to havecontinued confidence in the future prospects of the Group. J Kennair, MBEChairman25 May 2006 GROUP PROFIT AND LOSS ACCOUNTunaudited results for the six months to 31 March 2006 Six months to Six months to Year to 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited Notes £'000 £'000 £'000Turnover 5,670 5,112 10,590 Cost of sales 3,987 3,465 7,312Gross profit 1,683 1,647 3,278 Distribution costs 82 62 140Administrative expenses 1,124 1,141 2,137 1,206 1,203 2,277Operating profit 477 444 1,001 Interest payable (18) (18) (33)Interest receivable 5 11 16Profit on ordinary activities beforetaxation 464 437 984 Tax charge on profit on ordinary activities 3 (116) (140) (310) Profit on ordinary activities aftertaxation 348 297 674 Earnings per shareEarnings per share - basic 4 2.4p 2.1p 4.7pEarnings per share - diluted 4 2.4p 2.0p 4.6p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESunaudited accounts for the six months to 31 March 2006 There were no recognised gains or losses as defined in Financial ReportingStandard No. 3 other than those stated above. In addition the effect ofimplementing Financial Reporting Standard 21 ("FRS 21") - events after thebalance sheet date - is that an amount of £71,000 for the six months to 31 March2005 (£215,000 for the year to 30 September 2005) previously included withincreditors has been added back to the profit and loss account reserve. GROUP BALANCE SHEETunaudited results for the six months to 31 March 2006 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited (restated) (restated) Notes £'000 £'000 £'000Fixed assets Intangible assets 2,046 2,122 2,133Tangible assets 3,731 2,420 2,494 5,777 4,542 4,627Current assetsStocks 1,504 1,188 1,201Debtors: amounts falling due within one year 2,639 2,098 2,641Cash at bank and in hand 316 919 810 4,459 4,205 4,652Creditors: amounts falling due within one year 6 1,993 1,582 1,878Net current assets 2,466 2,623 2,774 Total assets less current liabilities 8,243 7,165 7,401 Creditors: amounts falling due after more than one year 783 278 161 Provisions for liabilities and charges 239 195 239 7,221 6,692 7,001Capital and reservesCalled up share capital 144 143 143Share premium 6,299 6,212 6,215Profit and loss account 6 778 337 643Equity shareholders' funds 7,221 6,692 7,001 GROUP STATEMENT OF CASH FLOWSunaudited results for the six months to 31 March 2006 Six months Six month Year to to to 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited Notes £'000 £'000 £'000Net cash inflow from operating activities 7a 516 319 939 Returns on investments and servicing of financeInterest received 5 11 16Interest paid (11) (6) (12)Interest element of finance lease rental payments (7) (12) (21)Net outflow from returns on investments and servicing offinance (13) (7) (17) Taxation Corporation tax repayment/(paid) 10 11 (28)Capital expenditure and financial investment Payments to acquire intangible fixed assets (44) (53) (209)Payments to acquire tangible fixed assets - property (792) - - Payments to acquire tangible fixed assets - plant andequipment (666) (486) (830) Receipt from sale of short term property investment - 75 75Net outflow from capital expenditure and financialinvestment (1,502) (464) (964) Equity dividends paid (215) - (71) Net cash outflow before financing (1,204) (141) (141) Financing Issue of ordinary share capital re options 84 - 3Receipt from new bank loan - property 750 - -Repayments of bank loans (51) (42) (83)Repayments of capital element of finance lease (73) (69) (140)Net inflow/(outflow) from financing 710 (111) (220)Decrease in cash (494) (252) (361)Reconciliation of net cash flow to movementin net (debt)/funds Decrease in cash (494) (252) (361)Receipt from new bank loan - property (750) - -Repayments of bank loans 51 42 83Repayments of capital element of finance lease 73 69 140Movement in net funds (1,120) (141) (138) Net funds at beginning of period 416 554 554Net (debt)/funds at end of period 7b (704) 413 416 NOTES TO THE INTERIM REPORTunaudited results for the six months to 31 March 2006 1. Basis of preparation The financial information in this interim statement is prepared under thehistorical cost convention and in accordance with applicable accountingstandards. It does not constitute statutory accounts as defined in Section 240of the Companies Act 1985. The financial information for the full preceding yearis based on the statutory accounts for the year to 30 September 2005. Thoseaccounts, upon which the auditors issued an unqualified opinion, have beendelivered to the Registrar of Companies. The interim financial information has been prepared on the basis of theaccounting policies set out in the Group's statutory accounts for the year ended30 September 2005 as adjusted for the change in accounting for dividendsdiscussed below. The taxation charge is calculated by applying the Directors'best estimate of the annual tax rate to the profit for the period. Otherexpenses are accrued in accordance with the same principles used in thepreparation of the annual accounts. FRS 21 requires a change of accounting policy in respect of the accrual ofproposed dividends. Dividends are now included in the profit and loss accountreserve in the accounting period in which the dividend is approved for payment.The interim accounts for the six months ended 31 March 2005 and the full yearaccounts for the year ended 31 September 2005 have been restated via a prioryear adjustment to reflect this change in accounting policy. Dividends proposed or paid are no longer to be shown as part of the profit andloss account statement. 2. Basis of consolidation The Group results consolidate the accounts of Zytronic Plc and all itssubsidiary undertakings drawn up to 31 March 2006. 3. Tax charge on profit on ordinary activities The estimated tax rate for the year of 25% has been applied to the half year'sprofit before tax, in accordance with the ASB's statement on interim reports.The estimated rate is lower than the standard rate of UK corporation tax (30%)due, in particular, to the effect of allowances from the exercise of shareoptions but also because of the continuing beneficial effect of the Research &Development tax credit scheme. 4. Earnings per share The calculations of earnings per share are based on a profit after taxation of£348,000, (2005: £297,000) and a basic and diluted weighted average of14,306,408 and 14,455,781 shares respectively in issue (2005: basic and diluted14,291,539 and 14,528,351). The calculations of earnings per share for the fullyear to 30 September 2005 are based on a profit after taxation of £674,000 and abasic and diluted weighted average of 14,292,242 and 14,594,284 shares in issuerespectively. NOTES TO THE INTERIM REPORTunaudited results for the six months to 31 March 2006 5. Dividends The Directors propose the payment of an interim dividend of 1.0p per share(2005: 0.5p), payable on 30 June 2006 to shareholders on the Register on 9 June 2006. As stated in note 1 above, this dividend has not been accrued in these Interim Accounts. The dividend payment will be £145,000. Under FRS 21 the dividends in the current and prior year have been restated asfollows: Six months to Six months to Year to 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000Ordinary dividends on equity shares Interim dividend of 0.5p per ordinary sharepaid on 29 June 2005 - - 71Final dividend of 1.5p per ordinary sharepaid on 24 March 2006 215 - - 215 - 71 NOTES TO THE INTERIM REPORTunaudited results for the six months to 31 March 2006 6. Creditors and profit and loss account - prior year adjustment As explained in note 1, FRS 21 requires a change of accounting policy in respectof the accrual of proposed dividends. These are now no longer to be accrued inthe accounts until they have been approved by the shareholders or been paid. As a consequence it is necessary to restate the comparative figures forcreditors and profit and loss account reserve as at 31 March 2005 and as at 30September 2005. Six months to Year to 31 March 30 September 2005 2005 Unaudited Unaudited (restated) (restated) £'000 £'000Creditors - as previously shown 1,653 2,093Prior year adjustment (71) (215)As restated 1,582 1,878Profit and loss account reserve - as previously shown 266 428Prior year adjustment 71 215As restated 337 643 7. Notes to the Group statement of cash flows a) Reconciliation of operating profit to net cash inflow from operatingactivities: Six months to Six months to Year to 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000Operating profit 477 444 1,001Depreciation 221 204 427Amortisation 131 124 246Gross cash inflows 829 772 1,674Decrease/(increase) in debtors 2 (225) (117)Increase in stocks (303) (104) (767)(Decrease)/increase in creditors (12) (124) 149Net cash inflow from operating activities 516 319 939 NOTES TO THE INTERIM REPORTunaudited results for the six months to 31 March 2006 7. Notes to the Group statement of cash flows (continued) b) Analysis of net (debt)/funds: 31 March 31 March 30 September 2006 2005 2005 Unaudited Unaudited Unaudited £'000 £'000 £'000Cash at bank and in hand 316 919 810Bank loans (866) (208) (167)Finance lease (154) (298) (227) (704) 413 416 8. Contingent liability regarding Ian Lawson, former Chief Executive The contract of employment for Ian Lawson, the former Chief Executive, ceased on30 June 2005, after he had served out his notice period of 12 months ongardening leave. On 29 September 2005, Mr Lawson filed an unfair dismissal claimagainst Zytronic Displays Limited. This claim was heard by an EmploymentTribunal in March 2006. In its ruling in April 2006, the Employment Tribunalfound that Mr Lawson had been unfairly dismissed and that his dismissal was byway of redundancy. Zytronic Displays Limited has appealed against the decision.Running parallel to this appeal, a separate remedies hearing is scheduled forJune 2006 at which the level of compensation will be determined by theEmployment Tribunal. If the appeal is unsuccessful, then Zytronic Displays Limited will have to paythe level of compensation imposed by the tribunal. The maximum compensation payable under the Employment Tribunal ruling is£58,060. Due to the uncertanties of the outcome of the appeal process and thefindings of the remedies hearing, a provision for compensation has not beenincluded in these accounts. Mr Lawson has reserved his position against the Company as regards the lapse ofhis share options, over 142,857 shares granted at 70p per share, following thecessation of his employment. A provision has not been made as there is currentlyno legal action in this regard. This information is provided by RNS The company news service from the London Stock Exchange