Zytronic Regulatory News (ZYT)

15 May 2007 07:02

Zytronic PLC15 May 2007 For Immediate Release 15 May 2007 ZYTRONIC PLC Interim Results for the Six Months to 31 March 2007 Zytronic Plc, a leading specialist manufacturer of touchscreens and opticalfilters for electronic displays, announces its interim results for the sixmonths to 31 March 2007. Financial Highlights •Group turnover of £5.96m showed growth of 5% (2006: £5.67m); •Gross profit margin increased to 31.2% from 29.7% in 2006; •Profit before tax £427,000 (2006: £443,000) •Proposed interim dividend of 1.0p per share (2006: Interim 1.0p); •Significant growth in sales of recently introduced ZYPOS(R) touch sensors; •New vendor management control systems at one of the Group's largest customers led to inventory reduction. Sales expected to return to more normal levels in Q4. Operational Highlights •New production facility at adjacent freehold factory proceeding according to plan; •New capacity for ZYPOS production on schedule to begin around the end of the financial year. Board •Mark Cambridge, Managing Director of the trading subsidiary, Zytronic Displays Limited appointed to the Board with effect from 1 June 2007. Commenting on outlook, John Kennair, Chairman, said: "Whilst the issue regarding de-stocking by one of our major customers isdisappointing we are extremely pleased with the successful introduction of ZYPOStouch sensors. Sales of this product are proceeding ahead of our expectations,indicating that this will be the fastest growth area of the business goingforward." Enquiries:Zytronic Plc 0191 414 5511John 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 (PCTTM) whichenables the pointing device to sense through an anti-vandal screen in front ofthe display. 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 Results Sales at £5.96m (2006 £5.67m) grew by 5%. An improvement in gross profit marginsto 31.2% (2006 29.7%) produced a 10% increase in gross profit. Higher overheadsin the period at £1.399m, partially arising from the continuing growth in theGroup's business and the introduction of ZYPOS(R), (2006 £1.227m) have led to apre-tax profit of £427,000 (2006 £443,000). Trading Sales growth of 5% over the corresponding period last year has been primarilyinfluenced by two offsetting factors; de-stocking by a major customer and theintroduction of ZYPOS(R) touch sensors. In the past six months, one of our largest customers has introduced new vendormanagement control systems whereby our products are supplied into centralwarehouses in various territories around the world, from which the customercalls down the product to meet its manufacturing requirements. This centralisedstocking system has enabled our customer to reduce inventory resulting in a fallof sales to this account in the first half of over £700,000, most critically inMarch 2007. The implementation of these new systems has now been completed inthe United States, which has had the largest impact on our business. It isanticipated that the systems will be completed in Europe by July of this year,following which sales to this customer are expected to return to more normallevels. ZYPOS Following the introduction of our new ZYPOS touch sensor product towards the endof the 2006 financial year, sales of ZYPOS have shown strong growth to £800,000in the period under review with the product now being specified into a number ofnew applications. The development of a new production facility for ZYPOS, which I mentioned in mylast statement, is proceeding according to plan and we expect the new factoryand associated equipment to come on stream around the financial year end. Dividend The Directors have declared an interim dividend of 1p per share (2006 1p pershare) payable on 29 June 2007 to shareholders on the Register on 8 June 2007. Management The Directors have appointed Mark Cambridge to the Board with effect from 1 June2007. Mark joined the Group in 1991, holding executive positions in technical,quality and sales and marketing before being appointed to the role of ManagingDirector of the trading subsidiary, Zytronic Displays Limited, in February 2006. Mark has made a major contribution to the success of the business, in particularthe development and launch of the ZYPOS product. I am sure he will make asignificant contribution to the Board. Outlook Whilst the de-stocking in what is currently the Group's largest market sectorhas held back the growth in sales in the first half, it is anticipated that thiswill have worked through the system with sales returning to more normal levelsin the fourth quarter. However, this will be too late to enable the Group toachieve sufficient profits in the second half to meet current marketexpectations. The successful introduction of ZYPOS touch sensors, with sales of this productproceeding ahead of Directors' expectations, indicate that this will be thefastest growth area of the business going forward. JOHN M. KENNAIRChairman GROUP PROFIT AND LOSS ACCOUNT unaudited results for the six months to 31 March 2007 Six months to Six months to Year to 31 March 31 March 30 September 2007 2006 2006 Unaudited Unaudited Unaudited (Restated) (Restated)----------------------- ------ --------- -------- -------- Notes £'000 £'000 £'000----------------------- ------ --------- -------- --------Turnover 5,960 5,670 12,301Cost of sales 4,101 3,987 8,449----------------------- ------ --------- -------- --------Gross profit 1,859 1,683 3,852----------------------- ------ --------- -------- --------Distribution costs 108 82 170Administrative expenses 1,291 1,145 2,356----------------------- ------ --------- -------- -------- 1,399 1,227 2,526----------------------- ------ --------- -------- --------Operating profit 460 456 1,326Interest payable (39) (18) (59)Interest receivable 6 5 6----------------------- ------ --------- -------- --------Profit on ordinaryactivities 427 443 1,273before taxationTax charge on profit onordinary 3 (90) (107) (153)activities ------ --------- -------- -------------------------------Profit on ordinaryactivities 337 336 1,120after taxation ------ --------- -------- -------------------------------Earnings per shareEarnings per share - basic 4 2.3p 2.3p 7.8pEarnings per share - diluted 4 2.3p 2.3p 7.7p----------------------- ------ --------- -------- -------- STATEMENT OF TOTAL RECOGNISED GAINSAND LOSSESunaudited accounts for the six months to 31 March 2007 There were no recognised gains or losses as defined in Financial ReportingStandard No. 3 other than those stated above. Following the adoption of FRS 20, share-based payment, the results for the sixmonths to 31 March 2006 and year to 30 September 2006 have been restated. Anadditional expense has been charged to Administrative expenses, being £23,000 inthe six months to 31 March 2007; £20,000 in the six months to 31 March 2006 and£39,000 in the year to 30 September 2006. GROUP BALANCE SHEETunaudited results for the six months to 31 March 2007 Six months to Six months to Year to 31 March 31 March 30 September 2007 2006 2006 Unaudited Unaudited Unaudited (Restated) (Restated)----------------------- ---------- -------- -------- £'000 £'000 £'000----------------------- ---------- -------- --------Fixed assetsIntangible assets 1,965 2,046 2,026Tangible assets 4,046 3,731 3,831----------------------- ---------- -------- -------- 6,011 5,777 5,857----------------------- ---------- -------- --------Current assetsStocks 1,871 1,504 1,706Debtors: amounts falling due withinone year 2,586 2,639 2,852Cash at bank and in hand 191 316 493----------------------- ---------- -------- -------- 4,648 4,459 5,051Creditors: amounts falling duewithin one year 1,386 1,984 1,828----------------------- ---------- -------- --------Net current assets 3,262 2,475 3,223----------------------- ---------- -------- --------Total assets less currentliabilities 9,273 8,252 9,080Creditors: amounts falling due aftermore than one year 624 783 658Provisions for liabilities andcharges 533 239 374----------------------- ---------- -------- -------- 8,116 7,230 8,048----------------------- ---------- -------- --------Capital and reservesCalled up share capital 146 144 146Share premium 6,450 6,299 6,450Profit and loss account 1,520 787 1,452----------------------- ---------- -------- --------Equity shareholders' funds 8,116 7,230 8,048----------------------- ---------- -------- -------- GROUP STATEMENT OF CASH FLOWS unaudited results for the six months to 31 March 2007 Six months Six months to Year to to 2007 31 March 30 September 31 March 2006 2006 Unaudited Unaudited Unaudited Notes £'000 £'000 £'000-------------------------- ------ -------- -------- -------- Net cash inflow from operating activities 6a 698 516 1,529 Returns on investments and servicing of finance ------------------------- ------- -------- -------- -------- Interest received 6 5 6 Interest paid (37) (11) (48) Interest element of finance lease (2) (7) (11) rental payments -------------------------- ------ -------- -------- -------- Net outflow from returns on investments and servicing of finance (33) (13) (53) Taxation Corporation tax repayment/(paid) 11 10 (230) Capital expenditure and financial investment -------------------------- ------ -------- -------- -------- Payments to acquire intangible fixed assets (77) (44) (159) Payments to acquire tangible fixed assets - property (152) (792) - Payments to acquire tangible fixed assets - plant and equipment (307) (666) (1,767) Receipt from sale of assets - - 6 --- ------------------------ ------ -------- -------- -------- Net outflow from capital expenditure and financial investment (536) (1,502) (1,920) -------------------------- ------ -------- -------- -------- Equity dividends paid (293) (215) (360) -------------------------- ------ -------- -------- -------- Net cash outflow before financing (153) (1,204) (1,034) Financing -------------------------- ------ -------- -------- -------- Issue of ordinary share capital - 84 238 re options Receipt from new bank loan - property - 750 750 Repayments of bank loans (71) (51) (122) Repayments of capital element of finance lease (78) (73) (149) --------------------------- ------ -------- -------- -------- Net inflow/(outflow) from financing (149) 710 717 -------------------------- ------ -------- -------- -------- Decrease in cash (302) (494) (317) -------------------------- ------ -------- -------- -------- Reconciliation of net cash flow to movement in net debt Decrease in cash (302) (494) (317) Receipt from new bank loan - property - (750) (750) Repayments of bank loans 71 51 122 Repayments of capital element of finance lease 78 73 149 -------------------------- ------ -------- -------- -------- Movement in net funds (153) (1,120) (796) Net(debt)/funds at beginning of period (380) 416 416 -------------------------- ------ -------- -------- -------- Net debt at end of period 6b (533) (704) (380) -------------------------- ------ -------- -------- -------- NOTES TO THE INTERIM REPORT unaudited results for the six months to 31 March 2007 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 2006. 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 2006 as adjusted for the adoption of FRS 20 'share-based payment'.In preparing the financial statements for the current year, the Group hasadopted FRS 20 'share-based payment'. The adoption of FRS 20 has resulted in achange in accounting policy for share-based payment transactions. FRS 20requires the fair value of options and share awards which ultimately vest to becharged to the profit and loss account over the vesting or performance period.For equity-settled transactions the fair value is determined at the date of thegrant using an appropriate pricing model. If an award fails to vest as theresult of certain types of performance condition not being satisfied, the chargeto the income statement will be adjusted to reflect this. The taxation charge is calculated by applying the Directors' best estimate ofthe annual tax rate to the profit for the period. Other expenses are accrued inaccordance with the same principles used in the preparation of the annualaccounts. 2. Basis of consolidation The Group results consolidate the accounts of Zytronic Plc and all itssubsidiary undertakings drawn up to 31 March 2007. 3. Tax charge on profit on ordinary activities The estimated tax rate for the year of 21% 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 the continuing beneficial effect of theResearch & Development tax credit scheme and the change of corporation tax (28%)used for the deferred tax provision. 4. Earnings per share Basic earnings per share (EPS) is calculated by dividing the profit attributableto ordinary equity holders of the Company by the weighted average number ofordinary shares in issue during the year. All activities are continuingoperations and therefore there is no difference between EPS arising from totaloperations and EPS arising from continuing operations. -------------------- ------ ------- ------ ------ ------- ------- Weighted Weighted average Earnings average Earnings number per number per Earnings of shares share Earnings of shares share 31 March 31 March 31 March 31 March 31 Marc 31 March 2007 2007 2007 2006 2006 2006 £'000 thousands pence £'000 thousands pence -------------------- ------ ------- ------ ------ ------- -------Profit on ordinaryactivities after taxationattributableto ordinaryequity holders 337 14,640 2.3 336 14,306 2.3-------------------- ------ ------- ------ ------ ------- -------Basic EPS 337 14,640 2.3 336 14,306 2.3-------------------- ------ ------- ------ ------ ------- ------- The weighted average number of shares for diluted EPS is calculated by includingthe weighted average number of shares under option. -------------------- ------ ------- ------ ------ ------- ------- Earnings Weighted Earnings Earnings Weighted Earnings 31 March average per 31 March average per 2007 number share 2006 number share £'000 of shares 31 March £'000 of shares 31 March 31 March 2007 31 March 2006 2007 pence 2006 pence thousands thousands -------------------- ------ ------- ------ ------ ------- -------Profit on ordinary activitiesafter taxation 337 14,640 2.3 336 14,306 2.3attributable to ordinaryequity holders Weighted average numberof shares under option - 196 (0.0) - 150 (0.0)-------------------- ------ ------- ------ ------ ------- -------Diluted EPS 337 14,836 2.3 336 14,456 2.3-------------------- ------ ------- ------ ------ ------- ------- ------------------------------ -------- -------- -------- Earnings Weighted Earnings 30 September average per 2006 number share £'000 of shares 30 September 30 September 2006 2006 pence Thousands------------------------------ -------- -------- --------Profit on ordinary activities aftertaxation attributable to ordinaryequity 1,120 14,414 7.8holders -------- -------- --------------------------------------Basic EPS 1,120 14,414 7.8------------------------------ -------- -------- -------- NOTES TO THE INTERIM REPORTunaudited results for the six months to 31 March 2007 The weighted average number of shares for diluted EPS is calculated by includingthe weighted average number of shares under option. ------------------------------ -------- -------- -------- Earnings Weighted Earnings 30 September average per 2006 number share £'000 of shares 30 September 30 September 2006 2006 pence thousand------------------------------ -------- -------- --------Profit on ordinary activities aftertaxation attributable to ordinaryequity 1,120 14,414 7.8holdersWeighted average number of sharesunder - 220 (0.1)option -------- -------- --------------------------------------Diluted EPS 1,120 14,634 7.7------------------------------ -------- -------- -------- 5. Dividends The Directors propose the payment of an interim dividend of 1.0p per share(2006: 1.0p), payable on 29 June 2007 to shareholders on the Register on 8 June2007. This dividend has not been accrued in these Interim Accounts. The dividendpayment will be some £146,000. The dividends in the current and prior year are as follows: Six months to Six months to 31 March 31 March Year to 2007 2006 30 September Unaudited Unaudited 2006 £'000 £'000 £'000---------------------------- --------- --------- --------Ordinary dividends on equity sharesFinal dividend of 1.5p per ordinary share paid on 24 March 2006 - 215 215Interim dividend of 1.0p perordinary share paid on 30 June 2006 - - 145 ---------------------------- --------- --------- -------- Final dividend of 2.0p per ordinary share paid on 16 March 2007 295 - ----------------------------- --------- --------- -------- 295 215 360---------------------------- --------- --------- -------- 6. 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 2007 2006 2006 Unaudited Unaudited Unaudited (Restated) (Restated)--------------------------- --------- --------- --------- £'000 £'000 £'000--------------------------- --------- --------- ---------Operating profit 460 456 1,326Depreciation 243 221 429Amortisation 139 131 266Profit on sale of fixed assets - - 5FRS 20 Share option payments 23 20 39--------------------------- --------- --------- ---------Gross cash inflows 865 828 2,065Decrease/(increase) in debtors 306 2 (505)Increase in stocks (165) (303) (216)(Decrease)/increase in creditors (308) (11) 185--------------------------- --------- --------- ---------Net cash inflow from operatingactivities 698 516 1,529--------------------------- --------- --------- --------- b) Analysis of net (debt)/funds: 31 March 31 March 2007 2006 30 September Unaudited Unaudited 2006 £'000 £'000 £'000--------------------------- --------- --------- ---------Cash at bank and in hand 191 316 493Bank loans (724) (866) (795)Finance lease - (154) (78)--------------------------- --------- --------- --------- (533) (704) (380)--------------------------- --------- --------- --------- This information is provided by RNS The company news service from the London Stock Exchange