Zytronic Regulatory News (ZYT)

Zytronic plc

("Zytronic" or the "Group")

Interim Results for the six months ended 31 March 2016

Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2016.

Overview

· Group revenue of £9.9m (H1 2015: £10.0m)

· Touch revenues account for 84% of total (H1 2015: 80%)

· Gross profit margin improved to 42.3% (H1 2015: 39.9%)

· Profit before tax increased by 8% to £1.8m (H1 2015: £1.6m)

· Earnings per share ("EPS") increased to 9.6p (H1 2015: 8.7p)

· Interim dividend increased by 10% to 3.45p per share (2015 interim dividend: 3.14p)

· Net cash increased by £1.0m to £9.5m (30 September 2015: £8.5m)

Commenting on the results, Chairman, Tudor Davies said:

"The second half has so far experienced a similar trend with touch product revenues continuing to increase relative to the traditional products."

Enquiries:

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 80,000ft2 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 in ultra-large form factor sizes from five inches to 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

We are pleased to announce that the year has started well with a continuing improvement in margins and profits combined with strong cash generation in the first half.

Results

Profit after tax increased by 11% to £1.5m (2015: £1.3m) principally as a result of an improved gross margin of 42.3% (2015: 39.9%) on slightly lower sales of £9.9m (2015: £10.0m). Diluted earnings per share increased by 10% to 9.5p (2015: 8.6p).

Whilst revenues were slightly lower by 1% at £9.9m, this was to some extent expected and consistent ‎with the strategy of moving away from the business' traditional glass displays and growing its technologically advanced touch product business. 

Sales of touch products accounted for 84% of the business (2015: 79%), as sales of touch products increased by £0.4m to £8.3m (2015: £7.9m), and sales of glass displays and filter products reduced by £0.5m to £1.6m (2015: £2.1m). 

The Group has continued to see growth and opportunities in areas that require larger size touch sensors, in particular, demand in its large format curved products developed for the gaming industry. The strategy continues to be to expand its global sales reach by concentrating on the applicable markets where the combination of expertise and capabilities in rugged glass solutions, larger format touch technology and developing product functionality provides a competitive advantage.

Cash Generation

The Group generated a net cash inflow of £2.5m before investment of £0.4m in capital expenditure and the payment of dividends of £1.4m, resulting in an increase in net cash to £9.5m as at 31 March 2016 after the mortgage liability (30 September 2015: £8.5m).

Dividend

The Directors have declared a 10% increase to the interim dividend to 3.45p per share (2015: 3.14p) payable on 22 July 2016 to shareholders on the Register on 8 July 2016.

Outlook

The second half has so far experienced a similar trend with touch product revenues continuing to increase relative to the traditional products, and the consequent improved margins from this change in mix and the move towards the more niche larger touch sensors. We expect to continue to make progress and will update shareholders as appropriate during the year.

Tudor Davies B.Sc.

Chairman

17 May 2016

Consolidated statement of comprehensive income

Unaudited results for the six months to 31 March 2016

All profits are from continuing operations

Consolidated statement of changes in equity

Unaudited results for the six months to 31 March 2016

Consolidated balance sheet

Unaudited results at 31 March 2016

Consolidated cashflow statement

Unaudited results for the six months to 31 March 2016

Notes to the interim report

Unaudited results for the six months to 31 March 2016

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 2016 are not reviewed by Ernst & Young 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 2015 annual report and financial statements.

The financial information for the six months to 31 March 2016 and the comparative financial information for the six months to 31 March 2015 have not been audited. The comparative financial information for the year ended 30 September 2015 has been extracted from the 2015 annual report and financial statements.

The annual report and financial statements for the year ended 30 September 2015, which were approved by the Board of Directors on 7 December 2015, received an unqualified audit report, did not contain a statement under Section 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 2016.

3. Tax charge on profit on ordinary activities

The estimated tax rate for the year of 15.5% has been applied to the half year's profit before tax, in accordance with the Auditing Standard Board's statement on interim reports.

4. Earnings per share

Basic EPS is calculated by dividing the 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 EPS arising from total operations and EPS arising from continuing operations.

For the six months to 31 March 2016 and 2015

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

For the year to 30 September 2015

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

5. Provisions

Long term incentive scheme

The provision for the long term incentive scheme relating to the Chief Executive, the Group Finance Director and other management personnel is calculated based on future expectations that the bonus will be payable. Management has assessed the criteria that determine the payout and taken a view that a proportion of the bonus should again be provided for in the half year ended 31 March 2016.

6. Dividends

The Directors propose the payment of an interim dividend of 3.45p per share (2015 interim dividend: 3.14p), payable on 22 July 2016 to shareholders on the Register on 8 July 2016. This dividend has not been accrued in these interim accounts. The dividend payment will be approximately £532,000.

7. Cash and cash equivalents

For the purpose of the consolidated cashflow statement, cash and cash equivalents comprise the following:

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 2016 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc which will fall for review in November 2016.

The fair value of cash and cash equivalents is £10.8m (31 March 2015: £8.7m).

8. Availability of the Interim Report

A copy of the interim report is available on the Company's website, www.zytronicplc.com, and can be obtained from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear, NE21 5NJ. Copies will be sent to shareholders shortly.