Last checked at 16 May 2017 07:00
| 16 May 2017 |
Zytronic plc
("Zytronic" or the "Group")
Interim Results for the six months ended 31 March 2017
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2017.
Overview
· Group revenue of £11.3m (H1 2016: £9.9m)
· Touch revenues increased to £10.0m (H1 2016: £8.3m)
· Gross profit margin improved to 43.1% (H1 2016: 42.3%)
· Profit before tax increased to £2.5m (H1 2016: £1.8m)
· Basic earnings per share ("EPS") increased by 44% to 13.8p (H1 2016: 9.6p)
· Interim dividend increased by 10% to 3.80p per share (2016: 3.45p)
· Net cash increased by £0.9m to £12.5m (30 September 2016: £11.6m)
Commenting on the results, Chairman, Tudor Davies said:
"The second half of the year has started well and is in line with expectations and on this basis we expect to make further progress in creating value for shareholders."
Enquiries:
Zytronic plc Mark Cambridge, Chief Executive Claire Smith, Group Finance Director
| 0191 414 5511 |
N+1 Singer (Nominated Advisor and Broker) Aubrey Powell, Liz Yong | 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 80,000ft2 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 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
The Board is pleased to announce that the period for the half year ended 31 March 2017 has continued to show an increase in demand, especially for our large format proprietary touch products, resulting in an improvement in the Group's overall margins and profits.
Results
Revenues have increased by 14% to £11.3m (H1 2016: £9.9m). Administration overheads of £2.1m benefited from a reduction in the foreign exchange hedging charge of £0.1m compared with the previous half year of £0.4m. Overall after adjusting for the benefit of the reduction in foreign exchange charges the profit before tax increased by 19% to £2.6m (H1 2016: £2.2m).
Reported profit before tax was £2.5m (H1 2016: £1.8m) and after tax of 14.5% (H1 2016: 15.5%) this resulted in a profit after tax for the period of £2.2m (H1 2016: £1.5m) with basic earnings per share increasing by 44% to 13.8p (H1 2016: 9.6p).
Touch revenues increased to £10.0m (H1 2016: £8.3m) and together with the focus on our proprietary technology for larger format and multi-user sensors, combined to improve gross margin to 43.1% (H1 2016: 42.3%). The principal drivers of growth continues to be the large format sizes in particular in the gaming sector for upright cabinet designs through both APAC and UK-based customers.
Cash generation
The Group continued to generate cash with £2.5m (H1 2016: £2.3m) being earned before the payment of £1.7m in respect of the final dividend for last year (final dividend 2016: £1.4m).
The Group's net cash position at 31 March 2017 was £12.5m (30 September 2016: £11.6m) after the £1.0m liability in relation to the property mortgage.
Capital reduction scheme
The capital reduction scheme resolution to increase distributable reserves, which was proposed and passed at the AGM on 16 February 2017, was approved by the Court on 15 March 2017 and was effected through the registration at Companies House on 22 March 2017.
Dividend
The Directors have declared a 10% increase to the interim dividend to 3.80p per share (2016: 3.45p) payable on 21 July 2017 to shareholders on the Register on 7 July 2017.
Outlook
The second half of the year has started well and is in line with expectations and on this basis we expect to make further progress in creating value for shareholders.
Tudor Davies
Chairman
16 May 2017
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2017
|
| Six months to | Six months to | Year to |
|
| 31 March | 31 March | 30 September |
|
| 2017 | 2016 | 2016 |
|
| Unaudited | Unaudited | Audited |
| Notes | £'000 | £'000 | £'000 |
Group revenue |
| 11,281 | 9,868 | 21,087 |
Cost of sales |
| (6,414) | (5,692) | (12,071) |
Gross profit |
| 4,867 | 4,176 | 9,016 |
Distribution costs |
| (229) | (198) | (378) |
Administration expenses |
| (2,117) | (2,220) | (4,365) |
Group trading profit |
| 2,521 | 1,758 | 4,273 |
Finance costs |
| (9) | (12) | (23) |
Finance revenue |
| 5 | 8 | 20 |
Profit before tax |
| 2,517 | 1,754 | 4,270 |
Tax expenses | 3 | (366) | (271) | (183) |
Profit for the period |
| 2,151 | 1,483 | 4,087 |
Earnings per share |
|
|
|
|
Basic | 4 | 13.8p | 9.6p | 26.6p |
Diluted | 4 | 13.6p | 9.5p | 26.1p |
All profits are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2017
| Called up |
|
|
|
| share | Share | Retained |
|
| capital | premium | earnings | Total |
| £'000 | £'000 | £'000 | £'000 |
At 1 October 2016 | 154 | 7,766 | 15,316 | 23,236 |
Profit for the period | - | - | 2,151 | 2,151 |
Exercise of share options | 5 | 1,039 | - | 1,044 |
Issue of capital reduction shares* | 8,919 | - | (8,919) | - |
Cancellation of capital reduction shares* | (8,919) | - | 8,919 | - |
Dividends | - | - | (1,744) | (1,744) |
At 31 March 2017 (unaudited) | 159 | 8,805 | 15,723 | 24,687 |
* Refer to note 8.
Consolidated balance sheet
Unaudited results at 31 March 2017
|
| At | At | At |
|
| 31 March | 31 March | 30 September |
|
| 2017 | 2016 | 2016 |
|
| Unaudited | Unaudited | Audited |
| Notes | £'000 | £'000 | £'000 |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
| 1,585 | 1,507 | 1,457 |
Property, plant and equipment |
| 7,228 | 7,547 | 7,389 |
|
| 8,813 | 9,054 | 8,846 |
Current assets |
|
|
|
|
Inventories |
| 3,479 | 3,140 | 2,760 |
Trade and other receivables |
| 3,563 | 3,362 | 3,745 |
Cash and short term deposits |
| 13,520 | 10,757 | 12,763 |
|
| 20,562 | 17,259 | 19,268 |
Total assets |
| 29,375 | 26,313 | 28,114 |
Liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| 1,494 | 1,378 | 1,302 |
Financial liabilities |
| 1,049 | 200 | 1,148 |
Derivative financial liabilities |
| 442 | 470 | 959 |
Provisions |
| - | - | 205 |
Accruals |
| 1,021 | 1,013 | 834 |
Tax liabilities |
| 405 | 286 | 122 |
|
| 4,411 | 3,347 | 4,570 |
Non-current liabilities |
|
|
|
|
Financial liabilities |
| - | 1,096 | - |
Provisions | 5 | - | 170 | - |
Government grants |
| 17 | 54 | 48 |
Deferred tax liabilities (net) |
| 260 | 590 | 260 |
|
| 277 | 1,910 | 308 |
Total liabilities |
| 4,688 | 5,257 | 4,878 |
Net assets |
| 24,687 | 21,056 | 23,236 |
Equity |
|
|
|
|
Equity share capital |
| 159 | 154 | 154 |
Share premium |
| 8,805 | 7,766 | 7,766 |
Revenue reserve | 8 | 15,723 | 13,136 | 15,316 |
Total equity |
| 24,687 | 21,056 | 23,236 |
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2017
|
| Six months to | Six months to | Year to |
|
| 31 March | 31 March | 30 September |
|
| 2017 | 2016 | 2016 |
|
| Unaudited | Unaudited | Audited |
| Notes | £'000 | £'000 | £'000 |
Operating activities |
|
|
|
|
Profit before tax |
| 2,517 | 1,754 | 4,270 |
Net finance costs |
| 4 | 4 | 3 |
Depreciation and impairment of property, plant and equipment |
| 387 | 405 | 766 |
Amortisation and impairment of intangible assets |
| 178 | 152 | 355 |
Loss on disposal of intangible assets |
| 28 | - | - |
Amortisation of government grant |
| (31) | (5) | (11) |
Share-based payments |
| - | 35 | 71 |
Fair value movement on foreign exchange forward contracts |
| (517) | 381 | 870 |
Working capital adjustments |
|
|
|
|
(Increase)/decrease in inventories |
| (719) | 74 | 454 |
Decrease/(increase) in trade and other receivables |
| 316 | (313) | (690) |
Increase in trade and other payables and provisions |
| 27 | 286 | 76 |
Cash generated from operations |
| 2,190 | 2,773 | 6,164 |
Tax paid |
| (83) | (234) | (576) |
Net cashflow from operating activities |
| 2,107 | 2,539 | 5,588 |
Investing activities |
|
|
|
|
Interest received |
| 5 | 8 | 20 |
Payments to acquire property, plant and equipment |
| (214) | (176) | (387) |
Payments to acquire intangible assets |
| (333) | (232) | (385) |
Net cashflow from investing activities |
| (542) | (400) | (752) |
Financing activities |
|
|
|
|
Interest paid |
| (8) | (12) | (21) |
Dividends paid to equity shareholders of the Parent |
| (1,744) | (1,368) | (1,900) |
Proceeds from share issues relating to options |
| 1,044 | 215 | 215 |
Repayment of borrowings |
| (100) | (50) | (200) |
Net cashflow from financing activities |
| (808) | (1,215) | (1,906) |
Increase in cash and cash equivalents |
| 757 | 924 | 2,930 |
Cash and cash equivalents at the beginning of the period |
| 12,763 | 9,833 | 9,833 |
Cash and cash equivalents at the end of the period | 7 | 13,520 | 10,757 | 12,763 |
Notes to the interim report
Unaudited results for the six months to 31 March 2017
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 2017 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 2016 annual report and financial statements.
The financial information for the six months to 31 March 2017 and the comparative financial information for the six months to 31 March 2016 have not been audited. The comparative financial information for the year ended 30 September 2016 has been extracted from the 2016 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2016, which were approved by the Board of Directors on 12 December 2016, 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 2017.
3. Tax charge on profit on ordinary activities
The estimated tax rate for the year of 14.5% 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 2017 and 2016
|
| Weighted |
|
| Weighted |
|
|
| average |
|
| average |
|
|
| number |
|
| number |
|
| Earnings | of shares | EPS | Earnings | of shares | EPS |
| 31 March | 31 March | 31 March | 31 March | 31 March | 31 March |
| 2017 | 2017 | 2017 | 2016 | 2016 | 2016 |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 2,151 | 15,626 | 13.8 | 1,483 | 15,369 | 9.6 |
Basic EPS | 2,151 | 15,626 | 13.8 | 1,483 | 15,369 | 9.6 |
The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option.
|
| Weighted |
|
| Weighted |
|
|
| average |
|
| average |
|
|
| number |
|
| number |
|
| Earnings | of shares | EPS | Earnings | of shares | EPS |
| 31 March | 31 March | 31 March | 31 March | 31 March | 31 March |
| 2017 | 2017 | 2017 | 2016 | 2016 | 2016 |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 2,151 | 15,626 | 13.8 | 1,483 | 15,369 | 9.6 |
Weighted average number of shares under option | - | 168 | (0.2) | - | 197 | (0.1) |
Diluted EPS | 2,151 | 15,794 | 13.6 | 1,483 | 15,566 | 9.5 |
For the year to 30 September 2016
|
| Weighted |
|
|
| average |
|
|
| number |
|
| Earnings | of shares | EPS |
| 30 September | 30 September | 30 September |
| 2016 | 2016 | 2016 |
| £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 4,087 | 15,346 | 26.6 |
Basic EPS | 4,087 | 15,346 | 26.6 |
The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option.
|
| Weighted |
|
|
| average |
|
|
| number |
|
| Earnings | of shares | EPS |
| 30 September | 30 September | 30 September |
| 2016 | 2016 | 2016 |
| £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 4,087 | 15,346 | 26.6 |
Weighted average number of shares under option | - | 299 | (0.5) |
Diluted EPS | 4,087 | 15,645 | 26.1 |
5. Provisions
|
|
|
|
| Total |
| £'000 |
At 1 October 2016 | 205 |
Utilised during the year | (205) |
At 31 March 2017 | - |
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 was calculated based on future expectations that the bonus would be payable.
6. Dividends
The Directors propose the payment of an interim dividend of 3.80p per share (2016: 3.45p), payable on 21 July 2017 to shareholders on the Register on 7 July 2017. This dividend has not been accrued in these interim accounts. The dividend payment will be approximately £606,000.
|
|
|
|
| Six months to 31 March | Six months to 31 March | Year to 30 September |
| 2017 | 2016 | 2016 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Ordinary dividends on equity shares |
|
|
|
Final dividend of 8.87p per ordinary share paid on11 March 2016 | - | 1,368 | 1,368 |
Interim dividend of 3.45p per ordinary share paid on22 July 2016 | - | - | 532 |
Final dividend of 10.96p per ordinary share paid on3 March 2017 | 1,744 | - | - |
| 1,744 | 1,368 | 1,900 |
7. Cash and cash equivalents
|
|
|
|
| Six months to 31 March | Six months to 31 March | Year to 30 September |
| 2017 | 2016 | 2016 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Cash at bank and in hand | 13,520 | 10,757 | 12,763 |
For the purpose of the consolidated cashflow statement, cash and cash equivalents comprise the following:
|
|
|
|
| Six months to 31 March | Six months to 31 March | Year to 30 September |
| 2017 | 2016 | 2016 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Cash at bank and in hand | 10,709 | 9,088 | 9,097 |
Short term deposits | 3,671 | 2,586 | 3,666 |
Bank overdraft | (860) | (917) | - |
| 13,520 | 10,757 | 12,763 |
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 2017 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 2017.
The fair value of cash and cash equivalents is £13.5m (31 March 2016: £10.8m).
8. Revenue reserve
On 22 March 2017, the Group carried out a capital reduction exercise whereby £8.9m of the Group's undistributable profits (within the retained earnings reserve) were capitalised by way of a bonus issue of newly created capital reduction shares. These shares were subsequently cancelled and the £8.9m credited to the retained earnings reserve as distributable profits.
9. 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.