Last checked at 15 May 2018 07:00
15 May 2018 |
Zytronic plc
("Zytronic" or the "Group")
Interim Results for the six months ended 31 March 2018
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2018.
Overview
· Group revenue of £10.6m (H1 2017: £11.3m)
· Gaming revenues increased by 17%, offset by a decline in Financial revenues of 29%
· Profit before tax of £2.2m (H1 2017: £2.5m)
· Interim dividend increased by 100% to 7.60p per share (H1 2017: 3.80p)
· Basic earnings per share ("EPS") of 11.7p (H1 2017: 13.8p)
· Net cash of £13.7m (30 September 2017: £14.1m) following an increase to dividend payments
Commenting on the results, Chairman, Tudor Davies said:
"The second half of the year has started with some improvement in demand from the ATM market and an increased number of projects in the growing Gaming sector. This is consistent with the improvement in trading normally experienced in the second half, and whilst growth may be suppressed compared with recent years, we expect to make good progress in developing our unique, award-winning products, particularly in the USA and Asia."
Enquiries:
Zytronic plc Mark Cambridge, Chief Executive Claire Smith, Group Finance Director
| 0191 414 5511 |
N+1 Singer (Nominated Adviser 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 report a doubling of the interim dividend to 7.6p (H1 2017: 3.8p) in line with our progressive dividend policy, and the continued development of our business into new markets, which in the first half has counteracted some deferral in business from the Financial sector.
Results
Revenues for the first half to 31 March 2018 were £10.6m (H1 2017: £11.3m), with profit before taxation of £2.2m (H1 2017: £2.5m).
There has been a considerable variation in demand across the various sectors, resulting in a reduction in revenues. The most positive has been Gaming which has increased by 17%, whereas in the Financial sector, where we supply product for ATM manufacture, demand has been unpredictable with projects being deferred and sales lower than at this time last year. However, in recent weeks we have seen some improvement in demand from the ATM market, and the good progress in Gaming is continuing with an increasing number of projects in the pipeline, and we expect further opportunities to result from the change to direct sales representation in USA and Asia.
Cash generation
Cash generation from operating activities improved to £2.4m (H1 2017: £2.1m), of which £0.3m was invested into capital expenditure, and with the 2017 final dividend payment of £2.4m, some £0.7m higher than the 2016 final dividend payment, resulted in cash balances of £13.7m (30 September 2017: £14.1m).
Dividend
The Directors have declared a 100% increase to the interim dividend to 7.60p per share (H1 2017: 3.80p) payable on 20 July 2018 to shareholders on the Register on 6 July 2018, to facilitate a move towards an improved balance between the interim and final dividends for a fiscal year, whilst maintaining the Company's progressive dividend policy.
Outlook
The second half of the year has started with some improvement in demand from the ATM market and an increased number of projects in the growing Gaming sector. This is consistent with the improvement in trading normally experienced in the second half, and whilst growth may be suppressed compared with recent years, we expect to make good progress in developing our unique, award-winning products, particularly in the USA and Asia.
Tudor Davies
Chairman
15 May 2018
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2018
Six months to | Six months to | Year to | ||
31 March | 31 March | 30 September | ||
2018 | 2017 | 2017 | ||
Unaudited | Unaudited | Audited | ||
Notes | £'000 | £'000 | £'000 | |
Group revenue | 10,605 | 11,281 | 22,892 | |
Cost of sales | (6,408) | (6,414) | (13,481) | |
Gross profit | 4,197 | 4,867 | 9,411 | |
Distribution costs | (213) | (229) | (393) | |
Administration expenses | (1,806) | (2,117) | (3,591) | |
Group trading profit | 2,178 | 2,521 | 5,427 | |
Finance costs | (3) | (9) | (24) | |
Finance revenue | 27 | 5 | 10 | |
Profit before tax | 2,202 | 2,517 | 5,413 | |
Tax expenses | 3 | (330) | (366) | (825) |
Profit for the period | 1,872 | 2,151 | 4,588 | |
Earnings per share | ||||
Basic | 4 | 11.7p | 13.8p | 29.0p |
Diluted | 4 | 11.7p | 13.6p | 28.8p |
All profits are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2018
Called up | ||||
share | Share | Retained | ||
capital | premium | earnings | Total | |
£'000 | £'000 | £'000 | £'000 | |
At 1 October 2017 | 160 | 8,994 | 17,622 | 26,776 |
Profit for the period | - | - | 1,872 | 1,872 |
Dividends | - | - | (2,439) | (2,439) |
At 31 March 2018 (unaudited) | 160 | 8,994 | 17,055 | 26,209 |
Consolidated balance sheet
Unaudited results at 31 March 2018
At | At | At | ||
31 March | 31 March | 30 September | ||
2018 | 2017 | 2017 | ||
Unaudited | Unaudited | Audited | ||
£'000 | £'000 | £'000 | ||
Assets | ||||
Non-current assets | ||||
Intangible assets | 1,660 | 1,585 | 1,633 | |
Property, plant and equipment | 6,790 | 7,228 | 7,030 | |
8,450 | 8,813 | 8,663 | ||
Current assets | ||||
Inventories | 2,969 | 3,479 | 2,996 | |
Trade and other receivables | 3,562 | 3,563 | 3,506 | |
Derivative financial assets | 28 | - | 54 | |
Cash and short term deposits | 13,730 | 13,520 | 14,099 | |
20,289 | 20,562 | 20,655 | ||
Total assets | 28,739 | 29,375 | 29,318 | |
Liabilities | ||||
Current liabilities | ||||
Trade and other payables | 1,030 | 1,494 | 1,042 | |
Financial liabilities | - | 1,049 | - | |
Derivative financial liabilities | - | 442 | - | |
Accruals | 700 | 1,021 | 862 | |
Tax liabilities | 175 | 405 | 3 | |
1,905 | 4,411 | 1,907 | ||
Non-current liabilities | ||||
Government grants | 17 | 17 | 25 | |
Deferred tax liabilities (net) | 608 | 260 | 610 | |
625 | 277 | 635 | ||
Total liabilities | 2,530 | 4,688 | 2,542 | |
Net assets | 26,209 | 24,687 | 26,776 | |
Equity | ||||
Equity share capital | 160 | 159 | 160 | |
Share premium | 8,994 | 8,805 | 8,994 | |
Revenue reserve | 17,055 | 15,723 | 17,622 | |
Total equity | 26,209 | 24,687 | 26,776 |
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2018
Six months to | Six months to | Year to | ||
31 March | 31 March | 30 September | ||
2018 | 2017 | 2017 | ||
Unaudited | Unaudited | Audited | ||
Notes | £'000 | £'000 | £'000 | |
Operating activities | ||||
Profit before tax | 2,202 | 2,517 | 5,413 | |
Net finance (revenue)/costs | (24) | 4 | 14 | |
Depreciation and impairment of property, plant and equipment |
369 |
387 | 749 | |
Amortisation and impairment of intangible assets | 175 | 178 | 424 | |
Loss on disposal of intangible assets | - | 28 | - | |
Amortisation of government grant | (8) | (31) | (42) | |
Fair value movement on foreign exchange forward contracts | 26 | (517) | (1,013) | |
Working capital adjustments | ||||
Decrease/(increase) in inventories | 27 | (719) | (236) | |
(Increase)/decrease in trade and other receivables | (56) | 316 | 239 | |
(Decrease)/increase in trade and other payables and provisions | (165) | 27 | (356) | |
Cash generated from operations | 2,546 | 2,190 | 5,192 | |
Tax paid | (195) | (83) | (521) | |
Net cashflow from operating activities | 2,351 | 2,107 | 4,671 | |
Investing activities | ||||
Interest received | 27 | 5 | 10 | |
Receipt of government grant | - | - | 19 | |
Payments to acquire property, plant and equipment | (103) | (214) | (472) | |
Payments to acquire intangible assets | (202) | (333) | (600) | |
Net cashflow from investing activities | (278) | (542) | (1,043) | |
Financing activities | ||||
Interest paid | (3) | (8) | (24) | |
Dividends paid to equity shareholders of the Parent | (2,439) | (1,744) | (2,354) | |
Proceeds from share issues relating to options | - | 1,044 | 1,234 | |
Repayment of borrowings | - | (100) | (1,148) | |
Net cashflow from financing activities | (2,442) | (808) | (2,292) | |
(Decrease)/increase in cash and cash equivalents | (369) | 757 | 1,336 | |
Cash and cash equivalents at the beginning of the period | 14,099 | 12,763 | 12,763 | |
Cash and cash equivalents at the end of the period | 6 | 13,730 | 13,520 | 14,099 |
Notes to the interim report
Unaudited results for the six months to 31 March 2018
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 2018 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 2017 annual report and financial statements.
The financial information for the six months to 31 March 2018 and the comparative financial information for the six months to 31 March 2017 have not been audited. The comparative financial information for the year ended 30 September 2017 has been extracted from the 2017 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2017, which were approved by the Board of Directors on 11 December 2017, 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 2018.
3. Tax charge on profit on ordinary activities
The estimated tax rate for the year of 15% 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 2018 and 2017
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 | |
2018 | 2018 | 2018 | 2017 | 2017 | 2017 | |
£'000 | Thousands | Pence | £'000 | Thousands | Pence | |
Profit on ordinary activities after tax | 1,872 | 16,044 | 11.7 | 2,151 | 15,626 | 13.8 |
Basic EPS | 1,872 | 16,044 | 11.7 | 2,151 | 15,626 | 13.8 |
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 | |
2018 | 2018 | 2018 | 2017 | 2017 | 2017 | |
£'000 | Thousands | Pence | £'000 | Thousands | Pence | |
Profit on ordinary activities after tax | 1,872 | 16,044 | 11.7 | 2,151 | 15,626 | 13.8 |
Weighted average number of shares under option | - | - | - | - | 168 | (0.2) |
Diluted EPS | 1,872 | 16,044 | 11.7 | 2,151 | 15,794 | 13.6 |
For the year to 30 September 2017
Weighted | |||
average | |||
number | |||
Earnings | of shares | EPS | |
30 September | 30 September | 30 September | |
2017 | 2017 | 2017 | |
£'000 | Thousands | Pence | |
Profit on ordinary activities after tax | 4,588 | 15,819 | 29.0 |
Basic EPS | 4,588 | 15,819 | 29.0 |
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 | |
2017 | 2017 | 2017 | |
£'000 | Thousands | Pence | |
Profit on ordinary activities after tax | 4,588 | 15,819 | 29.0 |
Weighted average number of shares under option | - | 131 | (0.2) |
Diluted EPS | 4,588 | 15,950 | 28.8 |
5. Dividends
The Directors propose the payment of an interim dividend of 7.60p per share (H1 2017: 3.80p), payable on 20 July 2018 to shareholders on the Register on 6 July 2018. This dividend has not been accrued in these interim accounts. The dividend payment will be approximately £1.2m.
Six months to 31 March | Six months to 31 March | Year to 30 September | |
2018 | 2017 | 2017 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Ordinary dividends on equity shares | |||
Final dividend of 10.96p per ordinary share paid on3 March 2017 | - | 1,744 | 1,744 |
Interim dividend of 3.80p per ordinary share paid on21 July 2017 | - | - | 610 |
Final dividend of 15.20p per ordinary share paid on9 March 2018 | 2,439 | - | - |
2,439 | 1,744 | 2,354 |
6. Cash and cash equivalents
Six months to 31 March | Six months to 31 March | Year to 30 September | |
2018 | 2017 | 2017 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash at bank and in hand | 13,730 | 13,520 | 14,099 |
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 | |
2018 | 2017 | 2017 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash at bank and in hand | 11,382 | 10,709 | 11,679 |
Short term deposits | 3,030 | 3,671 | 3,089 |
Bank overdraft | (682) | (860) | (669) |
13,730 | 13,520 | 14,099 |
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 2018 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 2018.
The fair value of cash and cash equivalents is £13.7m (H1 2017: £13.5m).
7. 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. A copy of the presentation made to institutional investors is also available on the Company's website.
Corporate information
Websites:
www.zytronicplc.com
www.zytronic.co.uk
www.zytronic-inc.com
www.zytronic.cn
www.zytronic.jp
Secretary
Claire SmithEmail: claire.smith@zytronic.co.uk
Registered office
Whiteley RoadBlaydon-on-TyneTyne and WearNE21 5NJ
Tel: 0191 414 5511Fax: 0191 414 0545
Registration number
3881244
Nominated Adviser and Broker
N+1 Singer
One Bartholomew LaneLondonEC2N 2AX
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