Last checked at 14 May 2019 07:00
| 14 May 2019 |
Zytronic plc
("Zytronic" or the "Company" and, together with its subsidiaries, "Group")
Interim Results for the six months ended 31 March 2019 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2019. Comparative data is given for the six months ended 31 March 2018, except where indicated.
Overview
· Group revenue of £9.5m (2018: £10.6m), impacted by decrease in Gaming revenue
(partially offset by stronger revenues in other sectors)
· Profit before tax of £1.4m (2018: £2.2m)
· Interim dividend maintained at 7.6p per share (2018: 7.6p)
· Basic earnings per share ("EPS") of 7.4p (2018: 11.7p)
· Net cash of £12.1m (30 September 2018: £14.6m)
Commenting on the results, Tudor Davies, Chairman said:
"As stated in our recent trading update, whilst historically trading in the second half has shown an improvement over the first half, and there are several projects that should improve performance as they come to fruition, at this stage the Board is taking a cautious and conservative view on an increase in activity levels from the Gaming sector in the second half."
Enquiries:
Zytronic plc Mark Cambridge, Chief Executive Claire Smith, Group Finance Director
| 0191 414 5511 |
N+1 Singer (Nominated Adviser and Broker) Aubrey Powell, Alex Bond (Corporate Finance) Rachel Hayes (Corporate Broking) | 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
As announced in the trading update on 2 May 2019, we have experienced lower than expected revenues and profitability in the first half of this year, principally due to considerably slower sales of our touchscreen products into the previously buoyant Gaming sector.
Results
Revenues for the first half to 31 March 2019 were £9.5m (2018: £10.6m), with profit before tax of £1.4m (2018: £2.2m).
The reduction in revenues was due to the decline in sales into the Gaming market to £3.1m (2018: £4.2m) with sales to sectors such as Financial, Vending and Signage showing an increase to £5.1m (2018: £4.6m), and other sales including Industrial of £1.3m (2018: £1.8m).
The Gaming revenues were affected by a slower conversion of opportunities to orders of new design projects not replacing the anticipated reduction in volumes from several longer running projects, which had consisted of higher margin larger format products. In volume terms the numbers of touchscreens sold remained at similar levels to last year, but the number of larger panels dropped by 35% and this change in mix contributed toward a decline in gross margin to 34.7% (2018: 39.6%) and had a knock-on effect on profitability.
Cash generation
Net cash generation from operating activities was £0.2m (2018: £2.4m) as a result of a £1.7m increase in working capital. Along with further investment made into capital expenditure during the first half of £0.4m and with the payment of the 2018 final dividend of £2.4m, this resulted in closing cash balances of £12.1m (30 September 2018: £14.6m).
Dividend
The Directors have maintained the interim dividend at 7.6p per share (2018: 7.6p), payable on 19 July 2019 to shareholders on the Register on 5 July 2019.
Outlook
As stated in our recent trading update, whilst historically trading in the second half has shown an improvement over the first half, and there are several projects that should improve performance as they come to fruition, at this stage the Board is taking a cautious and conservative view on an increase in activity levels from the Gaming sector in the second half.
Tudor Davies
Chairman
14 May 2019
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2019
|
| Six months to | Six months to | Year to |
|
| 31 March | 31 March | 30 September |
|
| 2019 | 2018 | 2018 |
|
| Unaudited | Unaudited | Audited |
| Notes | £'000 | £'000 | £'000 |
Group revenue |
| 9,463 | 10,605 | 22,288 |
Cost of sales |
| (6,178) | (6,408) | (14,047) |
Gross profit |
| 3,285 | 4,197 | 8,241 |
Distribution costs |
| (182) | (213) | (461) |
Administration expenses |
| (1,755) | (1,806) | (3,639) |
Group trading profit |
| 1,348 | 2,178 | 4,141 |
Finance costs |
| - | (3) | (21) |
Finance revenue |
| 35 | 27 | 68 |
Profit before tax |
| 1,383 | 2,202 | 4,188 |
Tax expense | 3 | (193) | (330) | (541) |
Profit for the period |
| 1,190 | 1,872 | 3,647 |
Earnings per share |
|
|
|
|
Basic | 4 | 7.4p | 11.7p | 22.7p |
Diluted | 4 | 7.4p | 11.7p | 22.7p |
All activities are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2019
| Called up |
|
|
|
| share | Share | Retained |
|
| capital | premium | earnings | Total |
| £'000 | £'000 | £'000 | £'000 |
At 1 October 2018 | 160 | 8,994 | 17,611 | 26,765 |
Profit for the period | - | - | 1,190 | 1,190 |
Dividends | - | - | (2,439) | (2,439) |
At 31 March 2019 (unaudited) | 160 | 8,994 | 16,362 | 25,516 |
Consolidated statement of financial position
Unaudited results at 31 March 2019
|
| At | At | At |
|
| 31 March | 31 March | 30 September |
|
| 2019 | 2018 | 2018 |
|
| Unaudited | Unaudited | Audited |
|
| £'000 | £'000 | £'000 |
Assets |
|
|
|
|
Non-current assets |
|
|
|
|
Intangible assets |
| 1,460 | 1,660 | 1,585 |
Property, plant and equipment |
| 6,566 | 6,790 | 6,605 |
|
| 8,026 | 8,450 | 8,190 |
Current assets |
|
|
|
|
Inventories |
| 3,948 | 2,969 | 3,021 |
Trade and other receivables |
| 3,856 | 3,562 | 3,738 |
Derivative financial assets |
| - | 28 | - |
Cash and short term deposits |
| 12,060 | 13,730 | 14,626 |
|
| 19,864 | 20,289 | 21,385 |
Total assets |
| 27,890 | 28,739 | 29,575 |
Equity and liabilities |
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
| 978 | 1,030 | 1,446 |
Derivative financial liabilities |
| 3 | - | 7 |
Accruals |
| 591 | 700 | 767 |
Tax liabilities |
| 227 | 175 | 13 |
|
| 1,799 | 1,905 | 2,233 |
Non-current liabilities |
|
|
|
|
Government grants |
| 13 | 17 | 15 |
Deferred tax liabilities (net) |
| 562 | 608 | 562 |
|
| 575 | 625 | 577 |
Total liabilities |
| 2,374 | 2,530 | 2,810 |
Net assets |
| 25,516 | 26,209 | 26,765 |
Equity |
|
|
|
|
Equity share capital |
| 160 | 160 | 160 |
Share premium |
| 8,994 | 8,994 | 8,994 |
Revenue reserve |
| 16,362 | 17,055 | 17,611 |
Total equity |
| 25,516 | 26,209 | 26,765 |
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2019
|
| Six months to | Six months to | Year to |
|
| 31 March | 31 March | 30 September |
|
| 2019 | 2018 | 2018 |
|
| Unaudited | Unaudited | Audited |
| Notes | £'000 | £'000 | £'000 |
Operating activities |
|
|
|
|
Profit before tax |
| 1,383 | 2,202 | 4,188 |
Net finance income |
| (35) | (24) | (47) |
Depreciation and impairment of property, plant and equipment |
|
361 |
369 | 709 |
Amortisation, impairment and write-off of intangible assets |
| 205 | 175 | 438 |
Amortisation of government grant |
| (3) | (8) | (10) |
Fair value movement on foreign exchange forward contracts |
| (4) | 26 | 61 |
Working capital adjustments |
|
|
|
|
(Increase)/decrease in inventories |
| (927) | 27 | (25) |
Increase in trade and other receivables |
| (118) | (56) | (232) |
(Decrease)/increase in trade and other payables and provisions |
| (648) | (165) | 295 |
Cash generated from operations |
| 214 | 2,546 | 5,377 |
Tax received/(paid) |
| 25 | (195) | (573) |
Net cashflow from operating activities |
| 239 | 2,351 | 4,804 |
Investing activities |
|
|
|
|
Interest received |
| 30 | 27 | 65 |
Payments to acquire property, plant and equipment |
| (322) | (103) | (273) |
Payments to acquire intangible assets |
| (74) | (202) | (390) |
Net cashflow used in investing activities |
| (366) | (278) | (598) |
Financing activities |
|
|
|
|
Interest paid |
| - | (3) | (21) |
Dividends paid to equity shareholders of the Parent |
| (2,439) | (2,439) | (3,658) |
Net cashflow used in financing activities |
| (2,439) | (2,442) | (3,679) |
(Decrease)/increase in cash and cash equivalents |
| (2,566) | (369) | 527 |
Cash and cash equivalents at the beginning of the period |
| 14,626 | 14,099 | 14,099 |
Cash and cash equivalents at the end of the period | 6 | 12,060 | 13,730 | 14,626 |
Notes to the interim report
Unaudited results for the six months to 31 March 2019
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 2019 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 2018 annual report and financial statements.
The financial information for the six months to 31 March 2019 and the comparative financial information for the six months to 31 March 2018 have not been audited. The comparative financial information for the year ended 30 September 2018 has been extracted from the 2018 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2018, which were approved by the Board of Directors on 10 December 2018, received an unqualified audit report, did not contain a statement under Sections 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 2019.
3. Tax charge on profit on ordinary activities
The estimated tax rate for the year of 14% 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 2019 and 2018
|
| 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 |
| 2019 | 2019 | 2019 | 2018 | 2018 | 2018 |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 1,190 | 16,044 | 7.4 | 1,872 | 16,044 | 11.7 |
Basic EPS | 1,190 | 16,044 | 7.4 | 1,872 | 16,044 | 11.7 |
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 |
| 2019 | 2019 | 2019 | 2018 | 2018 | 2018 |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 1,190 | 16,044 | 7.4 | 1,872 | 16,044 | 11.7 |
Weighted average number of shares under option | - | - | - | - | - | - |
Diluted EPS | 1,190 | 16,044 | 7.4 | 1,872 | 16,044 | 11.7 |
For the year to 30 September 2018
|
| Weighted |
|
|
| average |
|
|
| number |
|
| Earnings | of shares | EPS |
| 30 September | 30 September | 30 September |
| 2018 | 2018 | 2018 |
| £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 3,647 | 16,044 | 22.7 |
Basic EPS | 3,647 | 16,044 | 22.7 |
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 |
| 2018 | 2018 | 2018 |
| £'000 | Thousands | Pence |
Profit on ordinary activities after tax | 3,647 | 16,044 | 22.7 |
Weighted average number of shares under option | - | - | - |
Diluted EPS | 3,647 | 16,044 | 22.7 |
5. Dividends
The Directors propose the payment of an interim dividend of 7.6p per share (2018: 7.6p), payable on 19 July 2019 to shareholders on the Register on 5 July 2019. 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 |
| 2019 | 2018 | 2018 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Ordinary dividends on equity shares |
|
|
|
Final dividend of 15.2p per ordinary share paid on9 March 2018 | - | 2,439 | 2,439 |
Interim dividend of 7.6p per ordinary share paid on20 July 2018 | - | - | 1,219 |
Final dividend of 15.2p per ordinary share paid on22 February 2019 | 2,439 | - | - |
| 2,439 | 2,439 | 3,658 |
6. Cash and cash equivalents
|
|
|
|
| Six months to 31 March | Six months to 31 March | Year to 30 September |
| 2019 | 2018 | 2018 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Cash at bank and in hand | 12,060 | 13,730 | 14,626 |
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 |
| 2019 | 2018 | 2018 |
| Unaudited | Unaudited | Audited |
| £'000 | £'000 | £'000 |
Cash at bank and in hand | 5,991 | 11,382 | 8,580 |
Short term deposits | 6,069 | 3,030 | 6,046 |
Bank overdraft | - | (682) | - |
| 12,060 | 13,730 | 14,626 |
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 2019 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in September 2019.
The fair value of cash and cash equivalents is £12.1m (2018: £13.7m).
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 made available 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
Stockbroker and Nominated Adviser
N+1 Singer
One Bartholomew LaneLondonEC2N 2AX
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