Last checked at 17 May 2022 07:00
| 17 May 2022 |
Zytronic plc
("Zytronic" or the "Company" and, together
with its subsidiaries, the "Group")
Interim Results for the six months ended 31 March 2022 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2022. Comparative data is given for the six months ended 31 March 2021, except where indicated.
Overview
· Group revenue of £5.9m (2021: £4.8m)
· EBITDA of £0.8m (2021: £0.2m)
· Profit before tax of £0.4m (2021: loss of £0.3m)
· Basic earnings per share of 3.0p (2021: loss per share 1.2p)
· Positive cash generated from operations £0.1m (2021: £0.4m)
· Net cash of £7.5m (30 September 2021: £9.2m)
Commenting on the results, David Buffham, Chair said:
"While the previously noted post-pandemic issues look likely to present a headwind for the remainder of the financial year, the Group remains well positioned to progress in its recovery, particularly now as global sales and marketing activities resume and provide the basis for the generation of new future opportunities."
Enquiries:
Zytronic plc Mark Cambridge, Chief Executive Claire Smith, Group Finance Director
| 0191 414 5511 |
Singer Capital Markets (Nominated Adviser and Broker) Aubrey Powell, Rachel Hayes, Amanda Gray (Investment Banking)
| 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.
Chair statement
Introduction
The Group continued to make encouraging progress over the first half of the current year in its recovery from the impacts of the Covid-19 pandemic, evidenced by the 24% year-on-year increase in sales to £5.9m (2021: £4.8m). However, the ongoing travel restrictions in many of its key geographic markets had the effect of further impeding its sales and marketing activities over the period, with the unfortunate postponement of several key tradeshows. Also as previously reported, the considerable disruption to global supply chains continues, particularly in the electronics components sector from which the Group buys and also supplies, adding upward pressure particularly on materials and logistics costs. Customer confidence is shown to have improved in certain markets, such as Gaming and Vending, which has benefited both sales and gross margin through the volume increase in large and shaped format sensors.
Results
Group revenue for the half year ended 31 March 2022 was £5.9m (2021: £4.8m), remaining in line with the AGM trading update published on 3 March 2022. The gross margin was 31.7% (2021: 27.0%), with EBITDA of £0.8m (2021: £0.2m) and profit before tax of £0.4m (2021: loss of £0.3m). Basic earnings per share was 3.0p (2021: loss per share 1.2p).
Sales have shown improvement, particularly in Gaming and Vending, which has consequently resulted in improvements in both the APAC and Americas territories. Innovation in the technical capabilities of, and the products offered, remains a key driver, with a further patent granted and a new application lodged. Tradeshow participation has yet again been very restricted over the period; albeit the Group continues to observe improvements in its level of opportunities being addressed, particularly in Vending, with significant global potential from future deployments of commercial electric vehicle charging stations.
The Group is mindful of the situation with the conflict in Ukraine and although the Group's revenue from the directly affected countries is not material, it has withdrawn from any trading opportunities into Russia. It will continue to monitor and take advice from the government on these matters.
Cash
The Board announced on 17 February 2022, following further consideration of the level of the Group's cash balances, that it was in the interests of shareholders to again distribute surplus cash. It was agreed that this was best achieved by way of share buybacks in the market, utilising the headroom remaining under the authority used for the Tender Offer implemented last year until its expiry, and subsequently utilising the new authority granted by shareholders at the 2022 AGM held on 3 March. By 31 March 2022, 750,500 shares had been purchased under the buyback at an average price of 153.5p per share, returning £1.2m of cash. These purchases have continued since the end of the half year.
Payments of a final dividend of £0.2m and capital expenditure totalling £0.2m, alongside the cash returned under the buyback programme, served to offset the small amount of cash generated from operations (which itself was impacted by an increase in working capital of £0.7m). These factors contributed to the net reduction in cash over the half year period of £1.6m (2021: £6.3m). Excluding the effects of the returns of cash via the Tender and buybacks in the relevant periods, the net movement in cash was a decrease of £0.5m (2021: increase of £0.4m), the principal shift being the absorption of working capital during the recovery in activity levels.
The Board considers the cash balances as of 31 March 2022 of £7.5m (30 September 2021: £9.2m) to be more than adequate for operational purposes and the funding of further share buybacks using the remaining headroom under the existing authority.
Dividends
The Board, having returned to paying dividends, with a final dividend for 2021 paid in March 2022, has decided that, as per last year, it will again not pay an interim dividend and will consider recommending a final dividend dependent on the full-year performance of the Group.
Outlook
While the previously noted post-pandemic issues look likely to present a headwind for the remainder of the financial year, the Group remains well positioned to progress in its recovery, particularly now as the global sales and marketing activities resume and provide the basis for the generation of new future opportunities.
David Buffham
Chair
17 May 2022
Consolidated statement of comprehensive incomeUnaudited results for the six months to 31 March 2022
Six months to | Six months to | Year to | ||
31 March | 31 March | 30 September | ||
2022 | 2021 | 2021 | ||
Unaudited | Unaudited | Audited | ||
Notes | £'000 | £'000 | £'000 | |
Group revenue | 5,910 | 4,784 | 11,683 | |
Cost of sales | (4,034) | (3,490) | (8,146) | |
Gross profit | 1,876 | 1,294 | 3,537 | |
Distribution costs | (132) | (66) | (183) | |
Administration expenses | (1,345) | (1,542) | (2,901) | |
Group trading profit/(loss) | 399 | (314) | 453 | |
Group operating profit/(loss) | 399 | (314) | 453 | |
Profit/(loss) before tax | 399 | (314) | 453 | |
Tax (expense)/credit | 3 | (56) | 130 | (47) |
Profit/(loss) for the period | 343 | (184) | 406 | |
Other comprehensive income | - | - | - | |
Total comprehensive income/(loss) | 343 | (184) | 406 | |
Earnings/(loss) per share | ||||
Basic | 4 | 3.0p | (1.2)p | 3.0p |
All activities are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2022
Called up | Capital | ||||
share | Share | redemption | Retained | ||
capital | premium | reserve | earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
At 1 October 2021 | 114 | 8,994 | 46 | 7,611 | 16,765 |
Profit for the period | - | - | - | 343 | 343 |
Dividends | - | - | - | (170) | (170) |
Repurchase and cancellation of shares | (8) | - | 8 | (1,152) | (1,152) |
At 31 March 2022 (unaudited) | 106 | 8,994 | 54 | 6,632 | 15,786 |
Consolidated statement of financial position
Unaudited results at 31 March 2022
At | At | At | ||
31 March | 31 March | 30 September | ||
2022 | 2021 | 2021 | ||
Unaudited | Unaudited | Audited | ||
Notes | £'000 | £'000 | £'000 | |
Assets | ||||
Non-current assets | ||||
Intangible assets | 635 | 875 | 733 | |
Property, plant and equipment | 5,310 | 5,490 | 5,370 | |
5,945 | 6,365 | 6,103 | ||
Current assets |
| |||
Inventories | 2,093 | 1,621 | 1,435 | |
Trade and other receivables | 2,078 | 1,912 | 2,200 | |
Derivative financial assets | - | 8 | - | |
Cash and short term deposits | 6 | 7,538 | 7,752 | 9,157 |
11,709 | 11,293 | 12,792 | ||
Total assets | 17,654 | 17,658 | 18,895 | |
Equity and liabilities |
| |||
Current liabilities |
| |||
Trade and other payables | 881 | 489 | 1,080 | |
Derivative financial liabilities | 18 | - | 16 | |
Accruals | 580 | 489 | 551 | |
Government grants | - | 25 | 26 | |
Tax liabilities | 53 | - | 121 | |
1,532 | 1,003 | 1,794 | ||
Non-current liabilities |
| |||
Deferred tax liabilities (net) | 336 | 480 | 336 | |
336 | 480 | 336 | ||
Total liabilities | 1,868 | 1,483 | 2,130 | |
Net assets | 15,786 | 16,175 | 16,765 | |
Capital and reserves | 7 |
| ||
Equity share capital | 106 | 114 | 114 | |
Share premium | 8,994 | 8,994 | 8,994 | |
Capital redemption reserve | 54 | 46 | 46 | |
Retained earnings | 6,632 | 7,021 | 7,611 | |
Total equity | 15,786 | 16,175 | 16,765 |
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2022
Six months to | Six months to | Year to | ||
31 March | 31 March | 30 September | ||
2022 | 2021 | 2021 | ||
Unaudited | Unaudited | Audited | ||
Notes | £'000 | £'000 | £'000 | |
Operating activities | ||||
Profit/(loss) before tax | 399 | (314) | 453 | |
Depreciation and impairment of property, plant and equipment | 279 | 333
| 629
| |
Amortisation, impairment and write-off of intangible assets | 121 | 188 | 379 | |
Amortisation of government grant | (26) | (2) | (1) | |
Fair value movement on foreign exchange forward contracts | 2 | 8 | 16 | |
Loss on disposal of asset | - | - | 23 | |
Working capital adjustments |
| |||
(Increase)/decrease in inventories | (658) | 711 | 897 | |
Decrease/(increase) in trade and other receivables | 122 | 47 | (433) | |
(Decrease)/increase in trade and other payables and provisions | (169) | (589) | 85 | |
Cash generated from operations | 70 | 382 | 2,048 | |
Tax (paid)/received | (125) | 61 | 48 | |
Net cashflow (used in)/from operating activities | (55) | 443 | 2,096 | |
Investing activities |
| |||
Payments to acquire property, plant and equipment | (219) | (3) | (179) | |
Payments to acquire intangible assets | (23) | (20) | (92) | |
Net cashflow used in investing activities | (242) | (23) | (271) | |
Financing activities |
| |||
Dividends paid to equity shareholders of the Parent | (170) | - | - | |
Repurchase and cancellation of shares | (1,152) | (6,706) | (6,706) | |
Net cashflow used in financing activities | (1,322) | (6,706) | (6,706) | |
Decrease in cash and cash equivalents | (1,619) | (6,286) | (4,881) | |
Cash and cash equivalents at the beginning of the period | 9,157 | 14,038 | 14,038 | |
Cash and cash equivalents at the end of the period | 6 | 7,538 | 7,752 | 9,157 |
Notes to the interim report
Unaudited results for the six months to 31 March 2022
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 2022 are not reviewed by Crowe U.K. 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 2021 annual report and financial statements.
The financial information for the six months to 31 March 2022 and the comparative financial information for the six months to 31 March 2021 have not been audited. The comparative financial information for the year ended 30 September 2021 has been extracted from the 2021 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2021, which were approved by the Board of Directors on 6 December 2021, 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 2022.
3. Tax charge on profit/(loss) 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 Standards Board's statement on interim reports.
4. Earnings/(loss) per share ("EPS" / "LPS")
Basic EPS/LPS is calculated by dividing the profit/(loss) 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/LPS arising from total operations and EPS/LPS arising from continuing operations.
For the six months to 31 March 2022 and 2021
Weighted | Weighted | |||||
average | average | |||||
number | number | |||||
Profit | of shares | EPS | Loss | of shares | LPS | |
31 March | 31 March | 31 March | 31 March | 31 March | 31 March | |
2022 | 2022 | 2022 | 2021 | 2021 | 2021 | |
£'000 | Thousands | Pence | £'000 | Thousands | Pence | |
Profit/(loss) on ordinary activities after tax | 343 | 11,357 | 3.0 | (184) | 15,273 | (1.2) |
Basic EPS/LPS | 343 | 11,357 | 3.0 | (184) | 15,273 | (1.2) |
For the year to 30 September 2021
Weighted | |||
average | |||
number | |||
Profit | of shares | EPS | |
30 September | 30 September | 30 September | |
2021 | 2021 | 2021 | |
£'000 | Thousands | Pence | |
Profit on ordinary activities after tax | 406 | 13,346 | 3.0 |
Basic EPS | 406 | 13,346 | 3.0 |
5. Dividends
As the Group recovers from the effects of the Covid-19 pandemic, the Directors considered it prudent not to pay an interim dividend. Accordingly, no interim dividend is proposed for the period (2021: Nil). The table below reflects historic dividend payments.
Six months to 31 March | Six months to 31 March | Year to 30 September | |
2022 | 2021 | 2021 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Ordinary dividends on equity shares | |||
Final dividend of 1.5p per ordinary share paid on18 March 2022 |
170 |
- |
- |
170 | - | - |
6. Cash and cash equivalents
Six months to 31 March | Six months to 31 March | Year to 30 September | |
2022 | 2021 | 2021 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash at bank and in hand | 7,538 | 7,752 | 9,157 |
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 | |
2022 | 2021 | 2021 | |
Unaudited | Unaudited | Audited | |
£'000 | £'000 | £'000 | |
Cash at bank and in hand | 7,267 | 7,752 | 8,886 |
Short term deposits | 271 | - | 271 |
7,538 | 7,752 | 9,157 |
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 2022 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in October 2022.
The fair value of cash and cash equivalents is £7.5 (2021: £7.8m).
7. Capital and reserves
On 1 February 2021 the Company announced a proposed return of up to £10.0m of capital by way of a Tender Offer which was accepted by shareholders on 25 February 2021. As a result, 4,624,889 shares were purchased and subsequently cancelled by the Company at a price of 145p per share, returning £6.7m of the Company's cash.
On 17 February 2022 the Company announced a further proposed return of capital, via a share buyback programme, under the authorities obtained at the Company's last AGM held on 25 February 2021. The Company subsequently purchased 115,500 shares at an average price of 151.0p. The Company then held its 2022 AGM on 3 March 2022 and the authorities to continue the buyback were again granted, enabling the Company to further purchase up to 1,141,915 shares. Since the 2022 AGM, the Company has purchased 635,000 shares, at an average price of 153.9p, up until 31 March 2022. The total amount of cash returned to shareholders in the first half of this financial year is £1.2m.
8. Availability of the interim report
The interim report and interim results presentation are available on the Company's corporate website, www.zytronicplc.com. Copies can be requested from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear NE21 5NJ.
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
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