Zytronic Regulatory News (ZYT)

11 Dec 2007 07:01

Zytronic PLC11 December 2007 For Immediate Release 11 December 2007 ZYTRONIC PLC ("Zytronic" or the "Company") Preliminary Results for the year ended 30 September 2007 (unaudited) Zytronic Plc, a leading specialist manufacturer of touch screens and opticalfilters for electronic displays, announces its preliminary results for the yearended 30 September 2007. Highlights Financial • Group turnover of £11.4m decreased by 7% (2006: £12.3m) • Profit before tax decreased to £0.64m (2006 restated: £1.27m) • Tax charge of 15.6% (2006 restated: 12.0%) • Basic EPS of 3.7p (2006 restated of 7.8p) • Proposed final dividend maintained at 2.0p - total for year 3.0p (2006: 3.0p) Operational • Increasing sales of ZYPOS(R) touch sensors • ATM sales returning to higher, more normal levels • Appointment of new distributors takes total to 36 • Significant investment in refurbishment of freehold property and plant and equipment for new ZYPOS manufacturing facility On outlook, Chairman John Kennair said: "The return to higher levels of ATM sales, together with the growth in sales ofZYPOS touch sensors should enable an improvement in gross margins. We expectthat continuing strong sales growth in all product groupings will reduce theGroup's dependence upon the ATM market in the future and anticipate asubstantial improvement in the overall future profitability of the business. Welook forward to the remainder of the current financial year with renewedconfidence." Enquiries: Zytronic Plc (Today: 020 7466 5000; thereafter 0191 414 5511)John Kennair, Chief ExecutiveDenis Mullan, Finance Director Buchanan Communications 020 7466 5000Richard Darby, Isabel Podda Brewin Dolphin Securities LimitedAlan Stewart, Corporate 0845 213 4213 FinanceJamie Cumming, Corporate 0845 213 4203 BrokingJock MacDonald, Corporate Sales 0191 279 7418 Notes to Editors Zytronic is an industry leader in the development and manufacture of customisedoptical filters to enhance electronic display performance. It is also aninnovator in the production of specialised and transparent laminates for nichemarkets. Based on this lamination expertise, Zytronic has developed a unique range oftouch sensor products employing Projected Capacitive Technology (PCTTM) whichenables the pointing device to sense through an anti-vandal screen in front ofthe display. This system offers significant benefits to electronic displaymanufacturers. Operating from three modern factories near Newcastle-upon-Tyne in England,Zytronic assembles touch sensors and filters, utilising special glass andplastic materials, in environmentally controlled clean rooms. Chairman's statement I am pleased to report to you on the results for the year ended 30 September2007 and to inform you that the weakness in our ATM sales, reported in my Augusttrading statement, appears to be behind us, with sales now returning to higher,more normal, levels. Results Turnover for the year under review decreased by 7% to £11.4m (2006 £12.3m)caused by this lower demand in the ATM sector. Gross margins declined by 1.2%,also as a result of the reduction in ATM volumes, leading to a decrease inpre-tax profits to £0.64m (2006 restated £1.27m). Basic earnings per shareamounted to 3.7p (2006 restated: 7.8p). Trading The reduced performance in the ATM sector masks significant progress in the restof the business for the year ended 30 September 2007. All areas of the Group'stouch screen business outside the ATM sector have shown substantial growth, withoverall sales growth of 75% in the year under review. Sales of ZYPOS(R) touchsensors, which were first introduced in 2006, have shown growth this year of340% to £1.4m. Sales of ZYTOUCH(R) touch sensors, outside the ATM sector,increased by 27% to £2.2m. It is pleasing to note that the Group has gained new customers over the year,assisted by the appointment of further distributors and representatives takingthe total to 36. Sales growth of non-ATM touch screen products has resulted notonly from the expansion of geographical markets but also from their growing usein widely diversified markets, with new customers being won in fields ofvending, ticketing, transport passenger information systems, gaming andself-service. In the ATM sector, the reduction in our sales, almost entirely in the NorthAmerican market, has been due primarily to the reorganisation by two of ourmajor customers of their manufacturing and inventory control systems, enablingthem to achieve substantial reductions in stock levels. These reorganisationswere virtually complete by September 2007, following which we have experienced areturn to higher levels of trading. Investment in ZYPOS The building works relating to the new production facilities and clean rooms forZYPOS were completed by the beginning of October 2007. We have moved ourexisting ZYPOS production facilities into this new factory and are alreadyproducing ZYPOS touch sensors there. We will receive additional items of plantand equipment early next year, further increasing capacity and the automation ofproduction. The new production facilities should have a significant positive impact on thecost base for the production of ZYPOS as we move through 2008. Dividend The Directors are pleased to recommend an unchanged final dividend of 2.0p pershare payable on 7 March 2008 to shareholders on the Register of Members on 22February 2008. Following a dividend of 1.0p per share paid on 29 June 2007, thiswill bring the total dividend for the year to 3.0p per share (2006 3.0p pershare). Outlook We are pleased that sales to our two major customers in the ATM market arereturning to higher levels. The Directors expect that continuing strong salesgrowth in all product groupings will reduce the Group's dependence upon thatmarket in the future. The return to higher ATM sales, together with the growth in sales of ZYPOS touchsensors, which are increasingly being specified into a number of newapplications in Europe, the Far East and North America, combined with increasedmanufacturing capacity in the new ZYPOS production facilities, should enable animprovement in gross margins. Consequently, we anticipate a substantialimprovement in the overall future profitability of the business. J M Kennair MBEChairman 11 December 2007 Group profit and loss account for the year ended 30 September 2007 Unaudited Restated 2007 2006 Notes £'000 £'000Group turnover 11,434 12,301Cost of sales 7,989 8,449Gross profit 3,445 3,852Distribution costs 197 170Administration expenses 2,541 2,356 2,738 2,526Group operating profit 707 1,326Interest payable (73) (59)Interest receivable 7 6Profit on ordinary activities before taxation 641 1,273Tax charge on profit on ordinary activities 3 (100) (153)Profit on ordinary activities after taxation 541 1,120 Earnings per shareEarnings per share - basic 5 3.7p 7.8pEarnings per share - diluted 5 3.7p 7.7p The results for both the above years derive from continuing operations. Group statement of total recognised gains and losses for the year ended 30 September 2007 Notes Unaudited Restated 2007 2006 £'000 £'000Profit for the financial year 541 1,120 Total recognised gains and losses relating to the year 541 1,120 Prior year adjustment 1 15 Total gains and losses recognised since last annual report 556 Group balance sheet at 30 September 2007 Unaudited Restated 2007 2006 £'000 £'000Fixed assetsIntangible assets 1,959 2,026Tangible assets 5,350 3,831 7,309 5,857Current assetsStocks 1,828 1,706Debtors: amounts falling due within one year 2,767 2,852 amounts falling due after one year 194 -Cash at bank and in hand 140 493 4,929 5,051Creditors: amounts falling due within one year 2,201 1,837Net current assets 2,728 3,214Total assets less current liabilities 10,037 9,071Creditors: amounts falling due after more than one year 1,340 658Provisions for liabilities and chargesDeferred tax 477 365 8,220 8,048Capital and reservesCalled up share capital 147 146Share premium 6,473 6,450Profit and loss account 1,600 1,452Shareholders' funds 8,220 8,048 Group statement of cashflows for the year ended 30 September 2007 Unaudited 2007 2006 Notes £'000 £'000Net cash inflow from operating activities 6a 1,348 1,529Return on investments and servicing of financeInterest received 7 6Interest paid (71) (48)Interest element of finance lease rental payments (2) (11)Net outflow from returns on investments and servicing of finance (66) (53)TaxationCorporation tax paid (29) (230)Capital expenditure and financial investmentPayments to acquire intangible fixed assets (202) (159)Payments to acquire tangible fixed assets (1,901) (1,767)Receipt from sale of assets 1 6Net outflow from capital expenditure and financial investment (2,102) (1,920)Equity dividends paid (439) (360)Net cash outflow before financing (1,288) (1,034)FinancingNet receipts from new hire purchase agreements/bank loan 1,123 750Issue of ordinary share capital 24 238Repayments of bank loans (134) (122)Repayments of capital element of finance lease (78) (149)Net inflow from financing 935 717Decrease in cash (353) (317)Reconciliation of net cashflow to movement in net debtDecrease in cash (353) (317)Net receipts from new hire purchase agreements/bank loan (1,123) (750)Repayments of bank loans 134 122Repayments of capital element of finance lease 78 149Movement in net debt (1,264) (796)Net debt at beginning of year (380) 416Net debt at end of year 6b (1,644) (380) 1. Basis of preparation The preliminary results have been prepared under the historical cost conventionand in accordance with applicable accounting standards. The preliminary resultshave been prepared on the basis of the accounting policies set out in theGroup's statutory accounts for the year ended 30 September 2006, except that theaccounts take account, for the first time, of the requirements of FinancialReporting Standard 20, share-based payment. The results for the year ended 30September 2006 have been restated to reflect the application of FRS20. The adoption of FRS 20 has resulted in a change in accounting policy for sharebased-payment transactions. FRS 20 requires the fair value of options and shareawards, which ultimately vest, to be charged to the profit and loss account overthe vesting or performance period. For equity-settled transactions the fairvalue is determined at the date of the grant using an appropriate pricing model.For cash-settled transactions fair value is established initially at the grantdate and at each balance sheet date thereafter until the awards are settled. Ifan award fails to vest as the result of certain types of performance conditionnot being satisfied, the charge to the income statement will be adjusted toreflect this. Staff costs of £46,000 (2006: £39,000) and a deferred tax asset of £29,000(2006: £15,000) have been recognised in the profit and loss account and thebalance sheet respectively. 2. Basis of consolidation The Group results consolidate the financial statements of Zytronic plc and allof its subsidiary undertakings drawn up to 30 September 2007. 3. Tax charge on profit on ordinary activities Restated 2007 2006 £'000 £'000Current tax:UK corporation tax - (27)Corporation tax over-provided in prior years 12 10Total current tax credit/(charge) 12 (17)Deferred tax:Origination and reversal of timing differences (112) (136)Group deferred tax (112) (136)Tax charge on profit on ordinary activities (100) (153) Factors affecting current tax charge: Restated 2007 2006 £'000 £'000Profit on ordinary activities multiplied by standard rate of UK corporation tax of 30% (2006: 30%) (192) (382)Expenses not deductible for tax purposes (includes amortisation of goodwill and licences) 17 (54)Deferred revenue expenses and tax credits 146 110Accelerated capital allowances 70 81Current year tax losses carried forward (44) -Effects of small company/marginal rates of UK corporation tax - 16"Gain" on exercise of share options allowable for taxation 3 202purposes but not reflected in the profit and loss accountAdjustments in respect of prior years 12 10Total current tax credit/(charge) 12 (17) 4. Dividends The Directors propose the payment of a final dividend of 2.0p per share (2006:2.0p), payable on 7 March 2008 to shareholders on the Register on 22 February2008. This dividend has not been accrued in these Annual Accounts. The dividendpayment will amount to some £293,000. 2007 2006 £'000 £'000Ordinary dividends on equity sharesFinal dividend of 1.5p per ordinary share paid on 24 March 2006 - 215Interim dividend of 1.0p per ordinary share paid on 30 June 2006 - 145Final dividend of 2.0p per ordinary share paid on 16 March 2007 293 -Interim dividend of 1.0p per ordinary share paid on 29 June 2007 146 - 439 360 5. Earnings per share Basic earnings per share (EPS) is calculated by dividing the profit attributableto ordinary equity holders of the Company by the weighted average number ofordinary shares in issue during the year. All activities are continuingoperations and therefore there is no difference between EPS arising from totaloperations and EPS arising from continuing operations. Weighted Weighted average Restated average Restated number Earnings number Earnings Earnings of shares per share Earnings of shares per share 30 September 30 September 30 September 30 September 30 September 30 September 2007 2007 2007 2006 2006 2006 £'000 thousands pence £'000 thousands pence Profit on ordinaryactivities aftertaxation attributableto ordinary equityholders 541 14,640 3.7 1,120 14,414 7.8 Basic EPS 541 14,640 3.7 1,120 14,414 7.8 The weighted average number of shares for diluted EPS is calculated by includingthe weighted average number of shares under option. Weighted Weighted average Restated average Restated number Earnings number Earnings Earnings of shares per share Earnings of shares per share 30 September 30 September 30 September 30 September 30 September 30 September 2007 2007 2007 2006 2006 2006 £'000 thousands pence £'000 thousands pence Profit on ordinary activities after taxation attributable to ordinary equity holders 541 14,640 3.7 1,120 14,414 7.8 Weighted average number of shares under option - 147 - - 220 (0.1) Diluted EPS 541 14,787 3.7 1,120 14,634 7.7 During the year 21,818 ordinary shares with an aggregate nominal value of £218were allocated for cash at 110p each on the exercise of one option. 6. Notes to the statement of Group cashflows (a) Reconciliation of operating profit to net cash inflow from operatingactivities Restated 2007 2006 £'000 £'000Operating profit 707 1,326Depreciation 490 429Amortisation 269 266Profit on sale of fixed assets (1) (5)Share options charge 46 39Gross cash inflows 1,511 2,055Increase in stocks (122) (505)Increase in debtors (96) (216)Increase in creditors 55 195Net cash inflow from operating activities 1,348 1,529 (b) Analysis of net debt 2006 Cashflows 2007 £'000 £'000 £'000Cash at bank and in hand 493 (353) 140Bank loan - chattel mortgage (83) 76 (7)Bank loan - property (712) 58 (654)Finance lease (78) 78 -Hire purchase agreements - (1,123) (1,123)Net debt (380) (1,264) (1,644) 7. Report and Accounts The Board approved the preliminary release for the year ended 30 September 2007on Monday 10 December 2007. The above unaudited results do not representstatutory accounts. The audit report is yet to be signed. The audited accountswill be mailed to shareholders shortly and will be available from the registeredoffice at Whiteley Road, Blaydon on Tyne, Tyne & Wear, NE21 5NJ. The results for the year ended 30 September 2006 have been extracted from the2006 accounts of Zytronic plc, which have been restated following the adoptionof FRS20, share-based payment, in the accounts for the year ended 30 September2007. The 2006 accounts, which have been filed with the Registrar of Companies,received an unqualified audit report and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. 8. AGM Date It is intended that the AGM will take place at the Company's offices at WhiteleyRoad, Blaydon on Tyne, Tyne & Wear, NE21 5NJ on Tuesday 19 February 2008 at2.00pm. Notice of the AGM will be sent to shareholders with the financialstatements. This information is provided by RNS The company news service from the London Stock Exchange