Last checked at 9 Dec 2009 07:00
| For Immediate Release | 9 December 2009 |
Zytronic plc
Preliminary Results for the year ended 30 September 2009 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors and optical filters for electronic displays, announces its preliminary results for the year ended 30 September 2009.
Highlights
Financial
Group revenue of £15.9m increased by 8.2% (2008: £14.7m)
Growth of 18.2% in touch sensor sales
Profit before tax increased by 32.2% to £2.3m (2008: £1.7m)
EPS increased by 58.9% to 11.6p (2008: 7.3p)
Final dividend proposed of 3.8p - total for year increased by 25.0% to 5.0p (2008: 4.0p)
Operational
Zypos® touch sensor sales increased by 54.9%
Export sales now represent 85.9% of Group sales (2008: 79.4%)
Zypos® sensors selected for The Coca-Cola Freestyle™ self-serve fountain dispenser
First approvals received in the white goods sector
Commenting on the results, Chairman, John Kennair said:
"Continuing growth in touch sensor sales, particularly in the gaming, vending and ATM markets, combined with the first products now being specified into the white goods sector, give the Directors confidence that, even in these challenging conditions, the Group will continue to grow and prosper in the years ahead."
Enquiries:
| Zytronic plc | (Today: 020 7466 5000; Thereafter 0191 414 5511) |
| Mark Cambridge, Chief Executive | |
| Denis Mullan, Finance Director | |
| Buchanan Communications Ltd | 020 7466 5000 |
| Richard Darby, Ben Romney | |
| Brewin Dolphin Ltd | |
| Andrew Emmott, Neil McDonald | 0845 270 8610 |
Notes to Editors
Zytronic is the developer and manufacturer of a unique range of internationally award-winning touch sensor products. These products employ an embedded sensing element and are based on projected capacitive technology ("PCT™"). PCT offers significant durability, environmental stability and optical enhancement benefits to system designers of integrated electronic displays.
Zytronic is also an industry leader in the development and manufacture of customised optical filters to enhance electronic display performance and an innovator in the production of specialised and transparent laminates for niche markets.
Operating from three modern factories near Newcastle-upon-Tyne in the United Kingdom, Zytronic assembles touch sensors, optical filters and other laminates, using special glass and plastic materials, in environmentally controlled clean rooms.
CHAIRMAN'S STATEMENT
I am pleased to be able to report good trading results for the year ended 30 September 2009 in the teeth of what is probably the worst financial crisis on record.
Results
Turnover for the year under review has increased by 8.2% to £15.9m (2008: £14.7m). Gross margins improved by 1.8% to 34.0% (2008: 32.2%) leading to a 32.2% increase in pre-tax profits at £2.30m (2008: £1.74m) with reported basic earnings per share rising 58.9% to 11.6p per share (2008: 7.3p per share).
Trading
Sales growth of 8.2% has been led by a strong increase in touch sensor sales which have increased by 18.2% to £10.0m in 2009 (2008: £8.5m) and now represent a healthy 63% (2008: 58%) of the Group's total sales, whilst other products have reduced by 6% against the corresponding period last year.
The growth in exports, which now represent 86.2% of the Group's total sales (2008: 79.6%), particularly in the markets of Asia Pacific and EMEA, has made a major contribution to the improved trading performance. The split is as follows:
| 2009 | 2008 | 2007 | |
| £m | £m | £m | |
| UK | 2.2 | 3.0 | 4.1 |
| Americas | 3.0 | 3.3 | 2.6 |
| EMEA (excluding UK) | 7.4 | 6.1 | 3.6 |
| Asia Pacific | 3.3 | 2.3 | 1.1 |
| TOTAL | 15.9 | 14.7 | 11.4 |
The Group's natural hedging reduces the impact of currency fluctuations; 45% of total sales are invoiced in currencies other than Sterling (Dollars and Euros) with more than 60% of material purchases in those currencies.
In addition, and more importantly for the longer term, the efficiencies that are now being achieved in the new manufacturing facilities have improved margins.
Sales of ZYPOS® sensors have grown by 54.9% over the last year, the growth coming from gaming, in the form of wagering and betting terminals, vending machines, and dispensing machines.
As announced in July of this year, Zytronic's touch sensors were selected for use in the innovative Coca-Cola Freestyle™ self-serve fountain dispenser. This product is now entering production and volumes are expected to increase over the course of 2010/11. In addition, the first approvals have been received in the white goods sector and it is anticipated that this will start to impact towards the end of the 2010 financial year.
Cash
The Group continues to generate significant cashflow from operating activities, which increased by 25% to £2.5m (2008: £2.0m).
During the course of the year, the Group took advantage of the disruption in the commercial property market and low interest rates to purchase, for the sum of £3.5m, the freehold and long leasehold of its two leased properties. These purchases were part financed by a term loan of £2.25m repayable over ten years. This led to an increase in the gearing ratio to 31% (2008: 11%).
At the year end, the Group had net cash balances of £0.1m (2008: £0.7m) and unused banking facilities at its disposal of £2.4m.
Dividend
The Directors are pleased to recommend a final dividend of 3.8p per share payable on 26 February 2010 to shareholders on the Register of Members on 12 February 2010. Following a dividend of 1.2p per share paid on 26 June 2009, this will bring the total dividend for the year to 5.0p per share (2008: 4.0p per share).
Outlook
The global economic outlook over the next two years will undoubtedly be very challenging. Whilst the Directors anticipate that this will impact on the sales of some of the Group's products, continuing growth in touch sensor sales, particularly in the gaming, vending and ATM markets, combined with the first products now being specified into the white goods sector, give the Directors confidence that, even in these challenging conditions, the Group will continue to grow and prosper in the years ahead.
John M Kennair MBE
Chairman 9 December 2009
Consolidated income statement for the year ended 30 September 2009
| Unaudited | |||
| 30 September | 30 September | ||
| 2009 | 2008 | ||
| Notes | £'000 | £'000 | |
| Group revenue | 15,921 | 14,717 | |
| Cost of sales | 10,514 | 9,978 | |
| Gross profit | 5,407 | 4,739 | |
| Distribution costs | 183 | 217 | |
| Administration expenses | 2,850 | 2,675 | |
| Group trading profit | 2,374 | 1,847 | |
| Other operating income | 20 | 27 | |
| Group operating profit from continuing operations | 2,394 | 1,874 | |
| Finance costs | (98) | (146) | |
| Finance revenue | 4 | 12 | |
| Profit from continuing operations | 2,300 | 1,740 | |
| Tax expense | 3 | (593) | (677) |
| Profit for the year from continuing operations | 1,707 | 1,063 | |
| Earnings per share | |||
| Earnings per share - basic | 5 | 11.6p | 7.3p |
| Earnings per share - diluted | 5 | 11.5p | 7.2p |
Consolidated statement of recognised income and expense
for the year ended 30 September 2009
| Unaudited | ||
| 30 September | 30 September | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Income and expense recognised directly in equity | ||
| Current tax recognised directly in equity | - | 5 |
| Deferred tax recognised directly in equity | (4) | (7) |
| Net expense recognised directly in equity | (4) | (2) |
| Profit for the year | 1,707 | 1,063 |
| Total recognised income and expense for the year | 1,703 | 1,061 |
Consolidated balance sheet at 30 September 2009
| Unaudited | |||
| 30 September | 30 September | ||
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Assets | |||
| Non-current assets | |||
| Intangible assets | 1,974 | 2,058 | |
| Property, plant and equipment | 8,375 | 5,315 | |
| Trade and other receivables | 210 | 210 | |
| 10,559 | 7,583 | ||
| Current assets | |||
| Inventories | 2,503 | 2,496 | |
| Trade and other receivables | 3,110 | 3,039 | |
| Cash and short term deposits | 739 | 1,260 | |
| 6,352 | 6,795 | ||
| Total assets | 16,911 | 14,378 | |
| Equity and liabilities | |||
| Current liabilities | |||
| Trade and other payables | 1,306 | 1,480 | |
| Financial liabilities | 1,442 | 1,182 | |
| Accruals and deferred income | 574 | 533 | |
| Taxation liabilities | 300 | 341 | |
| 3,622 | 3,536 | ||
| Non-current liabilities | |||
| Financial liabilities | 2,428 | 1,088 | |
| Deferred tax liabilities (net) | 820 | 817 | |
| Government grants | 43 | 55 | |
| 3,291 | 1,960 | ||
| Total liabilities | 6,913 | 5,496 | |
| Net assets | 9,998 | 8,882 | |
| Capital and reserves | |||
| Equity share capital | 147 | 147 | |
| Share premium | 6,479 | 6,479 | |
| Revenue reserve | 3,372 | 2,256 | |
| Total equity | 9,998 | 8,882 | |
Consolidated cashflow statement for the year ended 30 September 2009
|
| |||
| Unaudited | |||
| 30 September | 30 September | ||
| 2009 | 2008 | ||
| £'000 | £'000 | ||
| Operating activities | |||
| Profit before tax | 2,300 | 1,740 | |
| Net interest expense | 94 | 134 | |
| Depreciation of property, plant and equipment | 613 | 565 | |
| Amortisation of intangible assets | 307 | 310 | |
| Amortisation of government grant | (12) | (5) | |
| Share-based payments | 29 | 34 | |
| Increase in inventories | (7) | (668) | |
| Increase in trade and other receivables | (59) | (301) | |
| (Decrease)/Increase in trade and other payables | (137) | 166 | |
| Cash generated from operations | 3,128 | 1,975 | |
| Taxation (paid)/repayments | (646) | 13 | |
| Net cashflow from operating activities | 2,482 | 1,988 | |
| Investing activities | |||
| Interest received | 4 | 12 | |
| Receipt of government grant | - | 60 | |
| Purchases of property, plant and equipment | (3,673) | (605) | |
| Payments to acquire intangible assets | (223) | (246) | |
| Net cashflow from investing activities | (3,892) | (779) | |
| Financing activities | |||
| Interest paid | (94) | (141) | |
| Dividends paid to equity shareholders of the parent | (616) | (440) | |
| Proceeds from share issues re options | - | 6 | |
| New borrowings | 2,217 | 438 | |
| Repayment of borrowings | (163) | (96) | |
| Repayment of capital element of hire purchase contracts | (476) | (465) | |
| Net cashflow from financing activities | 868 | (698) | |
| (Decrease)/Increase in cash and cash equivalents | (542) | 511 | |
| Cash and cash equivalents at the beginning of the year | 651 | 140 | |
| Cash and cash equivalents at the year end | 109 | 651 | |
Notes to the preliminary results for the year ended 30 September 2009
1. Statement of compliance
The group results have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted for use in the European Union and as applied in accordance with the provisions of the Companies Act 2006.
2. Basis of consolidation and goodwill
The group results comprise the financial statements of Zytronic plc and its subsidiaries as at 30 September each year. They are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000) except where otherwise indicated.
3. Taxation
| Unaudited | ||
| 30 September | 30 September | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Current tax | ||
| UK corporation tax | (602) | (346) |
| Corporation tax over-provided in prior years | 10 | - |
| Total current tax charge | (592) | (346) |
| Deferred tax | ||
| Effect of change in tax rates and legislation on industrial buildings | - | (174) |
| Origination and reversal of temporary differences | (1) | (157) |
| Total deferred tax | (1) | (331) |
| Tax charge in the income statement | (593) | (677) |
Tax relating to items charged or credited to equity
| Unaudited | ||
| 30 September | 30 September | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Current tax | ||
| Tax on share-based payment | - | 5 |
| Total current tax credit | - | 5 |
| Deferred tax | ||
| Tax on share-based payment | (4) | (7) |
| Total deferred tax charge | (4) | (7) |
| Tax charge in the statement of recognised income and expense | (4) | (2) |
Reconciliation of the total tax charge
The effective tax rate of the tax expense in the income statement for the year is 26% compared with the standard rate of corporation tax in the UK of 28% (2008: 29%). The differences are reconciled below:
| Unaudited | ||
| 30 September | 30 September | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Accounting profit before tax | 2,300 | 1,740 |
| Accounting profit multiplied by the UK standard rate of corporation tax of 28% (2008: 29%) | 644 | 505 |
| Effects of; | ||
| Expenses not deductible for tax purposes | 14 | 24 |
| Depreciation in respect of non-qualifying items | 40 | 37 |
| Enhanced tax reliefs | (95) | (64) |
| Effect of changes in legislation on industrial buildings | - | 204 |
| Differences in tax rates | - | (29) |
| Tax over-provided in prior years | (10) | - |
| Total tax expense reported in the income statement | 593 | 677 |
Factors that may affect future tax charges
Under current tax legislation, some of the amortisation of licences will continue to be non-deductible for tax purposes.
Under HMRC's R&D tax credit scheme, the Group will receive an annual uplift of 75% on qualifying R&D expenditure for tax purposes. Until the financial year 2006, where R&D expenditure has been capitalised, the benefit of this uplift is only recognised as the asset is amortised. The unrecognised element, relating to the year ended 30 September 2005 and prior, at 30 September 2009 was £80,000 (2008: £100,000). Following changes to HMRC's rules which took effect for financial year 2006, the uplift on expenditure which has been capitalised in any year is recognised in that year.
The "gain" on the exercise of share options, being the difference between the grant/exercise price and the market value at the time of exercise, is allowable as a taxable deduction from profits although it is not reflected within the income statement. These gains will arise in future years but their timing and amount is uncertain.
There are no tax losses carried forward at 30 September 2009 (2008: £Nil).
4. Dividends
The Directors propose the payment of a final dividend of 3.8p per share (2008: 3.0p), payable on 26 February 2010 to shareholders on the Register on 12 February 2010. This dividend has not been accrued in these financial statements. The dividend payment will amount to some £560,000.
| Unaudited | ||
| 30 September | 30 September | |
| 2009 | 2008 | |
| £'000 | £'000 | |
| Ordinary dividends on equity shares | ||
| Final dividend of 2.0p per ordinary share paid on 16 March 2008 | - | 293 |
| Interim dividend of 1.0p per ordinary share paid on 29 June 2008 | - | 147 |
| Final dividend of 3.0p per ordinary share paid on 9 March 2009 | 440 | - |
| Interim dividend of 1.2p per ordinary share paid on 26 June 2009 | 176 | - |
| 616 | 440 |
5. Earnings per share
Basic earnings per share ("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 year. All activities are continuing operations and therefore there is no difference between EPS arising from total operations and EPS arising from continuing operations.
| Unaudited | ||||||
| Weighted | Weighted | |||||
| average | average | |||||
| Unaudited | number | Unaudited | number | |||
| Earnings | of shares | EPS | Earnings | of shares | EPS | |
| 30 September | 30 September | 30 September | 30 September | 30 September | 30 September | |
| 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence | |
| Profit on ordinary activities after taxation | 1,707 | 14,674 | 11.6 | 1,063 | 14,667 | 7.3 |
| Basic EPS | 1,707 | 14,674 | 11.6 | 1,063 | 14,667 | 7.3 |
The weighted average number of shares for diluted EPS is calculated by including the weighted average number of shares under option.
| Unaudited | ||||||
| Weighted | Weighted | |||||
| average | average | |||||
| Unaudited | number | Unaudited | number | |||
| Earnings | of shares | EPS | Earnings | of shares | EPS | |
| 30 September | 30 September | 30 September | 30 September | 30 September | 30 September | |
| 2009 | 2009 | 2009 | 2008 | 2008 | 2008 | |
| £'000 | Thousands | Pence | £'000 | Thousands | Pence | |
| Profit on ordinary activities after taxation attributable to ordinary equity holders | 1,707 | 14,674 | 11.6 | 1,063 | 14,667 | 7.3 |
| Weighted average number of shares under option | - | 79 | (0.1) | - | 110 | (0.1) |
| Diluted EPS | 1,707 | 14,753 | 11.5 | 1,063 | 14,777 | 7.2 |
6. Report and accounts
The Board approved the preliminary release for the year ended 30 September 2009 on Tuesday 8 December 2009. The above unaudited results do not represent statutory accounts. The audit report is yet to be signed. The audited accounts will be mailed to shareholders shortly, will be available from the registered office at Whiteley Road, Blaydon on Tyne, Tyne & Wear, NE21 5NJ and will be put onto the Group's website www.zytronic.co.uk.
The results for the year ended 30 September 2008 have been extracted from the 2008 accounts of Zytronic plc. The 2008 accounts, which have been filed with the Registrar of Companies, received an unqualified audit report and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.
7. AGM date
It is intended that the AGM will take place at the Company's offices at Whiteley Road, Blaydon on Tyne, Tyne & Wear, NE21 5NJ on Thursday 11 February 2010 at 2.00pm. Notice of the AGM will be sent to shareholders with the financial statements.