REG - Zytronic PLC - Interim Results
RNS Number : 1503YZytronic PLC11 May 2021
11 May 2021
Zytronic plc
("Zytronic" or the "Company" and, together
with its subsidiaries, the "Group")
Interim Results for the six months ended 31 March 2021 (unaudited)
Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2021. Comparative data is given for the six months ended 31 March 2020, except where indicated.
Overview
· Group revenue of £4.8m (2020: £7.4m), impacted by the Coronavirus pandemic
· EBITDA of £0.2m (2020: £1.0m)
· Loss before tax of £0.3m (2020: profit of £0.5m)
· Basic (loss)/earnings per share of (1.2)p (2020: 2.5p)
· Positive operating cashflow of £0.4m (2020: £1.9m)
· Net cash of £7.8m (30 September 2020: £14.0m), after payment of £6.7m in respect of the return of capital
Commenting on the results, Tudor Davies, Chairman said:
"Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post COVID-19."
Enquiries:
Zytronic plc
Mark Cambridge, Chief Executive
Claire Smith, Group Finance Director
0191 414 5511
N+1 Singer (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.
Chairman's statement
Introduction
In the January trading update, we explained that sales continued to be badly affected by the Coronavirus pandemic, but the prior year's reorganisation and cost reduction measures were enabling us to maintain a positive EBITDA, and there were some signs of an improvement in the order intake.
We are pleased to report a continuation of the improvement in order intake and sales during the remainder of the first half to 31 March 2021, and now expect a gradual return to profitability as long as the Coronavirus pandemic continues to be controlled in our major markets of Europe, Asia and the Americas.
Trading
Revenues for the half year ended 31 March 2021 were £4.8m (2020: £7.4m), with gross margin of 27.0% (2020: 30.3%), EBITDA of £0.2m (2020: £1.0m) and after depreciation and amortisation the loss before tax was £0.3m (2020: profit of £0.5m).
Whilst the drop in revenues of 35% is significant when compared with the same period last year, the comparison with a pre-COVID-19 period only provides an indicator of more normal historic trading levels. A better indicator of progress at this stage is the order intake, and from April last year we had continued to experience a consistently low order intake level. However, from January onwards we have seen an improving monthly average order intake, and it is particularly pleasing that the Gaming and Financial sectors have made a major contribution to the improvement.
Cash position
The Board decided that the £14.0m cash balances as at 30 September 2020, arising from the Company's 16-year record of unbroken profitability prior to the pandemic, and despite a 15-year unbroken dividend, should provide the opportunity for shareholders to either participate in a return of surplus cash, or to maintain their shareholdings.
Following the conclusion of the Tender Offer on 25 February 2021, the number of shares in issue reduced by 28.8% to 11,419,152 as 4,624,889 shares were purchased at a price of 145p and a cost of £6.7m.
We continue to be in a strong financial position with cash balances of £7.8m (30 September 2020: £14.0m) and are pleased that despite the considerable downturn we have generated £0.4m.
Outlook
Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post-COVID-19.
Tudor Davies
Chairman
11 May 2021
Consolidated statement of comprehensive income
Unaudited results for the six months to 31 March 2021
Six months to
Six months to
Year to
31 March
31 March
30 September
2021
2020
2020
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'000
Group revenue
4,784
7,378
12,680
Cost of sales
(3,490)
(5,146)
(10,130)
Cost of sales excluding exceptional items
(3,490)
(5,146)
(9,015)
Exceptional items
3a
-
-
(1,115)
Gross profit
1,294
2,232
2,550
Distribution costs
(66)
(135)
(196)
Administration expenses
(1,542)
(1,679)
(3,318)
Administration expenses excluding exceptional items
(1,542)
(1,679)
(3,060)
Exceptional items
3b
-
-
(258)
Group trading (loss)/profit
(314)
418
(964)
Exceptional other income
4
-
-
500
Group operating (loss)/profit
(314)
418
(464)
Finance revenue
-
40
41
(Loss)/profit before tax
(314)
458
(423)
Tax credit/(expense)
5
130
(64)
129
(Loss)/profit for the period
(184)
394
(294)
(Loss)/earnings per share
Basic
6
(1.2)p
2.5p
(1.8)p
Diluted
6
(1.2)p
2.5p
(1.8)p
All activities are from continuing operations.
Consolidated statement of changes in equity
Unaudited results for the six months to 31 March 2021
Called up
share
Share
Retained
capital
premium
earnings
Total
£'000
£'000
£'000
£'000
At 1 October 2020
160
8,994
13,911
23,065
Loss for the period
-
-
(184)
(184)
Repurchase and cancellation of shares
(46)
-
(6,660)
(6,706)
At 31 March 2020 (unaudited)
114
8,994
7,067
16,175
Consolidated statement of financial position
Unaudited results at 31 March 2021
At
At
At
31 March
31 March
30 September
2021
2020
2020
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'000
Assets
Non-current assets
Intangible assets
875
1,208
1,043
Property, plant and equipment
5,490
6,126
5,820
6,365
7,334
6,863
Current assets
Inventories
1,621
2,713
2,332
Trade and other receivables
1,912
3,357
1,888
Derivative financial assets
8
-
-
Cash and short term deposits
8
7,752
12,369
14,038
11,293
18,439
18,258
Total assets
17,658
25,773
25,121
Equity and liabilities
Current liabilities
Trade and other payables
489
650
591
Derivative financial liabilities
-
93
-
Provisions
-
-
582
Accruals
489
636
376
Government grants
25
-
27
Tax liabilities
-
125
-
1,003
1,504
1,576
Non-current liabilities
Deferred tax liabilities (net)
480
516
480
480
516
480
Total liabilities
1,483
2,020
2,056
Net assets
16,175
23,753
23,065
Capital and reserves
9
Equity share capital
114
160
160
Share premium
8,994
8,994
8,994
Retained earnings
7,067
14,599
13,911
Total equity
16,175
23,753
23,065
Consolidated cashflow statement
Unaudited results for the six months to 31 March 2021
Six months to
Six months to
Year to
31 March
31 March
30 September
2021
2020
2020
Unaudited
Unaudited
Audited
Notes
£'000
£'000
£'000
Operating activities
(Loss)/profit before tax
(314)
458
(423)
Finance income
-
(40)
(41)
Depreciation and impairment of property, plant and
equipment
333
365
718
Amortisation, impairment and write-off of intangible assets
188
213
457
Amortisation of government grant
(2)
-
(442)
Fair value movement on foreign exchange forward contracts
8
72
(21)
Working capital adjustments
Decrease in inventories
711
321
702
Decrease in trade and other receivables
47
770
2,360
(Decrease)/increase in trade and other payables and provisions
(589)
(170)
88
Cash generated from operations
382
1,989
3,398
Tax received/(paid)
61
(127)
(220)
Net cashflow from operating activities
443
1,862
3,178
Investing activities
Interest received
-
31
41
Payments to acquire property, plant and equipment
(3)
(106)
(153)
Payments to acquire intangible assets
(20)
(122)
(201)
Net cashflow used in investing activities
(23)
(197)
(313)
Financing activities
Dividends paid to equity shareholders of the Parent
-
(2,439)
(2,439)
Receipt of government grants
-
-
469
Repurchase and cancellation of shares
(6,706)
-
-
Net cashflow used in financing activities
(6,706)
(2,439)
(1,970)
(Decrease)/increase in cash and cash equivalents
(6,286)
(774)
895
Cash and cash equivalents at the beginning of the period
14,038
13,143
13,143
Cash and cash equivalents at the end of the period
8
7,752
12,369
14,038
Notes to the interim report
Unaudited results for the six months to 31 March 2021
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 2021 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 2020 annual report and financial statements.
The financial information for the six months to 31 March 2021 and the comparative financial information for the six months to 31 March 2020 have not been audited. The comparative financial information for the year ended 30 September 2020 has been extracted from the 2020 annual report and financial statements.
The annual report and financial statements for the year ended 30 September 2020, which were approved by the Board of Directors on 7 December 2020, 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 2021.
3. Exceptional costs
(a) Cost of sales
Six months to 31 March
Six months to 31 March
Year to 30 September
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Costs of restructuring
-
-
652
Costs of Furlough
-
-
463
Total exceptional costs
-
-
1,115
These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.
(b) Administration expenses
Six months to 31 March
Six months to 31 March
Year to 30 September
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Costs of restructuring
-
-
144
Costs of Furlough
-
-
114
Total exceptional costs
-
-
258
These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.
4. Exceptional other income
Six months to 31 March
Six months to 31 March
Year to 30 September
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Grant monies received
-
-
500
Total grant monies received
-
-
500
The income received and accrued as above is as a result of claims made under the CJRS for when personnel were on Furlough leave.
5. Tax charge on (loss)/profit on ordinary activities
The estimated tax rate for the year of 41% has been applied to the half year's loss before tax, in accordance with the Auditing Standards Board's statement on interim reports.
6. (Loss)/earnings per share ("LPS" / "EPS")
Basic LPS/EPS is calculated by dividing the (loss)/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 LPS/EPS arising from total operations and LPS/EPS arising from continuing operations.
For the six months to 31 March 2021 and 2020
Weighted
Weighted
average
average
number
number
Loss
of shares
LPS
Earnings
of shares
EPS
31 March
31 March
31 March
31 March
31 March
31 March
2021
2021
2021
2020
2020
2020
£'000
Thousands
Pence
£'000
Thousands
Pence
(Loss)/profit on ordinary activities after tax
(184)
15,273
(1.2)
394
16,044
2.5
Basic LPS/EPS
(184)
15,273
(1.2)
394
16,044
2.5
The weighted average number of shares for diluted LPS/EPS is calculated by including the weighted average number of shares under option.
Weighted
Weighted
average
average
number
number
Loss
of shares
LPS
Earnings
of shares
EPS
31 March
31 March
31 March
31 March
31 March
31 March
2021
2021
2021
2020
2020
2020
£'000
Thousands
Pence
£'000
Thousands
Pence
(Loss)/profit on ordinary activities after tax
(184)
15,273
(1.2)
394
16,044
2.5
Weighted average number of shares under option
-
-
-
-
-
-
Diluted LPS/EPS
(184)
15,273
(1.2)
394
16,044
2.5
For the year to 30 September 2020
Weighted
average
number
Loss
of shares
LPS
30 September
30 September
30 September
2020
2020
2020
£'000
Thousands
Pence
Loss on ordinary activities after tax
(294)
16,044
(1.8)
Basic LPS
(294)
16,044
(1.8)
The weighted average number of shares for diluted LPS is calculated by including the weighted average number of shares under option.
Weighted
average
number
Loss
of shares
LPS
30 September
30 September
30 September
2020
2020
2020
£'000
Thousands
Pence
Loss on ordinary activities after tax
(294)
16,044
(1.8)
Weighted average number of shares under option
-
-
-
Diluted LPS
(294)
16,044
(1.8)
7. Dividends
Under the present circumstances, the Directors consider that it is appropriate to defer returns to shareholders until there is clear evidence of a return towards normality. Accordingly, no interim dividend is proposed for the period (2020: Nil). The table below reflects historic dividend payments.
Six months to 31 March
Six months to 31 March
Year to 30 September
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Ordinary dividends on equity shares
Final dividend of 15.2p per ordinary share paid on
7 February 2020
-
2,439
2,439
-
2,439
2,439
8. Cash and cash equivalents
Six months to 31 March
Six months to 31 March
Year to 30 September
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Cash at bank and in hand
7,752
12,369
14,038
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
2021
2020
2020
Unaudited
Unaudited
Audited
£'000
£'000
£'000
Cash at bank and in hand
7,752
9,839
11,503
Short term deposits
-
2,530
2,535
7,752
12,369
14,038
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 2021 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in July 2021.
The fair value of cash and cash equivalents is £7.8m (2020: £12.4m).
9. 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.
10. Availability of the interim report
A copy of the interim report and interim results presentation is 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.
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