Interim Results

Zytronic PLC 21 May 2002 ZYTRONIC PLC Interim Results for the Six Months to 31 March 2002 Zytronic Plc, a specialist manufacturer of touch screens and optical filters for electronic displays, announces its results for the six months to 31 March 2002. HIGHLIGHTS • Interim loss before tax £475,000 (March 2001: Profit £273,000) - in line with expectations • Dividend maintained at 0.5p per share • BT web telephone system - production commenced • Zytouch sales increased by 26% • Traditional business being restored to last year's levels • Further substantial contracts anticipated in the second half John Kennair, Chairman of Zytronic commented: 'Our new touch screen technology, ZYTOUCH, has been well received in the market place. Importantly, ZYTOUCH has been specified by BT for their web telephone system - the world's largest network of public access internet terminals. We have commenced production and BT anticipate the roll out of the project to be 28,000 units. 'ZYTOUCH continues to be successfully specified in qualification programmes in all targeted market sectors and the Directors anticipate that further substantial contracts will be secured in the second half of this year. The strengthening of the traditional order book to the levels of last year, combined with existing ZYTOUCH contracts and the ongoing success in the qualification programmes, lead the Directors to remain optimistic about the future prospects of the group.' 21 May 2002 ENQUIRIES: Zytronic Plc Tel: 0191 414 5511 John Kennair, Chairman College Hill Tel: 0207 457 2020 Michael Padley Nicholas Nelson CHAIRMAN'S STATEMENT In the past six months Zytronic has continued to progress a number of touch screen projects in the sectors of financial services, telecommunications, gaming and interactive kiosks. Amongst these projects, the new touch screen technology, ZYTOUCH, has been specified by BT for their web telephone system which is the world's largest network of public access internet terminals. Production has now commenced and BT anticipate the roll out of the project to be 28,000 units. Trading In comparison with the same trading period last year sales of ZYTOUCH have grown by 26%. However, with the decline in the electronics sector generally in this period, group sales of traditional products fell by 37% and this is the main reason for a 24% reduction in sales to £2,070,000 for the period under review. Order levels have now returned to the volumes of last year. In my statement to shareholders in December 2001, I indicated that the delays in securing the initial contracts for ZYTOUCH, combined with the increase in management costs to strengthen the general management and improve the sales and marketing of ZYTOUCH, would lead to a substantial reduction in profitability in the first half of this year. In our announcement on 25 April 2002, I explained that these factors have combined with the fall in the traditional business to produce a pre-tax loss of £475,000 in the six months to 31 March 2002. During this period strict control of working capital enabled cash outflow from operating activities to be limited to £11,000 and, in accordance with our plans, we expended a further £709,000 to substantially complete the ZYTOUCH capital investment programme. With the return to more normal sales levels the Directors anticipate that there will be a significant improvement in the second half. Dividend Having regard to the recovery of the order book for traditional products and the continued progress of ZYTOUCH, the Directors have declared an unchanged interim dividend of 0.5p per share payable on 21 June 2002 to shareholders on the register at 7 June 2002. Outlook ZYTOUCH continues to be successfully specified in qualification programmes in all targeted market sectors and the Directors anticipate that further substantial contracts will be secured in the second half of this year. The strengthening of the traditional order book to the levels of last year, combined with existing ZYTOUCH contracts and the ongoing success in the qualification programmes, lead the Directors to remain optimistic about the future prospects of the group. John M Kennair Chairman 21 May 2002 GROUP PROFIT AND LOSS ACCOUNT Year to Notes Six months to 31 March 30 September 2002 2001 2001 Unaudited Unaudited Unaudited (see note 1) £'000 £'000 £'000 Turnover 2,070 2,736 5,785 Cost of sales 1,620 1,700 3,610 Gross profit 450 1,036 2,175 Distribution costs 26 35 54 Administrative expenses 906 763 1,415 932 798 1,469 Operating (loss)/profit (482) 238 706 Interest payable (4) (11) (17) Interest receivable 11 46 74 (Loss)/profit on ordinary activities before taxation (475) 273 763 Tax credit/(charge) on loss/profit on ordinary activities 123 (88) (225) (Loss)/profit on ordinary activities after taxation (352) 185 538 Ordinary dividend on equity shares 3 71 71 179 Retained (loss)/profit for the period (423) 114 359 (Loss)/earnings per share - basic 4 (2.5)p 1.3p 3.8p - diluted 4 (2.5)p 1.3p 3.7p STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES £'000 £'000 £'000 (Loss)/profit for the financial year (352) 185 538 Total recognised gains and losses relating to the period (352) 185 538 Prior year adjustment 5 (30) Total gains and losses recognised since last annual report (382) GROUP BALANCE SHEET 31 March 30 September 2002 2001 2001 Unaudited Unaudited Unaudited (see note 1) £'000 £'000 £'000 Fixed assets Intangible assets 2,305 2,310 2,248 Tangible assets 2,746 1,620 2,632 5,051 3,930 4,880 Current assets Stocks 936 963 982 Debtors: Amounts falling due within one year 1,183 1,159 1,421 Cash at bank and in hand 314 1,708 1,156 2,433 3,830 3,559 Creditors: amounts falling due within one year 865 1,031 1,397 Net current assets 1,568 2,799 2,162 Total assets less current liabilities 6,619 6,729 7,042 Creditors: amounts falling due after more than one year - 11 - Provisions for liabilities and charges Deferred tax (2001 adjusted - see note 5) 184 30 184 Deferred consideration - 75 - 6,435 6,613 6,858 Capital and reserves Called up share capital 143 143 143 Share premium 6,212 6,212 6,212 Merger reserve (31) (31) (31) Profit and loss account (2001 adjusted - see note 5) 111 289 534 Equity shareholders' funds 6,435 6,613 6,858 GROUP STATEMENT OF CASHFLOWS Year to Notes Six months to 31 March 30 September 2002 2001 2001 Unaudited Unaudited Unaudited (see note 1) £'000 £'000 £'000 Net cash (outflow)/inflow from operating activities 6a (11) 230 679 Returns on investments and servicing of finance Interest received 11 49 76 Interest paid (3) (7) (6) Interest element of finance lease rental (1) (4) (11) payments 7 38 59 Taxation Corporation tax received/(paid) 14 (116) (116) Capital expenditure and financial investment Payments to acquire intangible fixed assets (33) - (86) Payments to acquire tangible fixed assets (676) (389) (1,190) Receipts from sales of tangible fixed assets - 5 6 (709) (384) (1,270) Equity dividends paid (108) (143) (214) Net cash outflow before financing (807) (375) (862) Financing Repayment of long term loans (6) (5) (10) Repayment of capital element of finance leases and hire purchase contracts (29) (71) (129) (35) (76) (139) Decrease in cash (842) (451) (1,001) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Decrease in cash (842) (451) (1,001) Repayment of long term loans 6 5 10 Net repayments of capital element of finance leases and hire purchase contracts 29 71 129 Movement in net funds (807) (375) (862) Net funds at beginning of period 1,105 1,967 1,967 Net funds at end of period 6b 298 1,592 1,105 NOTES 1. Basis of preparation The financial information in this interim statement is prepared under the historical cost convention and in accordance with applicable accounting standards. It does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the full preceding year is based on the statutory accounts for the year to 30 September 2001, as adjusted for the change in accounting for deferred taxation referred to in note 5. Those accounts, upon which the auditors issued an unqualified opinion, have been delivered to the Registrar of Companies. The interim financial information has been prepared on the basis of the accounting policies set out in the Group's statutory accounts for the year ended 30 September 2001, as adjusted for the change in accounting for deferred taxation referred to in note 5. The taxation credit is calculated by applying the Directors' best estimate of the annual tax rate to the loss for the period. Other expenses are accrued in accordance with the same principles used in the preparation of the annual accounts. 2. Basis of consolidation The Group results consolidate the accounts of Zytronic Plc and all its subsidiary undertakings drawn up to 31 March 2002. 3. Dividends An interim dividend of 0.5p per share is payable on 21 June 2002 to shareholders on the register at 7 June 2002. 4. Loss/earnings per share The calculations of loss/earnings per share are based on a loss after taxation of £352,000 (2001: £185,000 profit) and a basic and diluted weighted average of 14,291,539 shares in issue (2001: basic weighted average of 14,291,539 shares and diluted weighted average of 14,426,991 shares). The calculations of earnings per share for the full year to 30 September 2001 are based on a profit after taxation of £538,000, a basic weighted average of 14,291,539 shares in issue and a diluted weighted average of 14,381,760 shares. 5. Accounting policy - Deferred taxation In order to comply with the requirements of Financial Reporting Standard No. 19, the Group has changed its accounting policy for deferred taxation. The new policy is as follows:- 'The charge for taxation is based on the profit for the year and takes into account taxation deferred because of timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance sheet date, with the following exceptions: • provision is made for gains on disposal of fixed assets that have been rolled over into replacement assets only where, at the balance sheet date, there is a commitment to dispose of the replacement assets with no likely subsequent roll over and/or available capital losses. • deferred tax assets are recognised only to the extent that the Directors consider that it is more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. • provision on timing differences arising when an asset is continuously revalued to fair value is only made where changes in fair value are recognised in the profit and loss account. • provision is made for the tax that would arise on remittance of the retained earnings of overseas subsidiaries, associates and joint ventures only to the extent that, at the balance sheet date, dividends have been accrued as receivable or there is a commitment for profits to be distributed. (The Group does not have any overseas subsidiaries, associates or joint ventures at present). Deferred tax is measured on a non-discounted basis at the tax rates that are expected to apply in the periods in which timing differences reverse, based on tax rates and laws enacted or substantively enacted at the balance sheet date.' The change in policy has had no affect on the Group profit and loss accounts or Group cash flows for any of the periods shown in this interim statement. The only adjustment to the balance sheets has been to increase the provision for deferred tax at 31 March 2002, 31 March 2001 and 30 September 2001 by £30,000 and reduce reserves at those dates by the same amount. 6. Notes to the Group statement of cash flows a) Reconciliation of operating (loss)/profit to net cash (outflow)/inflow from operating activities: Six months to 31 March Year to 30 September 2002 2001 2001 Unaudited Unaudited Unaudited (see note 1) £'000 £'000 £'000 Operating (loss)/ profit (482) 238 706 Depreciation 207 147 306 Amortisation 79 78 151 Profit on sale of fixed assets - (5) (6) (196) 458 1157 Decrease/(increase) in debtors 238 98 (163) Decrease/ (increase) in stocks 46 (126) (145) Decrease in creditors (99) (200) (170) Net cash (outflow)/inflow from operating activities (11) 230 679 b) Analysis of net funds: 31 March 30 September Unaudited Unaudited Unaudited (see note 1) 2002 2001 2001 £'000 £'000 £'000 Cash at bank and in hand 314 1,708 1,156 Bank overdrafts - (2) - 314 1,706 1,156 External loans (4) (15) (10) Finance leases (12) (99) (41) 298 1,592 1,105 This information is provided by RNS The company news service from the London Stock Exchange

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