Interim Results
Zytronic PLC
15 May 2007
For Immediate Release 15 May 2007
ZYTRONIC PLC
Interim Results for the Six Months to 31 March 2007
Zytronic Plc, a leading specialist manufacturer of touchscreens and optical
filters for electronic displays, announces its interim results for the six
months to 31 March 2007.
Financial Highlights
•Group turnover of £5.96m showed growth of 5% (2006: £5.67m);
•Gross profit margin increased to 31.2% from 29.7% in 2006;
•Profit before tax £427,000 (2006: £443,000)
•Proposed interim dividend of 1.0p per share (2006: Interim 1.0p);
•Significant growth in sales of recently introduced ZYPOS(R) touch
sensors;
•New vendor management control systems at one of the Group's largest
customers led to inventory reduction. Sales expected to return to more
normal levels in Q4.
Operational Highlights
•New production facility at adjacent freehold factory proceeding according
to plan;
•New capacity for ZYPOS production on schedule to begin around the end of
the financial year.
Board
•Mark Cambridge, Managing Director of the trading subsidiary, Zytronic
Displays Limited appointed to the Board with effect from 1 June 2007.
Commenting on outlook, John Kennair, Chairman, said:
'Whilst the issue regarding de-stocking by one of our major customers is
disappointing we are extremely pleased with the successful introduction of ZYPOS
touch sensors. Sales of this product are proceeding ahead of our expectations,
indicating that this will be the fastest growth area of the business going
forward.'
Enquiries:
Zytronic Plc 0191 414 5511
John Kennair, Chief Executive
Denis Mullan, Finance Director
Buchanan Communications 020 7466 5000
Richard Darby, Isabel Podda
Notes to Editors
Zytronic is an industry leader in the development and manufacture of customised
optical filters to enhance electronic display performance. It is also an
innovator in the production of specialised and transparent laminates for niche
markets.
Based on this lamination expertise, Zytronic has developed a unique range of
touchscreen products employing Projected Capacitive Technology (PCTTM) which
enables the pointing device to sense through an anti-vandal screen in front of
the display. This system offers significant benefits to electronic display
manufacturers.
Operating from two modern factories near Newcastle-upon-Tyne in England,
Zytronic assembles touchscreens and filters, utilising special glass and plastic
materials, in environmentally controlled clean rooms.
CHAIRMAN'S STATEMENT
Results
Sales at £5.96m (2006 £5.67m) grew by 5%. An improvement in gross profit margins
to 31.2% (2006 29.7%) produced a 10% increase in gross profit. Higher overheads
in the period at £1.399m, partially arising from the continuing growth in the
Group's business and the introduction of ZYPOS(R), (2006 £1.227m) have led to a
pre-tax profit of £427,000 (2006 £443,000).
Trading
Sales growth of 5% over the corresponding period last year has been primarily
influenced by two offsetting factors; de-stocking by a major customer and the
introduction of ZYPOS(R) touch sensors.
In the past six months, one of our largest customers has introduced new vendor
management control systems whereby our products are supplied into central
warehouses in various territories around the world, from which the customer
calls down the product to meet its manufacturing requirements. This centralised
stocking system has enabled our customer to reduce inventory resulting in a fall
of sales to this account in the first half of over £700,000, most critically in
March 2007. The implementation of these new systems has now been completed in
the United States, which has had the largest impact on our business. It is
anticipated that the systems will be completed in Europe by July of this year,
following which sales to this customer are expected to return to more normal
levels.
ZYPOS
Following the introduction of our new ZYPOS touch sensor product towards the end
of the 2006 financial year, sales of ZYPOS have shown strong growth to £800,000
in the period under review with the product now being specified into a number of
new applications.
The development of a new production facility for ZYPOS, which I mentioned in my
last statement, is proceeding according to plan and we expect the new factory
and associated equipment to come on stream around the financial year end.
Dividend
The Directors have declared an interim dividend of 1p per share (2006 1p per
share) payable on 29 June 2007 to shareholders on the Register on 8 June 2007.
Management
The Directors have appointed Mark Cambridge to the Board with effect from 1 June
2007. Mark joined the Group in 1991, holding executive positions in technical,
quality and sales and marketing before being appointed to the role of Managing
Director of the trading subsidiary, Zytronic Displays Limited, in February 2006.
Mark has made a major contribution to the success of the business, in particular
the development and launch of the ZYPOS product. I am sure he will make a
significant contribution to the Board.
Outlook
Whilst the de-stocking in what is currently the Group's largest market sector
has held back the growth in sales in the first half, it is anticipated that this
will have worked through the system with sales returning to more normal levels
in the fourth quarter. However, this will be too late to enable the Group to
achieve sufficient profits in the second half to meet current market
expectations.
The successful introduction of ZYPOS touch sensors, with sales of this product
proceeding ahead of Directors' expectations, indicate that this will be the
fastest growth area of the business going forward.
JOHN M. KENNAIR
Chairman
GROUP PROFIT AND LOSS ACCOUNT
unaudited results for the six months to 31 March 2007
Six months to Six months to Year to
31 March 31 March 30 September
2007 2006 2006
Unaudited Unaudited Unaudited
(Restated) (Restated)
----------------------- ------ --------- -------- --------
Notes £'000 £'000 £'000
----------------------- ------ --------- -------- --------
Turnover 5,960 5,670 12,301
Cost of sales 4,101 3,987 8,449
----------------------- ------ --------- -------- --------
Gross profit 1,859 1,683 3,852
----------------------- ------ --------- -------- --------
Distribution costs 108 82 170
Administrative expenses 1,291 1,145 2,356
----------------------- ------ --------- -------- --------
1,399 1,227 2,526
----------------------- ------ --------- -------- --------
Operating profit 460 456 1,326
Interest payable (39) (18) (59)
Interest receivable 6 5 6
----------------------- ------ --------- -------- --------
Profit on ordinary
activities 427 443 1,273
before taxation
Tax charge on profit on
ordinary 3 (90) (107) (153)
activities ------ --------- -------- --------
-----------------------
Profit on ordinary
activities 337 336 1,120
after taxation ------ --------- -------- --------
-----------------------
Earnings per share
Earnings per share - basic 4 2.3p 2.3p 7.8p
Earnings per share - diluted 4 2.3p 2.3p 7.7p
----------------------- ------ --------- -------- --------
STATEMENT OF TOTAL RECOGNISED GAINS
AND LOSSES
unaudited accounts for the six months to 31 March 2007
There were no recognised gains or losses as defined in Financial Reporting
Standard No. 3 other than those stated above.
Following the adoption of FRS 20, share-based payment, the results for the six
months to 31 March 2006 and year to 30 September 2006 have been restated. An
additional expense has been charged to Administrative expenses, being £23,000 in
the six months to 31 March 2007; £20,000 in the six months to 31 March 2006 and
£39,000 in the year to 30 September 2006.
GROUP BALANCE SHEET
unaudited results for the six months to 31 March 2007
Six months to Six months to Year to
31 March 31 March 30 September
2007 2006 2006
Unaudited Unaudited Unaudited
(Restated) (Restated)
----------------------- ---------- -------- --------
£'000 £'000 £'000
----------------------- ---------- -------- --------
Fixed assets
Intangible assets 1,965 2,046 2,026
Tangible assets 4,046 3,731 3,831
----------------------- ---------- -------- --------
6,011 5,777 5,857
----------------------- ---------- -------- --------
Current assets
Stocks 1,871 1,504 1,706
Debtors: amounts falling due within
one year 2,586 2,639 2,852
Cash at bank and in hand 191 316 493
----------------------- ---------- -------- --------
4,648 4,459 5,051
Creditors: amounts falling due
within one year 1,386 1,984 1,828
----------------------- ---------- -------- --------
Net current assets 3,262 2,475 3,223
----------------------- ---------- -------- --------
Total assets less current
liabilities 9,273 8,252 9,080
Creditors: amounts falling due after
more than one year 624 783 658
Provisions for liabilities and
charges 533 239 374
----------------------- ---------- -------- --------
8,116 7,230 8,048
----------------------- ---------- -------- --------
Capital and reserves
Called up share capital 146 144 146
Share premium 6,450 6,299 6,450
Profit and loss account 1,520 787 1,452
----------------------- ---------- -------- --------
Equity shareholders' funds 8,116 7,230 8,048
----------------------- ---------- -------- --------
GROUP STATEMENT OF CASH FLOWS
unaudited results for the six months to 31 March 2007
Six months Six months to Year to
to 2007 31 March 30 September
31 March 2006 2006
Unaudited Unaudited Unaudited
Notes £'000 £'000 £'000
-------------------------- ------ -------- -------- --------
Net cash
inflow from
operating
activities 6a 698 516 1,529
Returns on investments and servicing
of finance
------------------------- ------- -------- -------- --------
Interest received 6 5 6
Interest paid (37) (11) (48)
Interest element of finance lease (2) (7) (11)
rental payments
-------------------------- ------ -------- -------- --------
Net outflow from returns on investments
and servicing of finance (33) (13) (53)
Taxation
Corporation tax repayment/(paid) 11 10 (230)
Capital expenditure and financial
investment
-------------------------- ------ -------- -------- --------
Payments to acquire intangible fixed assets (77) (44) (159)
Payments to acquire tangible
fixed assets - property (152) (792) -
Payments to acquire tangible
fixed assets - plant and equipment (307) (666) (1,767)
Receipt from sale of assets - - 6
--- ------------------------ ------ -------- -------- --------
Net outflow from capital expenditure
and financial investment (536) (1,502) (1,920)
-------------------------- ------ -------- -------- --------
Equity dividends paid (293) (215) (360)
-------------------------- ------ -------- -------- --------
Net cash outflow before financing (153) (1,204) (1,034)
Financing
-------------------------- ------ -------- -------- --------
Issue of ordinary share capital - 84 238
re options
Receipt from new bank loan - property - 750 750
Repayments of bank loans (71) (51) (122)
Repayments of capital element of
finance lease (78) (73) (149)
--------------------------- ------ -------- -------- --------
Net inflow/(outflow) from financing (149) 710 717
-------------------------- ------ -------- -------- --------
Decrease in cash (302) (494) (317)
-------------------------- ------ -------- -------- --------
Reconciliation of net cash flow to movement
in net debt
Decrease in cash (302) (494) (317)
Receipt from new bank loan - property - (750) (750)
Repayments of bank loans 71 51 122
Repayments of capital element of
finance lease 78 73 149
-------------------------- ------ -------- -------- --------
Movement in net funds (153) (1,120) (796)
Net(debt)/funds at beginning
of period (380) 416 416
-------------------------- ------ -------- -------- --------
Net debt at
end of period 6b (533) (704) (380)
-------------------------- ------ -------- -------- --------
NOTES TO THE INTERIM REPORT
unaudited results for the six months to 31 March 2007
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 2006. 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 2006 as adjusted for the adoption of FRS 20 'share-based payment'.
In preparing the financial statements for the current year, the Group has
adopted FRS 20 'share-based payment'. The adoption of FRS 20 has resulted in a
change in accounting policy for share-based payment transactions. FRS 20
requires the fair value of options and share awards which ultimately vest to be
charged to the profit and loss account over the vesting or performance period.
For equity-settled transactions the fair value is determined at the date of the
grant using an appropriate pricing model. If an award fails to vest as the
result of certain types of performance condition not being satisfied, the charge
to the income statement will be adjusted to reflect this.
The taxation 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
accounts.
2. Basis of consolidation
The Group results consolidate the accounts of Zytronic Plc and all its
subsidiary undertakings drawn up to 31 March 2007.
3. Tax charge on profit on ordinary activities
The estimated tax rate for the year of 21% has been applied to the half year's
profit before tax, in accordance with the ASB's statement on interim reports.
The estimated rate is lower than the standard rate of UK corporation tax (30%)
due, in particular, to the effect of the continuing beneficial effect of the
Research & Development tax credit scheme and the change of corporation tax (28%)
used for the deferred tax provision.
4. 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.
-------------------- ------ ------- ------ ------ ------- -------
Weighted Weighted
average Earnings average Earnings
number per number per
Earnings of shares share Earnings of shares share
31 March 31 March 31 March 31 March 31 Marc 31 March
2007 2007 2007 2006 2006 2006
£'000 thousands pence £'000 thousands pence
-------------------- ------ ------- ------ ------ ------- -------
Profit on ordinary
activities after taxation
attributable
to ordinary
equity holders 337 14,640 2.3 336 14,306 2.3
-------------------- ------ ------- ------ ------ ------- -------
Basic EPS 337 14,640 2.3 336 14,306 2.3
-------------------- ------ ------- ------ ------ ------- -------
The weighted average number of shares for diluted EPS is calculated by including
the weighted average number of shares under option.
-------------------- ------ ------- ------ ------ ------- -------
Earnings Weighted Earnings Earnings Weighted Earnings
31 March average per 31 March average per
2007 number share 2006 number share
£'000 of shares 31 March £'000 of shares 31 March
31 March 2007 31 March 2006
2007 pence 2006 pence
thousands thousands
-------------------- ------ ------- ------ ------ ------- -------
Profit on ordinary activities
after taxation 337 14,640 2.3 336 14,306 2.3
attributable to ordinary
equity holders
Weighted average number
of shares under option - 196 (0.0) - 150 (0.0)
-------------------- ------ ------- ------ ------ ------- -------
Diluted EPS 337 14,836 2.3 336 14,456 2.3
-------------------- ------ ------- ------ ------ ------- -------
------------------------------ -------- -------- --------
Earnings Weighted Earnings
30 September average per
2006 number share
£'000 of shares 30 September
30 September 2006
2006 pence
Thousands
------------------------------ -------- -------- --------
Profit on ordinary activities after
taxation attributable to ordinary
equity 1,120 14,414 7.8
holders -------- -------- --------
------------------------------
Basic EPS 1,120 14,414 7.8
------------------------------ -------- -------- --------
NOTES TO THE INTERIM REPORT
unaudited results for the six months to 31 March 2007
The weighted average number of shares for diluted EPS is calculated by including
the weighted average number of shares under option.
------------------------------ -------- -------- --------
Earnings Weighted Earnings
30 September average per
2006 number share
£'000 of shares 30 September
30 September 2006
2006 pence
thousand
------------------------------ -------- -------- --------
Profit on ordinary activities after
taxation attributable to ordinary
equity 1,120 14,414 7.8
holders
Weighted average number of shares
under - 220 (0.1)
option -------- -------- --------
------------------------------
Diluted EPS 1,120 14,634 7.7
------------------------------ -------- -------- --------
5. Dividends
The Directors propose the payment of an interim dividend of 1.0p per share
(2006: 1.0p), payable on 29 June 2007 to shareholders on the Register on 8 June
2007. This dividend has not been accrued in these Interim Accounts. The dividend
payment will be some £146,000.
The dividends in the current and prior year are as follows:
Six months to Six months to
31 March 31 March Year to
2007 2006 30 September
Unaudited Unaudited 2006
£'000 £'000 £'000
---------------------------- --------- --------- --------
Ordinary dividends on equity shares
Final dividend of 1.5p per ordinary share
paid on 24 March 2006 - 215 215
Interim dividend of 1.0p per
ordinary share
paid on 30 June 2006 - - 145
---------------------------- --------- --------- --------
Final dividend of 2.0p per ordinary share
paid on 16 March 2007 295 - -
---------------------------- --------- --------- --------
295 215 360
---------------------------- --------- --------- --------
6. Notes to the Group statement of cash flows
a) Reconciliation of operating profit to net cash inflow from operating
activities:
Six months to Six months to Year to
31 March 31 March 30 September
2007 2006 2006
Unaudited Unaudited Unaudited
(Restated) (Restated)
--------------------------- --------- --------- ---------
£'000 £'000 £'000
--------------------------- --------- --------- ---------
Operating profit 460 456 1,326
Depreciation 243 221 429
Amortisation 139 131 266
Profit on sale of fixed assets - - 5
FRS 20 Share option payments 23 20 39
--------------------------- --------- --------- ---------
Gross cash inflows 865 828 2,065
Decrease/(increase) in debtors 306 2 (505)
Increase in stocks (165) (303) (216)
(Decrease)/increase in creditors (308) (11) 185
--------------------------- --------- --------- ---------
Net cash inflow from operating
activities 698 516 1,529
--------------------------- --------- --------- ---------
b) Analysis of net (debt)/funds:
31 March 31 March
2007 2006 30 September
Unaudited Unaudited 2006
£'000 £'000 £'000
--------------------------- --------- --------- ---------
Cash at bank and in hand 191 316 493
Bank loans (724) (866) (795)
Finance lease - (154) (78)
--------------------------- --------- --------- ---------
(533) (704) (380)
--------------------------- --------- --------- ---------
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