TIDMZYT
RNS Number : 0133Z
Zytronic PLC
12 December 2017
12 December 2017
Zytronic plc
("Zytronic" or the "Group")
Preliminary Results for the year ended 30 September 2017
(audited)
Zytronic plc, a leading specialist manufacturer of touch
sensors, announces its preliminary results for the year ended 30
September 2017.
Overview
-- Significant improvement in Group trading profits to GBP5.4m
(2016: GBP4.3m)
-- Strong cash generation from operating activities of GBP4.7m
(2016: GBP5.6m)
-- Final dividend increased by 39% to 15.2p (2016: 10.96p),
bringing total dividends for the year to 19.0p (2016: 14.41p), up
32% year-on-year and the fourth successive year of double-digit
dividend growth
-- Touch sensor units sold increased to 138,000 units (2016:
130,000 units) with large sensors > 30" increasing to 18,000
units (2016: 14,000)
-- Basic earnings per share increased to 29.0p (2016: 26.6p)
Commenting on the outlook, Chairman, Tudor Davies said:
"The current year has started with orders, revenues and trading
along similar levels to that of the prior year which together with
our strong balance sheet and cash generation provides a sound base
for further growth in dividends and shareholder value."
It is intended that the AGM will take place at the Company's
offices at Whiteley Road, Blaydon-on-Tyne, Tyne and Wear, NE21 5NJ
on Thursday 22 February 2018 at 9.30am. Notice of the AGM will be
sent to shareholders with the annual report and accounts in due
course.
Enquiries:
Zytronic plc (Today: 020 7496 3000;
Mark Cambridge, Chief Thereafter 0191 414 5511)
Executive
Claire Smith, Group
Finance Director
N+1 Singer (020 7496 3000)
(Nominated Advisor &
Broker)
Aubrey Powell
Liz Yong
Notes to Editors
Zytronic is a world renowned developer and manufacturer of a
unique range of internationally award winning optically transparent
interactive touch sensor overlay products for use with electronic
displays in industrial, self-service and public access
equipment.
Zytronic's products employ a sensing solution that is readily
configurable and is embedded in a laminate core which offers
significant durability, environmental stability and optical
enhancement benefits to system designers specific requirements.
Zytronic has continually developed process and technological
know-how and IP since the late 1990's around two sensing
methodologies; the first being single touch self-capacitive which
Zytronic markets as PCT(TM) ("Projected Capacitive Technology") and
the second being multi-touch, multi-user mutual-capacitive which
Zytronic markets as MPCT(TM) ("Mutual Projected Capacitive
Technology"), in which Zytronic holds five granted patents.
Operating from a single site near Newcastle-upon-Tyne in the
United Kingdom, Zytronic is relatively unique in the touch
eco-system as it offers a complete one-stop solution from
processing internally the form and factor of the glass substrates,
assembles their touch overlay products to customers specific
requirements, in environmentally controlled cleanrooms and develops
the bespoke firmware, software and electronic hardware to link the
interactive overlays to customer's integrated systems and
products.
Chairman's statement
We are pleased to announce the results for the year ended 30
September 2017, which show continuing growth in revenues, profits
and cash generation and a 39% increase (2016: 24%) in the final
dividend, resulting in an overall dividend increase of 32% (2016:
20%) for the year.
Results
Revenues for the year ended 30 September 2017 increased 9% to
GBP22.9m (2016: GBP21.1m), profit before tax increased 27% to
GBP5.4m (2016: GBP4.3m), with profit after tax increasing to
GBP4.6m (2016: GBP4.1m) and basic earnings per share increasing to
29.0p (2016: 26.6p).
The growth in revenues during the year has primarily arisen from
an increase in further projects for the gaming market, with the
growth driven by large format touch sensors. A fuller explanation
of the strategic sales and marketing initiatives and opportunities
are covered in the CEO's Operational review later in this
report.
Cash generation from operating activities for the year ended 30
September 2017 is GBP4.7m (2016: GBP5.6m), from which we invested
GBP1.1m (2016: GBP0.8m) in research and development and capital
expenditure. The Group also received GBP1.2m (2016: GBP0.2m) from
the proceeds of share options and made a final payment of GBP1.1m
(2016: GBP0.2m) on its property loan before the dividend payments
of GBP2.4m (2016: GBP1.9m), resulting in a net increase in year-end
cash balances of GBP1.3m to GBP14.1m (2016: GBP2.9m to
GBP12.8m).
Dividend
The Directors are pleased to propose a final dividend of 15.2p
(2016: 10.96p), payable on 9 March 2018 to shareholders on the
register on 23 February 2018, which increases the total dividend
for the year by 32% to 19.0p (2016: 14.41p) and brings the dividend
increase over the last five years to 124%.
Outlook
The current year has started with orders, revenues and trading
along similar levels to that of the prior year, which, together
with our strong balance sheet and cash generation, provides a sound
base for further growth in dividends and shareholder value. The
focus on growth this year will be from expansion in local sales
representation in the USA and the Far East, and we shall keep
shareholders updated on the progress, and any material
developments, over the course of the year.
Tudor Davies
Chairman
11 December 2017
Operational review
The following provides insights into the sales and marketing
initiatives and the strategic programmes undertaken by Zytronic's
research and development department during the year and the
consequential sales output profile.
Strategic sales and marketing initiatives
We continued to sell our products to customers around the world
in two ways: directly, sometimes with the assistance of
commissioned manufacturers' representatives and agents; and
indirectly, via franchised distributors and value-added resellers
("VARs"). Collectively, we refer to these agents, distributors and
VARs as our sales channel partners.
In 2017, we made several changes to our global network of sales
channel partners whilst increasing regionally our direct sales
function. At the end of the fiscal period we had 13 regional
agreements covering North, Central and South America ("AMERICAS"),
twelve across Asia Pacific ("APAC") and 13 spanning various
European, Middle Eastern and African countries ("EMEA").
Additionally, we had two global distribution agreements, with
Future Electronics and the Quixant group respectively.
-- In the AMERICAS, we terminated three underperforming agents
and appointed a new representative in the Southeastern USA. In
addition, to strengthen the direct sales presence of Zytronic Inc.,
we completed the recruitment of an industry and market experienced
US national, based in Austin, TX, to the position of director of
sales for the region.
-- In the APAC region, we appointed two further distributors in
Japan and increased our direct presence in the country, retaining a
Tokyo-based full-time business development manager under contract.
We also expanded the responsibility of our Taipei-based business
development manager, to include countries in Southeast Asia.
-- In the EMEA region, we appointed a new distributor for Switzerland and Austria.
Entering the new fiscal year, we have commenced a review on the
recruitment of a sales support engineer for the APAC region, most
likely to be based in Japan. We are also working to increase our
sales channel partner network in Western Europe and the USA, with
new agent and VAR appointments expected. Additionally, we are
presently planning to increase our direct sales team in the USA in
the second half of the year.
Our 2017 marketing strategy in support of sales activities
focused on increasing our profile in European, American and Asian
trade publications and key vertical markets. In addition, we have
expanded our digital and social media presence, releasing online a
new "factory tour" video to highlight our unique capabilities in
the touch ecosystem and the competitive benefits we bring to
customers. We also participated in several application specific
global trade events, including Electronica (the large German
electronics fair in November 2016), C-Touch in Shenzhen, China, in
the same month, the Integrated Systems Europe ("ISE") expo in
February 2017 in Amsterdam and the USA-focused Digital Signage Expo
("DSE") in March 2017. Indirectly, products were also well
represented at a number of tradeshows by distributors and
customers, such as the ICE Totally Gaming Expo in London during
January 2017, the Society of Information Displays ("SID") Display
Week and the Infocomm Expo during June 2017 in the USA.
Strategic research and development
The primary emphasis of the research and development team
throughout 2017 was the continued development of our MPCT(TM)
capabilities and the requirements of the developing Zytronic
Application Specific Integrated Chip ("ASIC"). Initial approval
samples of the designed ASIC were received in late January 2017,
followed by several months of in-house approval and compliance
testing. In May 2017, we provided approval and the order to build
and supply an initial 24,000 ASICs. Supply of production chips is
expected around December 2017. A new family of controllers
incorporating the ASICs has been designed along with new bespoke
firmware which will be released under the controller family
designation series ZXY500 early in the new calendar year.
Other significant development work undertaken during the year
has been around new material considerations as an alternative to
the micro-fine sensing wires generally employed in Zytronic PCT(TM)
and MPCT(TM) sensors including, but not limited to, the
collaboration work undertaken on the Hi-Response European-funded
H2020 project.
Further GB patent applications were initiated in the period on
Zytronic's shape recognition technology and our ability to put
physical holes in and through the active sensing area of our glass
sensors without functional detriment to the sensing and
interactivity around the physical hole, both being reliant on the
unique capabilities of our patented MPCT(TM) sensing.
Sales
The business showed an improved trading performance over that of
the previous year, with total revenues of GBP22.9m (2016:
GBP21.1m). Total export revenues as measured by Zytronic, being the
location of the companies where we invoice products, were GBP19.9m
(2016: GBP20.0m), with the slight reduction a consequence of the as
expected drop in legacy display product revenues.
The revenues of legacy display products, were GBP2.3m (2016:
GBP2.9m). Although a number of factors contributed to the decrease,
by far the two most significant were the GBP0.2m of non-recurring
revenues from the completion in 2016 of the curved gaming display
unit project in Korea and a further GBP0.2m reduction in global ATM
display revenues to GBP1.4m (2016: GBP1.6m).
Revenues generated by sales of our touch products were GBP2.4m
higher than the prior year at GBP20.6m (2016: GBP18.2m). The
significant growth in revenues came from invoiced UK sales for the
Gaming market, where product is almost immediately shipped by our
customer to other international locations for integration with
displays and gaming machines. Exported touch product revenues
showed growth to GBP18.0m from GBP17.6m, with EMEA and the AMERICAS
regions each growing by GBP0.3m to GBP7.0m and GBP0.2m to GBP3.8m
respectively, whilst APAC reduced by GBP0.1m to GBP7.2m.
Touch revenues are inherently linked, not only to the number of
touch sensors produced, but more substantially to the mix of the
sensor sizes, as large format units carry an obvious higher price
premium. The total number of sensor units supplied increased to
138,000 (2016: 130,000) and the table below illustrates the split
of sensor sizes and their relative movement from the prior
year.
2017 2016 Variance
Sensor size Units % Units % Units % change
('000) total ('000) total ('000)
----------------------------- --------- ------ --------- ------ ----------- ------------
Small - ( <= 14.9") 33 24 39 30 (6) (16)
Medium - ( >= 15.0 <= 29.9") 87 63 77 59 10 13
Large - ( >= 30.0") 18 13 14 11 4 26
----------------------------- --------- ------ --------- ------ ----------- ------------
Total 138 100 130 100 8 6
----------------------------- --------- ------ --------- ------ ----------- ------------
In large format sensors, the contributory volume of curved units
remained steady at 9,000 units year on year, with the growth coming
from flat units for new gaming projects. With the release in the
latter half of 2016 of the newer ZXY150 series of MPCT(TM)
controllers in support of medium sizes, we saw growth in the total
number of MPCT(TM) products supplied to 12,000 units (2016: 11,000
units).
Touch application markets
For the first time, Financial was not our top revenue-generating
touch application market, with Gaming taking the top spot. Gaming
continued to show considerable strength and growth in both units
produced at 20,000 (2016: 13,000) and revenues generated,
contributing GBP7.7m (2016: GBP5.9m), as new UK (predominantly) and
Asian invoiced PCT(TM) and MPCT(TM) projects moved into production.
Financial, with total unit volumes reducing by 4,000 to 50,000, as
the continued effects of supplier consolidation and reported
saturation of mature geographic markets were observed, moved into
second place contributing GBP6.3m (2016: GBP6.4m).
Vending, although our second highest market in terms of unit
volumes produced at 35,000 units (2016: 24,000 units), remained our
third market in terms of revenue at GBP3.3m (2016: GBP2.6m), with
benefits coming from drinks, fuel and parking management systems in
the USA, Korea and Germany respectively. However with the expected
redesign of the next generation Freestyle(R) drinks dispenser in
2018, resulting in a less durable and functional touch solution
requirement, we expect the requirements of the existing design to
reduce as the project moves towards end-of-life ("EOL").
The Industrial market, which saw a 3,000-unit reduction in small
sensors sold (2016: 12,000 units), but a 1,000-unit increase in
medium and larger sensors (2016: 7,000 units), showed an increase
in the revenues generated to GBP1.8m (2016: GBP1.4m), predominantly
through new opportunities generated by our Italian channel partner.
This was countered by a decline in the Signage market to GBP0.8m
(2016: GBP1.0m), in which we experienced a 1,000-unit reduction in
large sensors sold (2016: 2,000 units) from our channel partners in
Korea and Germany. However, this is still a market which although
continues to be lower in project unit volumes offers the advantages
of numerous bespoke and value-add opportunities.
The other markets, which predominantly are in the small and
medium-size ranges and are therefore open to much greater
alternative supplier competitive pressures, particularly from spare
capacity from consumer solution providers, being Home Automation,
Healthcare and Telematics, in total decreased to GBP0.7m (2016:
GBP0.9m), as we saw 1,000-unit declines in units supplied to both
Home (2016: 10,000 units) and Health (2016: 4,000 units). Similar
to that mentioned in Vending, we believe that the volumes of our
touch solution for the high-end Bosch cooktop models will continue
to reduce as the models move to EOL over 2018 and beyond.
Opportunities analysis
Our customer relationship management ("CRM") software continues
to be integral in managing and monitoring global sales
opportunities. Incoming leads from all sources (websites,
tradeshows, channel partners, sales management, etc.) are fed into
the CRM system; once validated, those opportunities are then
categorised according to vertical market (application), annual
quantity, touch sensor type, project duration, estimated unit price
and production start date. As the opportunity progresses, it is
dynamically assigned with an estimated probability of success. Only
those opportunities at the point in time when they are assigned
with a high probability are classified as a "Project" and only
those designated as a "Project" at the time of our quarterly sales
review are added into our dynamic forecast model.
As the CRM information is constantly being updated by the sales
team to account for changes to opportunities, which may be because
they are re-classified as dead, lost to a competitor, moved into
production or have changed success probability, the number of
opportunities, and the value of active 'Projects', varies
significantly day to day. At 30 September 2017, there were a total
of 551 live opportunities in the system, with 60 opportunities
classified on that day as "Projects", with those "Projects" having
an unsensitised lifetime revenue contribution of GBP8.2m, over a
projected five years.
Finally, on behalf of the Board of Directors, I would like to
thank all Zytronic employees for their valued contribution to the
performance of the business over the reporting period.
Mark Cambridge
Chief Executive Officer
11 December 2017
Financial review
Group revenue
Group revenue for the year increased by GBP1.8m to GBP22.9m
(2016: GBP21.1m) as a result of increased orders of touch products
totalling GBP20.6m (2016: GBP18.2m), particularly through the
Gaming market from one of the UK-based customers. Touch product
revenue now accounts for 90% of total revenue (2016: 86%).
Gross margin
Gross margin declined slightly in the year to 41.1% (2016:
42.8%), despite the increase in volume of larger format sensors
sold, mainly as a result of the following factors:
-- increased costs of raw materials due to supplier price rises
and purchasing more pre-prepared glass;
-- additional costs of wage rises and increased numbers of
personnel in production(146 employees compared to 129 in 2016);
and
-- increases in commissions payable as more revenue arose from
channel partners over the year.
Group trading profit
Group trading profit increased to GBP5.4m (2016: GBP4.3m). On a
year-on-year basis, excluding the impact of FX movements of
GBP1.0m, administration costs have increased only slightly in 2017
through higher costs of professional fees, marketing and
travel.
Taxation
The Group's taxation charge for the year ended 30 September 2017
of GBP0.8m represents an effective tax rate of 15%. In the year,
the Group continued to claim relief under the Patent Box regime and
the utilisation of R&D tax credits (GBP0.2m). The differences
in tax rates enacted and the fair value movement on the Group's FX
contracts have also impacted the tax charge in the year.
Earnings per share
The issued share capital is 16,044,041 ordinary shares of 1.0p
each and the resultant weighted EPS for the year is 29.0p, which
represents growth of 9% from that reported last year (2016:
26.6p).
Dividend
During the year the Group paid a final dividend for 2016 of
10.96p per share and a 2017 interim dividend of 3.80p per share
totalling GBP2.4m of cash (2016: GBP1.9m). The Directors recommend
the payment of a final dividend of 15.20p per share for the year
ended 30 September 2017 giving a total dividend for the year of
19.0p per share (2016: 14.41p) and an increase of 32% over last
year. Subject to approval by shareholders, the dividend will be
paid on Friday 9 March 2018 to shareholders on the register as at
the close of business on Friday 23 February 2018. The dividend is
covered 1.5 times by underlying earnings.
Capital expenditure
The Group additions to capital expenditure totalled GBP1.1m and
were weighted more to intangible assets with GBP0.5m of spend
occurring on the continuing development of the MPCT(TM) ASIC
project. This project is on target for completion during early
2018. A further GBP0.1m was spent on the Fibre Laser Table and
investment of GBP0.1m was made into a new CNC Edge Profiling
machine. Additional sensor manufacturing equipment has also been
added over the year to meet production requirements. Depreciation
and amortisation for the year increased slightly to GBP1.2m (2016:
GBP1.1m).
Cash and debt
The Group continues to be cash generative and has recorded an
increase in cash and cash equivalents of GBP1.3m (2016: GBP2.9m) at
the year end. Cash generated from operating activities was GBP4.7m
offsetting the cash outflow from investing and financing
activities. This growth in cash enables the Group to continue its
policy to invest in internal R&D and capital refurbishments and
maintain its progressive dividend policy.
The Group maintains an overdraft facility of GBP1.0m, which is
available for use in any of its currencies and falls for review in
November 2018. The Group also has an FX policy in place at the year
end whereby it is hedged in both US Dollars and Euros for a period
of four months ahead in line with its working capital policies to
try to better manage its net GBP inflows from its surplus currency
requirements.
The Group repaid its property mortgage with Barclays Bank plc
during the year utilising GBP1.1m of its cash. Following this, the
Group is now debt free and had cash balances of GBP14.1m at 30
September 2017.
Revenue reserve
On 22 March 2017, the Group carried out a capital reduction
exercise whereby GBP8.9m of the Group's undistributable profits
(within the retained earnings reserve) were capitalised by way of a
bonus issue of newly created capital reduction shares. These shares
were subsequently cancelled and the GBP8.9m credited to the
retained earnings reserve as distributable profits.
Claire Smith
Group Finance Director
11 December 2017
Consolidated statement of comprehensive income
For the year ended 30 September 2017
2017 2016
Notes GBP'000 GBP'000
------------------------- ------ --------- ---------
Group revenue 22,892 21,087
Cost of sales (13,481) (12,071)
Gross profit 9,411 9,016
Distribution costs (393) (378)
Administration expenses (3,591) (4,365)
------------------------- ------ --------- ---------
Group trading profit 5,427 4,273
Finance costs (24) (23)
Finance revenue 10 20
------------------------- ------ --------- ---------
Profit before tax 5,413 4,270
Tax expense 3 (825) (183)
------------------------- ------ --------- ---------
Profit for the year 4,588 4,087
------------------------- ------ --------- ---------
Earnings per share
Basic 5 29.0p 26.6p
Diluted 5 28.8p 26.1p
------------------------- ------ --------- ---------
All profits are from continuing operations.
Consolidated statement of changes in equity
For the year ended 30 September 2017
Called
up share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- --------- -------- --------- --------
At 1 October 2015 153 7,552 12,986 20,691
Profit for the year - - 4,087 4,087
Tax recognised directly
in equity - - 72 72
Exercise of share options 1 214 - 215
Share-based payments - - 71 71
Dividends - - (1,900) (1,900)
--------- -------- --------- --------
At 1 October 2016 154 7,766 15,316 23,236
Profit for the year - - 4,588 4,588
Tax recognised directly
in equity - - 72 72
Exercise of share options 6 1,228 - 1,234
Issue of capital reduction
shares* 8,919 - (8,919) -
Cancellation of capital
reduction shares* (8,919) - 8,919 -
Share-based payments - - - -
Dividends - - (2,354) (2,354)
---------------------------- --------- -------- --------- --------
At 30 September 2017 160 8,994 17,622 26,776
---------------------------- --------- -------- --------- --------
(*Refer to note 6)
Consolidated balance sheet
At 30 September 2017
2017 2016
Notes GBP'000 GBP'000
---------------------------------- ------- -------- --------
Assets
Non-current assets
Intangible assets 1,633 1,457
Property, plant and equipment 7,030 7,389
8,663 8,846
------------------------------------------ -------- --------
Current assets
Inventories 2,996 2,760
Trade and other receivables 3,506 3,745
Derivative financial assets 54 -
Cash and short term deposits 14,099 12,763
------------------------------------------- -------- --------
20,655 19,268
------------------------------------------ -------- --------
Total assets 29,318 28,114
------------------------------------------- -------- --------
Equity and liabilities
Current liabilities
Trade and other payables 1,042 1,302
Financial liabilities - 1,148
Derivative financial liabilities - 959
Provisions - 205
Accruals 862 834
Tax liabilities 3 122
1,907 4,570
------------------------------------------ -------- --------
Non-current liabilities
Government grants 25 48
Deferred tax liabilities (net) 610 260
635 308
------------------------------------------ -------- --------
Total liabilities 2,542 4,878
------------------------------------------- -------- --------
Net assets 26,776 23,236
------------------------------------------- -------- --------
Capital and reserves
Equity share capital 160 154
Share premium 8,994 7,766
Revenue reserve 17,622 15,316
------------------------------------------- -------- --------
Total equity 26,776 23,236
------------------------------------------- -------- --------
Consolidated cashflow statement
For the year ended 30 September 2017
2017 2016
GBP'000 GBP'000
---------------------------------------- -------- --------
Operating activities
Profit before tax 5,413 4,270
Net finance costs 14 3
Depreciation and impairment of
property, plant and equipment 749 766
Amortisation and impairment of
intangible assets 424 355
Amortisation of government grant (42) (11)
Share-based payments - 71
Fair value movement on foreign
exchange forward contracts (1,013) 870
Working capital adjustments
(Increase)/decrease in inventories (236) 454
Decrease/(increase) in trade and
other receivables 239 (690)
(Decrease)/increase in trade and
other payables and provisions (356) 76
---------------------------------------- -------- --------
Cash generated from operations 5,192 6,164
Tax paid (521) (576)
---------------------------------------- -------- --------
Net cashflow from operating activities 4,671 5,588
---------------------------------------- -------- --------
Investing activities
Interest received 10 20
Receipt of government grant 19 ---
Payments to acquire property,
plant and equipment (472) (387)
Payments to acquire intangible
assets (600) (385)
---------------------------------------- -------- --------
Net cashflow from investing activities (1,043) (752)
---------------------------------------- -------- --------
Financing activities
Interest paid (24) (21)
Dividends paid to equity shareholders
of the Parent (2,354) (1,900)
Proceeds from share issues relating
to options 1,234 215
Repayment of borrowings (1,148) (200)
Net cashflow used in financing
activities (2,292) (1,906)
---------------------------------------- -------- --------
Increase in cash and cash equivalents 1,336 2,930
---------------------------------------- -------- --------
Cash and cash equivalents at the
beginning of the year 12,763 9,833
---------------------------------------- -------- --------
Cash and cash equivalents at the
year end 14,099 12,763
---------------------------------------- -------- --------
Notes to the consolidated financial statement
1. Basis of preparation
The preliminary results for the year ended 30 September 2017
have been prepared in accordance with the recognition and
measurement requirements of International Financial Reporting
Standards ("IFRS") as endorsed by the European Union regulations as
they apply to the financial statements of the Group for the year
ended 30 September 2017. Whilst the financial information included
in this preliminary announcement has been computed in accordance
with the recognition and measurement requirements of IFRS, this
announcement does not itself contain sufficient information to
comply with IFRS. The accounting policies adopted are consistent
with those of the previous year.
The financial information set out in this announcement does not
constitute the statutory accounts for the Group within the meaning
of Section 435 of the Companies Act 2006. The statutory accounts
for the year ended 30 September 2016 have been filed with the
Registrar of Companies. The statutory accounts for the year ended
30 September 2017 will be filed in due course. The auditors' report
on these accounts was not qualified or modified and did not contain
any statement under sections 498(2) or (3) of the Companies Act
2006 or any preceding legislation.
Each of the Directors confirms that, to the best of their
knowledge, the financial statements, prepared in accordance with
IFRS as adopted by EU standards, give a true and fair view of the
assets, liabilities, financial position and profit or loss of the
Group and the undertakings included in the consolidation taken as a
whole; and the Group results, Operational review and Financial
review includes a fair review of the development and performance of
the business and the position of the Group and the undertakings
included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties that they
face
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 (GBP'000) except where otherwise indicated.
3. Tax
30 September 30 September
2017 2016
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Current tax
UK corporation tax 576 732
Corporation tax over-provided
in prior years - (289)
--------------------------------------- ------------- -------------
Total current tax charge 576 443
--------------------------------------- ------------- -------------
Deferred tax
Effect of change in tax rates - (103)
Origination and reversal of temporary
differences 249 (157)
--------------------------------------- ------------- -------------
Total deferred tax charge/(credit) 249 (260)
--------------------------------------- ------------- -------------
Tax charge in the income statement 825 183
--------------------------------------- ------------- -------------
Tax relating to items debited to equity
30 September 30 September
2017 2016
GBP'000 GBP'000
-------------------------------- ------------- -------------
Deferred tax
Tax on share-based payments (72) (72)
-------------------------------- ------------- -------------
Total deferred tax debit (72) (72)
-------------------------------- ------------- -------------
Tax charge in the statement of
changes in equity (72) (72)
-------------------------------- ------------- -------------
Reconciliation of the total tax charge
The effective tax rate of the tax expense in the income
statement for the year is 15% (2016: 4%) compared with the average
rate of corporation tax in the UK of 19.5% (2016: 20%). The
differences are reconciled below:
30 September 30 September
2017 2016
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Accounting profit before tax 5,413 4,270
------------------------------------------- ------------- -------------
Accounting profit multiplied by
the average UK rate of corporation
tax of 19.5% (2016: 20%) 1,056 854
Effects of:
Expenses not deductible for tax
purposes 32 16
"Gain" on exercise of share options
allowable for tax purposes but
not reflected in the income statement - (42)
Depreciation in respect of non-qualifying
items 33 38
Enhanced tax reliefs - R&D (229) (187)
Enhanced tax reliefs - Patent
Box (31) (127)
Effect of deferred tax rate reduction
and difference in tax rates (36) (80)
Tax over-provided in prior years - (289)
------------------------------------------- ------------- -------------
Total tax expense reported in
the income statement 825 183
------------------------------------------- ------------- -------------
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.
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 tax deduction from
profits.
There are no tax losses to carry forward at 30 September 2017
(2016: GBPNil).
The main rate of corporation tax in the UK reduced to 19% with
effect from 1 April 2017. The rate will be reduced to 17% from 1
April 2020. Both of these lower rates have been substantively
enacted by the balance sheet date. As the majority of the temporary
differences will reverse when the rate is 17%, this rate has been
applied to the deferred tax assets and liabilities arising at the
balance sheet date.
The Patent Box regime allows companies to apply a rate of
corporation tax of 10% to profits earned from patented inventions
and similar intellectual property. Zytronic generates such profits
from the sale of products incorporating patented components. The
Group has determined that all relevant criteria has been satisfied
for bringing income within the regime. Consequently, Patent Box
claims have been made for 2014, 2015 and 2016 accounting periods,
and the 2017 benefit has been estimated.
4. Dividends
The Directors propose the payment of a final dividend of 15.2p
per share (2016: 10.96p), payable on 9 March 2018 to shareholders
on the Register of Members on 23 February 2018. This dividend has
not been accrued in these financial statements. The dividend
payment will amount to some GBP2.4m.
30 September 30 September
2017 2016
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Ordinary dividends on equity shares
Final dividend of 8.87p per ordinary
share paid on 11 March 2016 - 1,368
Interim dividend of 3.45p per
ordinary share paid on 22 July
2016 - 532
Final dividend of 10.96p per ordinary 1,744 -
share paid on 3 March 2017
Interim dividend of 3.80p per 610 -
ordinary share paid on 21 July
2017
--------------------------------------- ------------- -------------
2,354 1,900
--------------------------------------- ------------- -------------
5. Earnings per share
Basic 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 average
number number
Earnings of shares EPS Earnings of shares EPS
30 September 30 September 30 September 30 September 30 September 30 September
2017 2017 2017 2016 2016 2016
GBP'000 Thousands Pence GBP'000 Thousands Pence
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Profit
on ordinary
activities
after
tax 4,588 15,819 29.0 4,087 15,346 26.6
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Basic
EPS 4,588 15,819 29.0 4,087 15,346 26.6
-------------- ------------- ------------- ------------- ------------- ------------- -------------
The weighted average number of shares for diluted EPS is
calculated by including the weighted average number of potentially
dilutive shares under option.
Weighted Weighted
average average
number number
Earnings of shares EPS Earnings of shares EPS
30 September 30 September 30 September 30 September 30 September 30 September
2017 2017 2017 2016 2016 2016
GBP'000 Thousands Pence GBP'000 Thousands Pence
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Profit
on ordinary
activities
after tax 4,588 15,819 29.0 4,087 15,346 26.6
Weighted
average
number
of shares
under option - 131 (0.2) - 299 (0.5)
--------------- ------------- ------------- ------------- ------------- ------------- -------------
Diluted
EPS 4,588 15,950 28.8 4,087 15,645 26.1
--------------- ------------- ------------- ------------- ------------- ------------- -------------
6. Revenue reserve
On 22 March 2017, the Group carried out a capital reduction
exercise whereby GBP8.9m of the Group's undistributable profits
(within the retained earnings reserve) were capitalised by way of a
bonus issue of newly created capital reduction shares. These shares
were subsequently cancelled and the GBP8.9m credited to the
retained earnings reserve as distributable profits.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UARBRBAAUAAA
(END) Dow Jones Newswires
December 12, 2017 02:00 ET (07:00 GMT)
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