Final Results
Zytronic PLC
12 December 2002
ZYTRONIC PLC
Preliminary Results for the Year to 30 September 2002
Zytronic Plc, a specialist manufacturer of touch screens and optical filters for
electronic displays, announces its preliminary results for the year to
30 September 2002.
Summary
• Strong recovery in second half, sales 45% up on first half; annual
turnover down 12% to £5.1 million (2001 : £5.8 million)
• Second half operating profit £88,000; annual operating loss £394,000
(2001: profit £706,000)
• Cash £1.2 million; net cash £0.6 million (2001: £1.2 million)
• Touch Screens - Substantial contracts expected to start impacting in
second half of 2003
Post year end
• Worldwide distribution agreement with 3M, a major world player in the
touchscreen market
John Kennair, Chairman, commented:
'With a year end cash balance of £1.2 million, the capital expenditure programme
related to capacity expansion now complete and Zytouch accepted in the market
place, the company is well positioned, both financially and technically to take
advantage of the contracts that have been secured.
'We expect progress of Zytouch in the touchscreen market to continue through
sales directly to OEM's and, in the longer term, from our new distribution
agreement with 3M. This is a major step in the longer term development of the
markets for Zytouch.'
12 December 2002
ENQUIRIES:
Zytronic Plc
John Kennair, MBE , Chairman Tel: 0191 414 5511
Ian Lawson, Chief Executive Today only: 020 7457 2020
After today: 0191 414 5511
College Hill
Nicholas Nelson/Clare Warren Tel: 020 7457 2020
CHAIRMAN'S STATEMENT
The year to 30 September 2002 has seen further significant progress in the
development of the business although this is yet to be reflected in the results.
The initial contracts for Zytouch, the Group's new touchscreen product,
entered production in the last quarter of the year. Other substantial contracts
in the banking and interactive kiosk markets have been secured and will come on
stream in 2003, and in November a worldwide distribution agreement was completed
with 3M, who are one of the leading touchscreen manufacturers in the world.
Trading Results
The events of September 2001 had a significant adverse impact on the electronic
sector in general, affecting the results of Zytronic's traditional business of
filters for electronic displays and slowing down the introduction of Zytouch.
Although the second half saw significant recovery, with sales 45% higher than
the first half, sales for the year to 30 September 2002 were 12.5% lower than
the previous year at £5.1 million. The second half produced an operating profit
of £88,000 reducing the overall operating loss for the year to £394,000. Cash
generated from trading in the course of the year (operating profit before
depreciation and amortisation) was £222,000, which combined with improvements in
working capital of £413,000 to produce an overall cash inflow from operating
activities of £635,000.
Outlook
With a year end cash balance of £1.2 million, the capital expenditure programme
related to capacity expansion now complete and Zytouch accepted in the market
place, the company is well positioned, both financially and technically to take
advantage of the contracts that have been secured.
We expect progress of Zytouch in the touchscreen market to continue through
sales directly to OEM's and, in the longer term, from our new distribution
agreement with 3M. They will brand our product with the 3M name and include it
in their touchscreen offering through their outlets worldwide. This is a major
step in the longer term development of the markets for Zytouch and provides a
further endorsement of the Zytouch technology by a company who are not only a
world leader in the manufacture of touchscreens, but also a world leader in
technology relating to electronic information displays.
Sales of Zytouch have taken longer to achieve than anticipated and uncertainties
remain in the electronics sector. Therefore, the Directors do not expect
progress to be reflected in trading until the second half of the 2003 financial
year. However, the 3M distribution agreement, combined with the contracts that
have already been secured in banking, telecommunications and interactive kiosks,
lead the directors to continue to be optimistic about the future prospects of
the group.
Dividends
While our cash position is strong, in common with many new companies we have not
built up significant distributable reserves. Following a reduction in reserves
during the last financial year, the Board has decided not to recommend a final
dividend. On the basis of current expectations, we plan to resume the payment
of dividends in respect of the year to 30 September 2003.
J M Kennair
Chairman
12 December 2002
GROUP PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 SEPTEMBER 2002
2002 2001
Notes £'000 £'000
Group turnover 5,066 5,785
Cost of sales 3,678 3,610
Gross profit 1,388 2,175
Distribution costs 66 54
Administrative expenses 1,716 1,415
1,782 1,469
Group operating (loss)/profit (394) 706
Interest payable (33) (17)
Interest receivable 21 74
(Loss)/profit on ordinary activities before taxation (406) 763
Tax on loss/profit on ordinary activities 3 85 (225)
(Loss)/Profit on ordinary activities after taxation (321) 538
Ordinary dividends on equity shares 4 (71) (179)
Retained (loss)/profit for the year (392) 359
(Loss)/Earnings per share - basic 5 (2.2p) 3.8p
- diluted 5 (2.2p) 3.7p
Statement of Total Recognised Gains and Losses
for the year ended 30 September 2002
(Loss)/profit for the financial year (321) 538
538
Total recognised gains and losses relating to the period (321)
Prior year adjustment 6 (30)
Total gains and losses recognised since last annual report (351)
The results for both the above years derive from continuing operations.
BALANCE SHEETS
AT 30 SEPTEMBER 2002
Group Company
2001
2002 Restated 2002 2001
£'000 £'000 £'000 £'000
Fixed assets
Intangible assets 2,357 2,248 - -
Tangible assets 2,630 2,632 - -
Investments - - 9,448 9,448
4,987 4,880 9,448 9,448
Current assets
Stocks 895 982 - -
Debtors:
Amounts falling within one year 1,259 1,421 2,086 2,051
Group debtors falling due after one year - - 4,000 4,000
Cash at bank and in hand 1,176 1,156 5 63
3,330 3,559 6,091 6,114
Creditors: amounts falling due within one year 1,203 1,397 129 250
Net current assets less liabilities 2,127 2,162 5,962 5,864
Total assets less current liabilities 7,114 7,042 15,410 15,312
Creditors: amounts falling due after more than one year 499 - - -
Provisions for liabilities and charges
Deferred tax 149 184 - -
6,466 6,858 15,410 15,312
Capital and reserves
Called up share capital 143 143 143 143
Share premium 6,212 6,212 6,212 6,212
Merger reserve (31) (31) - -
Profit and loss account 142 534 9,055 8,957
Equity shareholders' funds 6,466 6,858 15,410 15,312
GROUP STATEMENT OF CASHFLOWS
FOR THE YEAR ENDED 30 SEPTEMBER 2002
2002 2001
Notes £'000 £'000
Net cash inflow from operating activities 7(a) 635 679
Return on investments and servicing of finance
Interest received 21 76
Interest paid (2) (6)
Interest element of finance lease rental payment s (21) (11)
Net (outflow)/inflow from returns on investments and servicing of (2) 59
finance
Taxation
Corporation tax refunded/(paid) 13 (116)
Capital expenditure and financial investment
Payments to acquire intangible fixed assets (264) (86)
Payments to acquire tangible fixed assets (756) (1,190)
Receipts from sales of tangible fixed assets - 6
Net outflow from capital expenditure and financial investment (1,020) (1,270)
Equity dividends paid (179) (214)
Net cash outflow before financing (553) (862)
Financing
Repayment of long term loans (10) (10)
Receipts from new finance lease 684 -
Net repayment of capital element of finance leases
and hire purchase contracts (101) (129)
Net inflow/(outflow) from financing 573 (139)
Increase/(Decrease) in cash 20 (1,001)
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS
Increases/(Decrease) in cash 20 (1,001)
Repayment of long term loans 10 10
Receipts from new finance leases (684) -
Net repayment of capital element of finance leases
and hire purchase contracts 101 129
Movement in net funds (553) (862)
Net funds at beginning of the year 1,105 1,967
Net funds at end of year 7b 552 1,105
Notes
1. Basis of preparation
The preliminary results have been prepared under the historical cost convention
and in accordance with applicable accounting standards. The preliminary results
have 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 6.
2. Basis of consolidation
The group results consolidate the accounts of Zytronic Plc and all its
subsidiary undertakings drawn up to 30 September 2002.
3. Tax on loss/profit on ordinary activities
2001
2002 Restated
£'000 £'000
Current tax:
UK corporation tax recoverable/(payable) 94 (129)
Corporation tax (under)/over provided in prior years (44) 28
Recoverable advance corporation tax written back - 30
________ _______
Total current tax 50 (71)
________ ________
Deferred tax:
Origination and reversal of timing differences (20) (154)
Deferred tax over provided in prior years 55 -
________ ________
Group deferred tax 35 (154)
________ ________
Tax on loss/profit on ordinary activities 85 (225)
======= =======
Factors affecting current tax (credit)/charge
Loss/profit on ordinary activities multiplied by standard
rate of UK corporation tax of 30% (2001-30%) 122 (229)
Expenses not deductible for tax purposes (includes
amortisation of goodwill and licences) (54) (53)
Accelerated capital allowances 20 154
Effect of marginal rates of UK corporation tax 6 (1)
Current tax (under)/over provided in prior years (44) 28
Recoverable advance corporation tax written back - 30
________ ________
Total current tax 50 (71)
======= =======
4. Dividends
An interim dividend of 0.5p (2001: 0.5p) per share was paid to shareholders on
21 June 2002. There is no recommended final dividend (2001: 0.75p).
5. Loss/Earnings per share
The calculations of loss/earnings per share are based on a loss after taxation
of £321,000 (2001: £538,000 profit), and a basic and diluted weighted average of
14,291,539 shares (2001: basic weighted average of 14,291,539 shares and diluted
weighted average of 14,381,760 shares) in issue.
6. 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. (The Group does not have any
revalued assets at present.)
• 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 preliminary statement.
The only adjustment to the balance sheets has been to increase the provision for
deferred tax at 30 September 2001 by £30,000 and reduce reserves at that date by
the same amount.
7. Notes to the group statement of cash flows
(a)Reconciliation of operating loss/profit to net cash inflow from operating
activities:
2002 2001
£'000 £'000
Operating (loss)/profit (394) 706
Depreciation 458 306
Amortisation 155 151
Loss/(profit) on sale of fixed assets 3 (6)
________ ________
222 1,157
Decrease/(increase) in stocks 87 (145)
Decrease/(increase) in debtors 164 (163)
Increase/(decrease) in creditors 162 (170)
________ ________
Net cash inflow from operating activities 635 679
======= =======
(b) Analysis of net funds
2001 Cash Flows 2002
£'000 £'000 £'000
Cash at bank and in hand 1,156 20 1,176
External loans (10) 10 -
Finance leases (41) (583) (624)
_______ ________ ________
1,105 (553) 552
======= ======= ========
8. Report and accounts
The above results do not represent the statutory accounts. The audit report is
yet to be signed. The audited accounts will be mailed to shareholders shortly
and will be available from the registered office at Patterson Street, Blaydon,
Tyne & Wear, NE21 5SG.
The results for the year to 30 September 2001 have been extracted from the 2001
accounts of Zytronic Plc, as adjusted for the change in accounting policy for
deferred taxation referred to in note 6. The 2001 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.
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