TIDMZYT
RNS Number : 7022R
Zytronic PLC
13 December 2016
The following amendment has been made to the Preliminary Results
announcement released on 13 December 2016 at 07:00 under RNS No
6348R.
The record date for the final dividend has been corrected to 17
February 2017.
All other details remain unchanged. The full amended text is
shown below.
13 December 2016
Zytronic plc
("Zytronic" or the "Group")
Preliminary Results for the year ended 30 September 2016
(audited)
Zytronic plc, a leading specialist manufacturer of touch
sensors, announces its preliminary results for the year ended 30
September 2016.
Overview
-- Significant improvement in Group trading profits (excluding
the GBP0.9m fall in fair value of forward exchange contracts) to
GBP5.2m (2015: GBP4.6m)
-- Strong cash generation from operating activities of GBP5.6m
(2015: GBP4.9m) provides the basis for a 20% increase in dividends,
being the third successive year of double-digit dividend growth
-- Group revenue of GBP21.1m (2015: GBP21.3m) reflects the
continuing growth in touch sensor revenue of 5% (2015: 16%)
-- Export revenue accounted for 95% (2015: 93%) of all revenue
-- Basic earnings per share increased to 26.6p (2015: 24.7p)
Commenting on the outlook, Chairman, Tudor Davies said:
"The year has started well with orders, revenue and current
trading ahead of the same period last year, which provides an
encouraging start to continue to deliver value for our
shareholders.
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
Nick Owen
Notes to Editors
Zytronic is a world renowned developer and manufacturer of a
unique range of internationally award winning interactive touch
sensor overlay products for use with electronic displays in
industrial, self-service and public access equipment.
Zytronic's products employ an embedded sensing solution that is
readily configurable and offers significant durability,
environmental stability and optical enhancement benefits to system
designers specific requirements.
Zytronic has continually developed know-how and IP since 1999
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 three modern factories on a single site near
Newcastle-upon-Tyne in the United Kingdom, Zytronic processes glass
substrates and assembles their touch overlay products, 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 2016 which, as explained in the recent pre-close
statement, Group trading profit excluding fair value movements on
foreign exchange forward contracts of GBP0.9m, shows a significant
improvement to GBP5.2m.
Results
As Mark Cambridge, our CEO, describes in his Operational review,
it is pleasing to report the success of the strategy of targeting
the larger-format touch sensor markets where our proprietary
multi-touch technology has generated significant demand,
particularly in the gaming market.
The key measure of growth is our touch sensor business where,
for the year ended 30 September 2016, revenues grew by 5% to
GBP18.2m, although as expected there was a 26% reduction in
revenues to GBP2.9m of the original non-touch glass display
products which we have been diversifying away from for several
years.
In total, revenues were slightly down at GBP21.1m (2015:
GBP21.3m), but despite the fall in the fair value of the forward
exchange contracts of GBP0.9m, reported profit before tax was
GBP4.3m (2015: GBP4.5m) whilst profit after tax increased to
GBP4.1m (2015: GBP3.8m) with basic earnings per share increasing to
26.6p (2015: 24.7p). The benefit in EPS has come from a reduced tax
charge of 4% (2015: 17%) as a result of the Group's election to
take part in the Patent Box tax scheme.
The conversion of profits into cash demonstrates the underlying
improvement in performance, with cash generation from operating
activities for the year ended 30 September 2016 increasing to
GBP5.6m (2015: GBP4.9m).
Dividend
The Directors propose a final dividend of 10.96p (2015: 8.87p)
payable on 3 March 2017 to shareholders on the register on 17
February 2017, which increases the total dividend for the year by
20% to 14.41p (2015: 12.01p).
Outlook
The year has started well with orders, revenue and current
trading ahead of the same period last year, which provides an
encouraging start to continue to deliver value for our
shareholders.
Tudor Davies
Chairman
12 December 2016
2016 Operational review
I would like to start this Operational review by thanking on
behalf of the Board of Directors, all Zytronic employees who
contributed to the overall performance of the business, over the
2016 fiscal period.
Strategic sales and marketing initiatives
In the 2015 annual report, we indicated a number of key
strategic initiatives for 2016 particularly related to the growth
in our direct presence in key global areas, being North America,
the Greater China Region and Japan, as well as continuing to focus
on our global routes to market through the development of the sales
channel partnerships that we have around the world.
The work in establishing an increased direct presence for
Zytronic in the forementioned key geographies continued through
2016, with the appointment of a USA based national sales engineer
in Zytronic Inc. This was complemented over the course of 2016, by
the increase to 41 in our channel partner network (2015: 38); with
16 regional agreements across the Americas, up from 14 in 2015,
eleven across APAC, 13 across EMEA and one new global value added
reseller agreement with the display division of Future Electronics,
an organisation which has numerous sales offices, product
warehousing and assembly facilities around the world.
A key feature of the period has been the continued development
of our multi-touch multi-user mutual projected capacitive
technology ("MPCT(TM)") for ultra-large format sensor designs. This
has continued our strategic focus on key growth application areas
such as casino cabinet gaming (flat and curved), casino surface
table gaming and vertical and horizontal digital signage, where our
technology, manufacturing competence and product functionalities
provided an advantage.
The main focus of our marketing efforts during 2016 was the
complete corporate rebranding of the Group, with the release of a
new branding logo focused on the substantial touch-interactive
nature of the business, along with new websites with the added
benefits of mobile device compliance. We also continued to
participate either directly or in combination with channel partners
and suppliers, at key signage, gaming and technical tradeshows in
the UK, Europe, the Middle East and the USA. The global promotion
of the Group through our regional PR representatives, was assisted
by the release of several product case studies, process and sales
structure press releases and technical opinion pieces.
Strategic research and development
The technical team continued the work outlined in the 2015
annual report to provide manufacturing process and product
functional improvements to the ranges and IP associated with the
touch sensing technologies developed and produced by Zytronic.
The team completed the design and production release of the
ZXY150 series controller for MPCT(TM) functionality in the large
volume area of sensor sizes less than 20". In conjunction with this
development, the silicon phase of the developed Zytronic MPCT(TM)
Application-Specific Integrated Chip ("ASIC") commenced, with
delivery of first article approval samples of the ASIC expected in
January 2017. The production release of MPCT(TM) controllers
supporting the full range of sensor sizes incorporating the ASIC is
scheduled for the final quarter of 2017.
At the year end, a fifth GB patent was granted for our MPCT(TM)
solution, being GB2502594, related to the design specifics of our
MPCT(TM) electrode sensor pattern.
Over the period, the team also continued further developments of
Zytronic software and firmware IP, in both our single-touch,
single-user self-projected capacitive technology "PCT(TM)" and
MPCT(TM) solutions with the release of Android and Mac operating
system-specific hardware drivers as well as a single finger unique
zoom functionality instead of the normal and cumbersome
multi-finger gesture.
A significant amount of development time over 2016 was expended
on the design and procurement of a state-of-the-art laser system
for the bonding of our electrode pattern to our flexible PCB
controller connector tails, with a production ready unit expected
to be in service by January 2017. The team also continued over the
year to work on alternative sensor electrode materials as well as
providing significant technical support into our relationship with
Cryptera A/S as we move towards an expectation of 2017 production
projects of encrypted touch solutions.
Sales
The 2016 first half non-touch products revenue reduction,
reported at the interims, persisted through the second half,
resulting in revenues of non-touch products of GBP2.9m (2015:
GBP4.0m); this decline has been expected and had been flagged over
a number of reporting periods. Although a number of factors
contributed to this, by far the most significant, was a further
reduction in the ATM display revenues of GBP0.7m, from GBP2.3m of
2015 to GBP1.6m this year.
Total sales revenues for the year of GBP21.1m were generally in
line with those generated in 2015 (GBP21.3m), albeit with the
nature of the business being increasingly geared towards touch
product revenues. With high global exports, bespoke designs and
varying project-based low volume batch production, the mix of
product revenues was, as expected, considerably different when
comparing the two years. Touch revenues increased by GBP0.9m (5%)
to GBP18.2m (2015: GBP17.3m). More specific details of this mix
improvement are covered below.
Export revenues accounted for 95% of the GBP21.1m total revenues
(2015: 93% of GBP21.3m), whilst touch export revenues grew by
GBP1.3m (8%) to GBP17.6m, representing 96% of the GBP18.2m of total
touch revenues (2015: GBP16.3m, 94% of GBP17.3m). We experienced,
for the second year, significant growth in our APAC touch sales to
GBP7.3m (2015: GBP5.0m), coming from the strengthening of our
bespoke curved MPCT(TM) solutions in the gaming market, relative
stability in our EMEA touch sales at GBP6.7m (2015: GBP6.8m) and a
reduction in Americas touch sales to GBP3.6m (2015: GBP4.5m),
mainly associated with the vending market.
The total number of touch sensor units supplied across all size
ranges was 130,000 (2015: 149,000 units). The single most
significant reduction in volume was attributable to a decrease in
medium-sized 15" sensors, associated with vending applications.
However, as the business has continued to focus on the
increasing revenue benefits associated with the ultra-large format
markets, with sensors greater than 30", the effects of the
reduction in sensor volumes in the smaller size ranges was
significantly countered. The following table compares the relative
volumes of sensors sold over a range of sensor sizes:
2016 2015 Variance
------------ ----------------------- ----------------------- ------------------------
Sensor Units % total Units % total Units % Change
Size (thousands) (thousands) (thousands)
------------ ------------- -------- ------------- -------- ------------- ---------
0 - 14.9" 39 30 42 28 (3) (7)
------------ ------------- -------- ------------- -------- ------------- ---------
15.0 -29.9" 77 59 98 66 (21) (21)
------------ ------------- -------- ------------- -------- ------------- ---------
30.0"
+ 14 11 9 6 5 56
------------ ------------- -------- ------------- -------- ------------- ---------
TOTALS 130 100 149 100 (19) (13)
------------ ------------- -------- ------------- -------- ------------- ---------
Additional benefits in both revenues and margins are realised as
a consequence of the significant proportion of the 14,000
ultra-large format units supplied that are greater than 30" in size
incorporating the value added growth areas targeted by the Group.
These being 11,000 units incorporating our MPCT(TM) solutions
(2015: 6,000 units) and, of the 11,000 units, 9,000 units were of
bespoke large-radius curved designs (2015: 4,000 units).
Touch application markets
The financial market remained our top touch revenue generating
application contributing GBP6.4m (2015: GBP6.3m) of revenues. The
market in the year was affected by Asian ATM manufacturers
continuing to strengthen their local positions against our larger
global ATM OEM customers as well as the merger of Diebold Inc. with
Wincor Nixdorf, which was concluded in the year.
The gaming market continued to show considerable strength and
growth and in 2016, became the second highest touch application
revenue contributor at GBP5.9m (2015: GBP3.4m), as project
deliverables, where we offered both PCT(TM) and MPCT(TM) solutions
across a number of customers in ultra-large curved formats,
increased.
The vending market, although our second highest touch
application area in terms of unit volumes produced, became our
third highest touch application area in terms of revenue generation
at GBP2.6m (2015: GBP3.7m). As expected, the decline in both volume
and revenue was mostly attributable to another year of
significantly reduced supply for the medium-sized 15" Coca-Cola
Freestyle units, after their substantial purchasing of sensors to
align with the original LCD display unit end-of-life programme in
2015, as detailed in the 2015 annual report.
Our industrial and signage application markets declined from the
prior year to GBP1.4m (2015: GBP2.0m) and GBP1.0m (GBP1.2m)
respectively. By far the biggest contributor to the drop in
industrial revenues was the 52% reduction across numerous
individual projects from our French channel partner, coupled with
the effects in general of the oil and gas sector. Signage was
affected by the conclusion in 2015 of the car showroom information
table system project for a new model launch with a UK customer, as
described in the 2015 annual report.
In combination, our other application markets of healthcare,
home automation and telematics in total increased GBP0.1m to
GBP0.9m (2015: GBP0.8m), with the volume of the cooktop project,
under home in particular, improving over the year.
Opportunities analysis
Zytronic maintains an active log to monitor all valid sales
enquiries generated from the various input sources, being the sales
channel partners, regional sales managers, business development
managers and exhibition participation.
However, during the latter stages of 2016, to further improve
our lead monitoring and global sales management processes, we
ported and moved the static log into a new Microsoft Dynamics
process-based CRM system from which they are now monitored. New
leads were then added to the CRM system and all leads were
segregated into the key market sectors, ranging in size and value
depending upon their success probability, quantity, and, if
applicable to touch, by sensor size and technology of the products
required, with our high probability leads tagged as Projects.
As the system is dynamic, it ensures that the data is always up
to date, ensuring that strict defined process stages must be met
and complied with, as the leads progress through to Projects. As of
30 September 2016, there were 325 active leads in the system, of
which 48 are currently accorded high probability Project
status.
Mark Cambridge
Chief Executive Officer
12 December 2016
2016 Financial review
Overview
The Group's performance over the year can be characterised by
the following key factors:
-- Group revenue of GBP21.1m (2015: GBP21.3m);
-- Continued growth in touch sensor revenue of 5% (2015: 16%);
-- gross profit margin of 42.8%, compared to 41.9% in 2015;
-- reported Group trading profit of GBP4.3m (2015: GBP4.6m) is
impacted by the fall in fair value of forward foreign exchange
contracts of GBP0.9m;
-- profit after tax at GBP4.1m is ahead of last year by GBP0.3m (2015: GBP3.8m); and
-- continued strong cash generation from operating activities of GBP5.6m (2015: GBP4.9m).
Gross margin
Gross margin improved to 42.8% in the year (2015: 41.9%) through
increased revenues from larger--format touch sensors and a bigger
split of revenues from touch products compared to traditional
products. The Group maintained production efficiencies from
previous years' capital investment and continued to control other
costs.
Group trading profit
Group trading profit of GBP4.3m (2015: GBP4.6m) was impacted by
the GBP0.9m fall in fair value of forward foreign exchange
contracts following the severe weakening of Sterling when the EU
referendum resulted in the UK voting to leave the EU. Group trading
profit excluding fair value movement on forward foreign exchange
contracts is therefore GBP5.2m. All other costs of administration
have been well controlled throughout the year.
Tax
The Group's total tax charge in the income statement for the
year ended 30 September 2016 is GBP0.2m, which represents an
effective tax rate of 4.3%. The effective tax rate has been
impacted by the Group obtaining tax benefits from electing into the
Patent Box regime, which allows companies to apply a rate of
corporation tax of 10% to profits earned after 1 April 2013 from
patented inventions and similar intellectual property. During the
year ended 30 September 2016, work was completed by qualified
specialists to confirm that the relevant criteria had been met and
tax savings of GBP127k for 2016 plus GBP289k for the two previous
years has been recognised, which has reduced the effective tax rate
from the statutory rate of 20.0% by 9.7% in total. The tax rate has
been further reduced by 4.4% as a result of the Group claiming
R&D tax credits.
Earnings per share
The issued share capital is 15,429,528 ordinary shares of 1.0p
each and EPS for the year is 26.6p, which represents growth of 8%
from that reported last year (2015: 24.7p).
Dividend
During the year the Group paid a final dividend for 2015 of
8.87p per share and a 2016 interim dividend of 3.45p per share
totalling GBP1.9m of cash (2015: GBP1.6m). The Directors recommend
the payment of a final dividend of 10.96p per share for the year
ended 30 September 2016 giving a total dividend for the year of
14.41p per share (2015: 12.01p) and an increase of 20% over last
year. Subject to approval by shareholders, the dividend will be
paid on Friday 3 March 2017 to shareholders on the register as at
the close of business on Friday 17 February 2017. The dividend is
covered 1.9 times by underlying earnings.
Capital expenditure
The Group additions to capital expenditure totalled GBP0.8m
split equally between property, plant and equipment and intangible
assets. Following the major capacity planning expansion work
undertaken last year, this year's spend in plant and equipment has
been incurred in adding several new 2D direct-write electrode
printing machines to increase the throughput and capacity of the
production of ultra-large (up to 65") touch sensors. A large
portion of the spend in intangible assets related to continuing
work on the MPCT(TM) ASIC project and a new Fibre Laser PCB Bonding
Table and Vision system. Depreciation and amortisation for the year
was just over GBP1.1m (2015: GBP1.0m).
Cash and debt
The Group continues to be cash generative and recorded an
increase in cash and cash equivalents of GBP2.9m (2015: GBP2.0m) at
the year end. This growth in cash enables the Group to continue its
policy to invest in internal R&D and capital refurbishments and
to maintain its progressive dividend policy.
Net cash (cash less debt) balances at 30 September 2016 were
GBP11.6m (2015: GBP8.5m), of which GBP2.6m was held between instant
access and 95 days' notice interest-bearing deposit accounts, with
the remainder being managed through a set-off arrangement.
The Group maintains an overdraft facility which is available for
use in any of its currencies. The Group also had an FX policy in
place at the year end whereby it is hedged in both US Dollars and
Euros for a period of twelve months ahead to try to better manage
its net GBP inflows from its surplus currency requirements.
Following the year end the Group considered its position on FX and
agreed to continue to hedge against FX movement but only up to a
period of a maximum four months ahead. The current contracts in
place will therefore unwind over the coming year and will be
replaced as necessary as per the new policy.
The Group retains a property mortgage with Barclays Bank plc,
entered into in 2012, which is repayable at GBP0.2m per annum for
five years, at which time it will either be re-financed or repaid.
As of 30 September 2016, the outstanding property mortgage is
GBP1.1m.
Proposed capital reduction
A special resolution to apply to the Courts for a capital
reduction process will be placed before the shareholders at the
forthcoming Annual General Meeting ("AGM"). This resolution, should
it be approved by the Court, will enable the conversion of the
GBP8.9m of historical non-distributable reserves to distributable
reserves. The Directors' unanimous recommendation is that you vote
in favour of this proposal.
Claire Smith
Group Finance Director
12 December 2016
Consolidated statement of comprehensive income
For the year ended 30 September 2016
2016 2015
Notes GBP'000 GBP'000
------------------------- ------ --------- ---------
Group revenue 21,087 21,267
Cost of sales (12,071) (12,366)
Gross profit 9,016 8,901
Distribution costs (378) (278)
Administration expenses (4,365) (4,073)
------------------------- ------ --------- ---------
Group trading profit 4,273 4,550
------------------------- ------ --------- ---------
Finance costs (23) (29)
Finance revenue 20 23
------------------------- ------ --------- ---------
Profit before tax 4,270 4,544
Tax expense 3 (183) (775)
------------------------- ------ --------- ---------
Profit for the year 4,087 3,769
------------------------- ------ --------- ---------
Earnings per share
Basic 5 26.6p 24.7p
Diluted 5 26.1p 24.3p
------------------------- ------ --------- ---------
All profits are from continuing operations.
Consolidated statement of changes in equity
For the year ended 30 September 2016
Called
up share Share Retained
capital premium earnings Total
GBP'000 GBP'000 GBP'000 GBP'000
------------------------- --------- -------- --------- --------
At 1 October 2014 152 7,290 10,611 18,053
Profit for the year - - 3,769 3,769
Exercise of share
options 1 262 - 263
Share-based payments - - 180 180
Dividends - - (1,574) (1,574)
--------- -------- --------- --------
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 30 September
2016 154 7,766 15,316 23,236
------------------------- --------- -------- --------- --------
Consolidated balance sheet
At 30 September 2016
2016 2015
Notes GBP'000 GBP'000
---------------------------------- ------- -------- --------
Assets
Non-current assets
Intangible assets 1,457 1,427
Property, plant and equipment 7,389 7,807
8,846 9,234
------------------------------------------ -------- --------
Current assets
Inventories 2,760 3,214
Trade and other receivables 3,745 3,055
Cash and short term deposits 12,763 9,833
------------------------------------------- -------- --------
19,268 16,102
------------------------------------------ -------- --------
Total assets 28,114 25,336
------------------------------------------- -------- --------
Equity and liabilities
Current liabilities
Trade and other payables 1,302 971
Financial liabilities 1,148 200
Derivative financial liabilities 959 89
Provisions 205 -
Accruals 834 1,201
Tax liabilities 122 255
4,570 2,716
------------------------------------------ -------- --------
Non-current liabilities
Financial liabilities - 1,144
Provisions - 136
Government grants 48 59
Deferred tax liabilities
(net) 260 590
308 1,929
------------------------------------------ -------- --------
Total liabilities 4,878 4,645
------------------------------------------- -------- --------
Net assets 23,236 20,691
------------------------------------------- -------- --------
Capital and reserves
Equity share capital 154 153
Share premium 7,766 7,552
Revenue reserve 15,316 12,986
------------------------------------------- -------- --------
Total equity 23,236 20,691
------------------------------------------- -------- --------
Consolidated cashflow statement
For the year ended 30 September 2016
2016 2015
GBP'000 GBP'000
-------------------------------- -------- --------
Operating activities
Profit before tax 4,270 4,544
Net finance costs 3 6
Depreciation and impairment
of property, plant and
equipment 766 708
Amortisation and impairment
of intangible assets 355 336
Loss on sale of fixed assets - 54
Amortisation of government
grant (11) (4)
Share-based payments 71 180
Fair value movement on
foreign exchange forward
contracts 870 (87)
Working capital adjustments
Decrease/(increase) in
inventories 454 (88)
(Increase)/decrease in
trade and other receivables (690) 13
Increase/(decrease) in
trade and other payables
and provisions 76 (249)
--------------------------------- -------- --------
Cash generated from operations 6,164 5,413
Tax paid (576) (556)
--------------------------------- -------- --------
Net cashflow from operating
activities 5,588 4,857
--------------------------------- -------- --------
Investing activities
Interest received 20 23
Proceeds from disposal
of property, plant and
equipment - 3
Receipt of government grant --- 63
Payments to acquire property,
plant and equipment (387) (994)
Payments to acquire intangible
assets (385) (388)
--------------------------------- -------- --------
Net cashflow from investing
activities (752) (1,293)
--------------------------------- -------- --------
Financing activities
Interest paid (21) (26)
Dividends paid to equity
shareholders of the Parent (1,900) (1,574)
Proceeds from share issues
relating to options 215 263
Repayment of borrowings (200) (200)
Net cashflow from financing
activities (1,906) (1,537)
--------------------------------- -------- --------
Increase in cash and cash
equivalents 2,930 2,027
--------------------------------- -------- --------
Cash and cash equivalents
at the beginning of the
year 9,833 7,806
--------------------------------- -------- --------
Cash and cash equivalents
at the year end 12,763 9,833
--------------------------------- -------- --------
Notes to the consolidated financial statement
1. Basis of preparation
The preliminary results for the year ended 30 September 2016
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 2016. 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 2015 have been filed with the
Registrar of Companies. The statutory accounts for the year ended
30 September 2016 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
2016 2015
GBP'000 GBP'000
--------------------------------------- ------------- -------------
Current tax
UK corporation tax 732 750
Corporation tax over-provided in
prior years (289) 31
--------------------------------------- ------------- -------------
Total current tax charge 443 781
--------------------------------------- ------------- -------------
Deferred tax
Effect of change in tax rates (103) -
Origination and reversal of temporary
differences (157) (6)
--------------------------------------- ------------- -------------
Total deferred tax credit (260) (6)
--------------------------------------- ------------- -------------
Tax charge in the income statement 183 775
--------------------------------------- ------------- -------------
Tax relating to items debited to equity
30 September 30 September
2016 2015
GBP'000 GBP'000
------------------------------- ------------- -------------
Deferred tax
Tax on share-based payments (72) -
------------------------------- ------------- -------------
Total deferred tax debit (72) -
------------------------------- ------------- -------------
Tax charge in the statement of (72) -
changes in equity
------------------------------- ------------- -------------
Reconciliation of the total tax charge
The effective tax rate of the tax expense in the income
statement for the year is 4% (2015: 17%) compared with the rate of
corporation tax in the UK of 20% (2015: 20.5%). The differences are
reconciled below:
30 September 30 September
2016 2015
GBP'000 GBP'000
------------------------------------------- ------------- -------------
Accounting profit before tax 4,270 4,544
------------------------------------------- ------------- -------------
Accounting profit multiplied by
the UK rate of corporation tax
of 20% (2015: 20.5%) 854 932
Effects of:
Expenses not deductible/(income
not chargeable) for tax purposes 16 (19)
"Gain" on exercise of share options
allowable for tax purposes but
not reflected in the income statement (42) (25)
Depreciation in respect of non-qualifying
items 38 38
Enhanced tax reliefs - R&D (187) (179)
Enhanced tax reliefs - Patent Box (127) -
Effect of deferred tax rate reduction
and difference in tax rates (80) (3)
Tax (over-provided)/under-provided
in prior years (289) 31
------------------------------------------- ------------- -------------
Total tax expense reported in the
income statement 183 775
------------------------------------------- ------------- -------------
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 Group has obtained benefits from electing into the Patent
Box regime. This has resulted in a reduction in the corporation tax
liabilities for both the 2014 and 2015 accounting periods, which is
reflected within tax over-provided in prior years of GBP289k.
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,
although it is not reflected within the income statement. These
gains will arise in future years but their timing and amount is
uncertain.
There are no tax losses to carry forward at 30 September 2016
(2015: GBPNil).
The main rate of corporation tax in the UK reduced to 20% with
effect from 1 April 2015. The rate will be reduced to 19% from 1
April 2017 and 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 now been made in relation to the 2014 and 2015
accounting periods, and the 2016 benefit estimated.
4. Dividends
The Directors propose the payment of a final dividend of 10.96p
per share (2015: 8.87p), payable on 3 March 2017 to shareholders on
the Register of Members on 17 February 2017. This dividend has not
been accrued in these financial statements. The dividend payment
will amount to some GBP1.7m.
30 September 30 September
2016 2015
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Ordinary dividends on equity shares
Final dividend of 7.16p per ordinary
share paid on 13 March 2015 - 1,093
Interim dividend of 3.14p per ordinary
share paid on 24 July 2015 - 481
Final dividend of 8.87p per ordinary 1,368 -
share paid on 11 March 2016
Interim dividend of 3.45p per ordinary 532 -
share paid on 22 July 2016
---------------------------------------- ------------- -------------
1,900 1,574
---------------------------------------- ------------- -------------
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
2016 2016 2016 2015 2015 2015
GBP'000 Thousands Pence GBP'000 Thousands Pence
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Profit
on ordinary
activities
after
tax 4,087 15,346 26.6 3,769 15,259 24.7
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Basic
EPS 4,087 15,346 26.6 3,769 15,259 24.7
-------------- ------------- ------------- ------------- ------------- ------------- -------------
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
2016 2016 2016 2015 2015 2015
GBP'000 Thousands Pence GBP'000 Thousands Pence
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Profit
on ordinary
activities
after
tax 4,087 15,346 26.6 3,769 15,259 24.7
Weighted
average
number
of shares
under
option - 299 (0.5) - 239 (0.4)
-------------- ------------- ------------- ------------- ------------- ------------- -------------
Diluted
EPS 4,087 15,645 26.1 3,769 15,498 24.3
-------------- ------------- ------------- ------------- ------------- ------------- -------------
6. AGM date
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 16 February 2017 at 2.00pm. Notice of the AGM will be
sent to shareholders with the annual report and accounts in due
course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UOSWRNWAUARA
(END) Dow Jones Newswires
December 13, 2016 03:51 ET (08:51 GMT)
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