Interim Results

Zytronic plc

("Zytronic" or the "Company" and, together

 with its subsidiaries, the "Group")

Interim Results for the six months ended 31 March 2021 (unaudited)

Zytronic plc, a leading specialist manufacturer of touch sensors, announces its consolidated interim results for the six months ended 31 March 2021. Comparative data is given for the six months ended 31 March 2020, except where indicated.

Overview

· Group revenue of £4.8m (2020: £7.4m), impacted by the Coronavirus pandemic

· EBITDA of £0.2m (2020: £1.0m)

· Loss before tax of £0.3m (2020: profit of £0.5m)

· Basic (loss)/earnings per share of (1.2)p (2020: 2.5p)

· Positive operating cashflow of £0.4m (2020: £1.9m)

· Net cash of £7.8m (30 September 2020: £14.0m), after payment of £6.7m in respect of the return of capital

Commenting on the results, Tudor Davies, Chairman said:

"Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post COVID-19."

Enquiries:

Notes to Editors

Zytronic is the developer and manufacturer of a unique range of internationally award-winning and patented touch sensor products, operating from three modern factories totaling 80,000ft2 near Newcastle-upon-Tyne in the United Kingdom.

Zytronic touch products employ an embedded sensing solution and are readily configurable to enable multi-user and multi-touch touch sensing sizes from five inches to ultra-large 85", making them an ideal solution for system designers' specific requirements, offering significant durability, environmental stability and optical enhancement benefits to touch interactivity for industrial, self-service and public access equipment.

Chairman's statement

Introduction

In the January trading update, we explained that sales continued to be badly affected by the Coronavirus pandemic, but the prior year's reorganisation and cost reduction measures were enabling us to maintain a positive EBITDA, and there were some signs of an improvement in the order intake.

We are pleased to report a continuation of the improvement in order intake and sales during the remainder of the first half to 31 March 2021, and now expect a gradual return to profitability as long as the Coronavirus pandemic continues to be controlled in our major markets of Europe, Asia and the Americas.

Trading

Revenues for the half year ended 31 March 2021 were £4.8m (2020: £7.4m), with gross margin of 27.0% (2020: 30.3%), EBITDA of £0.2m (2020: £1.0m) and after depreciation and amortisation the loss before tax was £0.3m (2020: profit of £0.5m).

Whilst the drop in revenues of 35% is significant when compared with the same period last year, the comparison with a pre-COVID-19 period only provides an indicator of more normal historic trading levels. A better indicator of progress at this stage is the order intake, and from April last year we had continued to experience a consistently low order intake level. However, from January onwards we have seen an improving monthly average order intake, and it is particularly pleasing that the Gaming and Financial sectors have made a major contribution to the improvement.

Cash position

The Board decided that the £14.0m cash balances as at 30 September 2020, arising from the Company's 16-year record of unbroken profitability prior to the pandemic, and despite a 15-year unbroken dividend, should provide the opportunity for shareholders to either participate in a return of surplus cash, or to maintain their shareholdings.

Following the conclusion of the Tender Offer on 25 February 2021, the number of shares in issue reduced by 28.8% to 11,419,152 as 4,624,889 shares were purchased at a price of 145p and a cost of £6.7m.

We continue to be in a strong financial position with cash balances of £7.8m (30 September 2020: £14.0m) and are pleased that despite the considerable downturn we have generated £0.4m.

Outlook

Whilst we are starting from a very low base compared with our historic sales levels, the recent improvement in orders and sales are an encouraging sign of the prospects for the second half and for a return to profitability as more normal global trading resumes post-COVID-19.

Tudor Davies

Chairman

11 May 2021

Consolidated statement of comprehensive income

Unaudited results for the six months to 31 March 2021

All activities are from continuing operations.

Consolidated statement of changes in equity

Unaudited results for the six months to 31 March 2021

Consolidated statement of financial position

Unaudited results at 31 March 2021

Consolidated cashflow statement

Unaudited results for the six months to 31 March 2021

Notes to the interim report

Unaudited results for the six months to 31 March 2021

1. Basis of preparation

The financial information in these interim statements is prepared under the historical cost convention and in accordance with international accounting standards. It does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006 and does not reflect all the information contained in the Group's annual report and financial statements.

The tax 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 report and financial statements.

The interim results for the six months to 31 March 2021 are not reviewed by Crowe U.K. LLP and accordingly no opinion has been given.

The interim financial statements have been prepared using the same accounting policies and methods of computation used to prepare the 2020 annual report and financial statements.

The financial information for the six months to 31 March 2021 and the comparative financial information for the six months to 31 March 2020 have not been audited. The comparative financial information for the year ended 30 September 2020 has been extracted from the 2020 annual report and financial statements.

The annual report and financial statements for the year ended 30 September 2020, which were approved by the Board of Directors on 7 December 2020, received an unqualified audit report, did not contain a statement under Sections 498(2) or (3) of the Companies Act 2006 and have been filed with the Registrar of Companies.

The Group has one reportable business segment comprising the development and manufacture of customised optical products to enhance electronic display performance. Products in this reportable business segment include touch sensors, filters and other laminated products. All revenue, profits or losses before tax and net assets are attributable to this reportable business segment.

2. Basis of consolidation

The Group results consolidate the accounts of Zytronic plc and all its subsidiary undertakings drawn up to 31 March 2021.

3. Exceptional costs

(a) Cost of sales

These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.

(b) Administration expenses

These charges have arisen as a direct result of the COVID-19 impact on the Group whereby restructuring was necessary to align headcount with operations.

4. Exceptional other income

The income received and accrued as above is as a result of claims made under the CJRS for when personnel were on Furlough leave.

5. Tax charge on (loss)/profit on ordinary activities

The estimated tax rate for the year of 41% has been applied to the half year's loss before tax, in accordance with the Auditing Standards Board's statement on interim reports.

6. (Loss)/earnings per share ("LPS" / "EPS")

Basic LPS/EPS is calculated by dividing the (loss)/profit attributable to ordinary equity holders of the Company by the weighted average number of ordinary shares in issue during the period. All activities are continuing operations and therefore there is no difference between LPS/EPS arising from total operations and LPS/EPS arising from continuing operations.

For the six months to 31 March 2021 and 2020

The weighted average number of shares for diluted LPS/EPS is calculated by including the weighted average number of shares under option.

For the year to 30 September 2020

The weighted average number of shares for diluted LPS is calculated by including the weighted average number of shares under option.

7. Dividends

Under the present circumstances, the Directors consider that it is appropriate to defer returns to shareholders until there is clear evidence of a return towards normality. Accordingly, no interim dividend is proposed for the period (2020: Nil). The table below reflects historic dividend payments.

8. Cash and cash equivalents

For the purpose of the consolidated cashflow statement, cash and cash equivalents comprise the following:

Cash at bank earns interest at floating rates based on daily bank deposit rates. Short term deposits are made for variable lengths, being overnight, three months or one year (with break conditions), depending on the immediate cash requirements of the Group, and earn interest at variable rates.

At 31 March 2021 the Group had available a net £1.0m (cash less overdrawn accounts) overdraft facility from Barclays Bank plc, which will fall for review in July 2021.

The fair value of cash and cash equivalents is £7.8m (2020: £12.4m).

9. Capital and reserves

On 1 February 2021 the Company announced a proposed return of up to £10.0m of capital by way of a Tender Offer which was accepted by shareholders on 25 February 2021. As a result, 4,624,889 shares were purchased and subsequently cancelled by the Company at a price of 145p per share, returning £6.7m of the Company's cash.

10. Availability of the interim report

A copy of the interim report and interim results presentation is available on the Company's corporate website, www.zytronicplc.com. Copies can be requested from the Company's registered office: Whiteley Road, Blaydon-on-Tyne, Tyne and Wear NE21 5NJ.