Business

Zytronic reports upturn in orders after swinging to loss in pandemic

Gateshead tech manufacturer Zytronic said it is has seen a lift in orders, giving it encouragement for the coming months, after swinging to a loss in the pandemic.

The firm’s products are integrated into screens used by a number of sectors, including information desks, cash machines, casinos and transport ticketing machines. It was badly affected last year when Covid-19 triggered the closure of casinos and other businesses.

In January bosses at Zytronic warned that sales were still slow, but it managed to maintain positive EBITDA after carrying out a major restructure, which included making 67 of its 164 staff members redundant.

Now the firm has published interim results for the six months ended March 31, showing how the impacts of the pandemic reduced group revenue from £7.4m to £4.8m. EBITDA also dropped from £1m to £200,000.

Last year’s pre-tax profit of £500,000 was also converted to a loss of £200,000.

During the period the board decided that its £14m cash balances as of September 30, arising from the company’s 16-year record of unbroken profitability prior to the pandemic, should provide the opportunity for shareholders to either participate in a return of surplus cash, or to maintain their shareholdings.

As a result, the firm launched a tender offer on February 25, which has reduced the number of shares in issue by 28.8%. Around 4,624,889 shares were purchased at a price of 145p and a cost of £6.7m.

The firm said it still has strong cash balances of £7.8m and is pleased that “despite the considerable downturn” it has generated £400,000.

Chairman Tudor Davies said Zytronic has seen a recent pick-up in orders, delivering positive prospects for the rest of the year.

He 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.

“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.”

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