Newcastle-based Zytronic, which makes touch sensors and optical filters for electronic displays, notched up 33 per cent profits growth last year, and chairman John Kennair sees growth aplenty ahead.

For the year to September, Kennair announced 16 per cent-plus turnover growth to �12.3m and a healthy rise in pre-tax profits from �984,000 to �1.3m. Earnings grew at an even faster 70 per cent to 8p, thanks to a significantly reduced tax charge pertaining to growth in R&D tax credits and allowances on share options lifted from 2p to 3p.

Gross margin gains were reported for the fourth consecutive year – with the margin improving from 31 per cent to 31.3 per cent. Top-line growth included �310,000 worth of sales of the new ZYPOS touch sensor product, making rapid inroads into the fast food retailing, ticketing and petrol pump markets. Investment in a new ZYPOS manufacturing facility has already begun, to service this burgeoning demand, with these touch sensors apparently now being specified into projects ranging from DVD vending machines to passenger information systems within taxi cabs. The balance of the year’s revenue rise was spread between sales of traditional optical filter products and ZYTOUCH touch sensors, where sales were up 11 per cent.

Kennair expressed delight with growth in new orders, driven by expansion of the sales network in Europe and the Far East, as well as the US network established last year. ‘We’ve got such strong growth potential within the business,’ says Kennair, who also has high hopes for a new product known as ZYSWITCH.

While there’s plenty of growth on offer here, the shares are trading on a historic earnings multiple of 30 times-plus, which isn’t cheap. If you do hold shares, however, make sure you hang onto them.

Zytronic	AIM	�39.1m	267.00p	0.00p
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