In short it appears from today's RNS release that Zytronic's current business is in terminal decline. Revenues did pick up in the second half of the year but still fell short of last year's by £1.4m. Not the news shareholders were hoping for. On a brighter note the company announced a strategic review.
So quick thoughts. Transformation plan? NO NO NO thank you. Let's be real. If management couldn't see this steep decline in current business coming then how could you trust them to essentially take a flier in another unproven direction. Besides it'd take considerable financing, so they could end up pissing their considerable assets in cash, property and equipment up the wall and still fail.
They also mention the option of de-listing. ABSO(fucking)LUTELY NOT!! The business is failing so saving a few quid on listing costs will make fuck all difference.
Assets are considerable in relation to the current share price. Either a solvent liquidation, a sale of the business or liquidating assets and continuing as a cash shell are the sensible options.
After today's 11% share price decline the market cap. is about the £4.8m against Net Assets of £12.9m of which £8.4m comprises cash, property, plant and equipment.
Note to Zytronic management. You've failed, now give shareholders our money back!! Incidentally none of the management team are major shareholders which tells it's own story 😒.
In other news, I've just watched the Crimson Tide interim results investor presentation on their investor hub. In contrast to Zytronic it's a growing company with a new management team. My take-aways are that they seem more focused, they're aiming for the larger clients with continuous upselling opportunities and the pipeline of potential business is impressive (including in the US). It was interesting that they said even the recent interest from Ideagen at 3.1p per share is a large undervaluation of Crimson Tide and it's prospects. As ever time will tell if they can deliver on their optimism.
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