RNS Number : 7525W
Holders Technology PLC
21 August 2020
21 August 2020
Holders Technology plc
("Holders Technology" or the "Company")
Half Year Report 2020
Holders Technology, (AIM: HDT), is pleased to announce its unaudited half year results for the six months ended 31 May 2020.
Highlights
Holders Technology plc supplies specialty laminates and materials for printed circuit board manufacturers ("PCB") and operates as a lighting and control solutions ("LCS") provider to the lighting market and commercial buildings sector.
Unaudited results for the half year ended 31 May 2020 are summarised as follows:
2020
2019
£'000
£'000
Revenue
PCB
4,157
4,291
LCS
1,170
1,737
Total
5,327
6,028
Gross profit
1,398
1,579
Margins
26.2%
26.2%
Overheads
1,482
1,570
Operating (loss)/ profit
(84)
9
Finance (expense)/ income
(6)
11
(Loss)/ profit before tax
(90)
20
Taxation
-
29
(Loss)/ profit after tax
(90)
49
(Loss)/ earnings per share
(2.13p)
1.17p
Interim dividend per share
0.25p
0.25p
Net assets per share
99p
100p
Chairman's statement
Inevitably these interim results were heavily impacted by the economic consequences of the Covid-19 pandemic. The two segments of our business were affected differently. Details of this are set out below.
We have taken full benefit of all applicable assistance schemes, both in the UK and Germany, in order to reduce our costs. We have supplemented these with pay and other cost reductions wherever we can.
Against the background of the exceptionally difficult conditions, the board considers the result for the first half to be acceptable.
Group revenue decreased by 11.6% to £5.3m (H1 2019: £6.0m), gross margins were unchanged at 26.2%, and the pre-tax result was a loss of £90,000 (H1 2019: profit of £20,000).
PCB
PCB sales in the period decreased by 3.1%, from £4,291,000 in 2019 to £4,157,000, and PCB gross margins increased by 0.8% to 23.3%. The first half revenues benefitted from increased demand from healthcare applications and a degree of stockpiling by our customers due to global uncertainty. The Government support referred to above enabled us to reduce PCB overheads as a percentage of sales by 1.7% to 16.4%. Overall, our PCB activities recorded a pre-tax profit of £124,000 (H1 2019: profit of £30,000).
LCS
Lighting and Control Solutions division operations in the UK and Germany experienced a difficult first half due to the economic impact of Covid-19. A number of projects were delayed in the UK and the market in Germany weakened. Revenue reduced by 32.6% from £1,737,000 in H1 2019 to £1,170,000 but gross margins improved from 35.2% to 36.8%. Overheads as a percentage of revenue increased from 31.1% to 49.7%. The overall result for the LCS divisions was a loss of £174,000 (H1 2019: profit of £31,000).
In March 2020, the Group invested c. £15,000 in a 50:50 Joint Venture with a sales partner based in Austria. The new company, called Holders Technology Austria GmbH, will develop intelligent lighting business in Austria, Switzerland, Czechia, and Slovakia.
Cash and Debt
During the Covid-19 crisis management have increased focus on controlling days of stock and debtors' days. Net cash of £107,000 was generated from operations. Group cash at the period end was £723,000 (H1 2019: £674,000). Other than lease liabilities, the company has no debt.
Outlook
At present we have only limited visibility as to the likely level of trading in the second half of the year. We are encouraged by recent improvements in some divisions, both in quotations and order intake, as compared to the first half but cannot be certain that this will follow through to the end of the year. Our management team and work force remain committed to managing costs and containing working capital, so that the business may benefit from any improvement in trading conditions.
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.
For further information, contact:
Rudolf W. Weinreich Holders Technology plc
Executive Chairman 27-28 Eastcastle Street
London W1W 8HD
For further information, contact:
Holders Technology plc
Rudi Weinreich, Executive Chairman 01896 758781
Victoria Blaisdell, Group Managing Director
Paul Geraghty, Group Finance Director
SP Angel Corporate Finance LLP - Nomad and Broker
Matthew Johnson/ Caroline Rowe, Corporate Finance
Abigail Wayne, Corporate Broking 020 3470 0470
Website
www.holdersgroup.com
Consolidated income statement
for the half year ended 31 May 2020 (Unaudited)
Half year ended 31 May 2020
Half year ended 31 May 2019
Full year ended 30 Nov 2019
Notes
£'000
£'000
£'000
Revenue
4
5,327
6,028
12,162
Cost of sales
(3,929)
(4,449)
(8,770)
Gross profit
1,398
1,579
3,392
Distribution costs
(186)
(199)
(419)
Administrative expenses
(1,294)
(1,369)
(2,890)
Other operating (expenses)/ income
(2)
(2)
61
Operating (loss)/ profit
(84)
9
144
Finance (costs)/ income
(6)
11
6
Profit before taxation
(90)
20
150
Taxation
5
-
29
31
Profit for the period
(90)
49
181
Total and continuing
Basic earnings per share
7
(2.13p)
1.17p
4.31p
Diluted earnings per share
7
(2.13p)
1.17p
4.30p
Consolidated statement of comprehensive income
for the half year ended 31 May 2020 (Unaudited)
Half year ended 31 May 2020
Half year ended 31 May 2019
Full year ended 30 Nov 2019
£'000
£'000
£'000
(Loss)/ profit for the period
(90)
49
181
Reserves adjustment for IFRS 16
(10)
-
-
Exchange differences on translation of foreign operations
133
6
(94)
Total comprehensive income for the period
33
55
87
Consolidated statement of changes in equity
for the half year ended 31 May 2020 (Unaudited)
Share capital
Share premium
Capital redemption reserve
Translation reserve
Retained earnings
Total equity
£'000
£'000
£'000
£'000
£'000
£'000
Balance 1 Dec 2018
416
1,590
1
222
1,870
4,099
Dividends
-
-
-
-
(32)
(32)
Shares issued
6
-
-
-
-
6
Share based payments
-
-
-
-
4
4
Transactions with owners
6
-
-
-
(28)
(22)
Profit for the year
-
-
-
-
181
181
Exchange differences on translating foreign operations
-
-
-
(94)
-
(94)
Total comprehensive income for the year
-
-
-
(94)
181
87
Balance 30 Nov 2019
422
1,590
1
128
2,023
4,164
Loss for the period
-
-
-
-
(90)
(90)
Reserves adjustment for IFRS 16
--
-
-
-
(10)
(10)
Exchange differences on translating foreign operations
-
-
-
133
-
133
Total comprehensive income for the period
-
-
-
133
(100)
33
Balance 31 May 2020
422
1,590
1
261
1,923
4,197
Consolidated balance sheet
at 31 May 2020 (Unaudited)
Half year ended 31 May 2020
Half year ended 31 May 2019
Full year ended 30 Nov 2019
Notes
£'000
£'000
£'000
Assets
Non-current assets
Intangible fixed assets
388
318
394
Property, plant and equipment
245
338
237
Right-of-use assets
3
409
-
-
Investment in joint venture
15
-
-
Deferred tax assets
12
9
12
1,069
665
643
Current assets
Inventories
2,358
2,459
2,530
Trade and other receivables
1,461
1,542
1,758
Cash and cash equivalents
723
674
734
4,542
4,675
5,022
Liabilities
Current liabilities
Trade and other payables
(765)
(988)
(1,280)
Lease liabilities
3
(419)
-
-
Current tax liabilities
-
-
-
(1,184)
(988)
(1,280)
Net current assets
3,358
3,687
3,742
Non-current liabilities
Retirement benefit liability
(221)
(207)
(212)
Deferred tax liabilities
(9)
(6)
(9)
(230)
(213)
(221)
Net assets
4,197
4,139
4,164
Shareholders' equity
Share capital
422
422
422
Share premium account
1,590
1,590
1,590
Capital redemption reserve
1
1
1
Retained earnings
1,923
1,898
2,023
Cumulative translation adjustment
261
228
128
Equity attributable to the shareholders of the parent
4,197
4,139
4,164
Consolidated cash flow statement
for the half year ended 31 May 2020 (Unaudited)
Half year ended 31 May 2020
Half year ended 31 May 2019
Full year ended 30 Nov 2019
£'000
£'000
£'000
Cash flows from operating activities
(Loss)/ profit before tax from continuing operations
(90)
20
150
Share-based payment charge
-
-
4
Depreciation
150
76
74
Decrease in inventories
261
375
237
(Increase)/ decrease in trade and other receivables
(75)
104
(140)
(Decrease)/ increase in trade and other payables
(139)
(221)
92
Interest expense/ (credit)
6
(14)
(6)
Cash generated from operations
113
340
411
Interest paid
(6)
-
(8)
Net cash generated from operations
107
340
403
Cash flows from investing activities
Purchase of property, plant, and equipment
(21)
(57)
(42)
Purchase of ROU assets
(514)
-
-
Proceeds from sale of property, plant, and equipment
-
-
1
Investment in joint venture
(15)
-
-
Net cash used in investing activities
(550)
(57)
(41)
Cash flows from financing activities
Equity dividends paid
-
(21)
(32)
Ordinary shares issued
-
6
6
Proceeds of lease agreements
524
-
-
Lease payments
(116)
-
-
Net cash used in financing activities
408
(15)
(26)
Net change in cash and cash equivalents
(35)
268
336
Cash and cash equivalents at start of period
734
403
403
Effect of foreign exchange rates
24
3
(5)
Cash and cash equivalents at end of period
723
674
734
Notes
1. General information
Holders Technology plc is incorporated in the United Kingdom under the Companies Act 2006. The principal activity of the group is to provide specialised materials, components and solutions to the electronics and lighting industries.
2. Basis of preparation
The condensed consolidated half year financial statements have been prepared in accordance with the AIM Rules for Companies and prepared on a basis consistent with International Financial Reporting Standards ("IFRS") as adopted by the EU and the accounting policies set out in the group's financial statements for the year ended 30 November 2019.
The half year financial statements are unaudited and include all adjustments which management considers necessary for a fair presentation of the group's financial position, operating results and cash flows for the 6-month periods ended 31 May 2019 and 31 May 2020.
The half year financial statements do not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. A copy of the group's financial statements for the year ended 30 November 2019 prepared in accordance with IFRS as adopted by the EU has been filed with the Registrar of Companies. The auditors' report on those financial statements was not qualified and did not contain statements under s498(2) of s498(3) of the Companies Act 2006.
As permitted, the group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these half year financial statements and therefore the half year financial information is not in full compliance with IFRS.
The preparation of half year financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income, and expenses. Actual results may differ from these estimates.
These half year financial statements have been prepared under the historical cost convention.
The board of Holders Technology plc approved this half yearly report on 20 August 2020.
3. IFRS 16 Leases
The half year statements include the impact of IFRS 16 "Leases" for the first time. The group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2019 periods, under the transitional provisions in the standard. The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 December 2020.
On adoption of IFRS 16, the group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019.
Right of use ("ROU") assets and lease liabilities were recognised as follows:
PCB
LCS
Total
£'000
£'000
£'000
At 1 December 2019
ROU assets
Property
279
-
279
Equipment
243
-
243
Motor vehicles
-
7
7
Total
522
7
529
Lease liabilities
534
5
539
At 31 May 2020
ROU assets
Property
186
-
186
Equipment
221
-
221
Motor vehicles
-
2
2
Total
407
2
409
Lease liabilities
417
2
419
As a result of the above adjustments, retained reserves at 1.12.19 were reduced by £10,000.
The impact on the 6-month period to 31 May 2020 was a credit to administrative expenses of £6,000 (all PCB segment), and a charge to interest of the same amount.
4. Segmental information
Management currently identifies two operating segments:
1. PCB distributes materials, equipment and supplies to the PCB industry.
2. LCS provides lighting and control solutions to the lighting market and commercial buildings sector.
Analysis by operating segment for the half year ended 31 May
PCB
LCS
Central Costs
Total
2020
2019
2020
2019
2020
2019
2020
2019
£'000
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Revenue
4,157
4,291
1,170
1,737
-
-
5,327
6,028
Cost of sales
3,189
3,324
740
1,125
-
-
3,929
4,449
Gross Profit
968
967
430
612
-
-
1,398
1,579
Distribution costs
164
159
22
40
-
-
186
199
Administration costs
680
778
582
541
34
52
1,296
1,371
Segment Profit/ (Loss)
124
30
(174)
31
(34)
(52)
(84)
9
5. The tax provision for the six months ended 31 May 2020 is calculated based on the tax rates applicable in the country in which each company operates.
6. A final dividend of 0.25p per share on the total issued share capital of 4,224,164 10p ordinary shares was paid on 23 June 2020 in respect of the year ended 30 November 2019.
An interim dividend payment of 0.25p per share (2019: 0.25p per share) will be payable on 6 October 2020 to shareholders on the register at 11 September 2020. The shares will go ex-dividend on 10 September 2020. The interim dividend had not been approved by the board at 31 May 2020 and accordingly, has not been included as a liability as at that date.
7. The basic earnings per share for continuing operations are based on the loss for the period of £90,000 (2019: profit £49,000) and on 4,224,164 ordinary shares (2019: 4,172,759), the weighted average number of shares in issue during the period. Diluted earnings per share for continuing operations are based on 4,224,164 ordinary shares (2019: 4,194,313), being the weighted average number of ordinary shares after an adjustment of nil shares (2019: 21,554 shares) in relation to share options.
8. A copy of this half yearly report is being sent to shareholders and is available for inspection at the company's offices at Holders Technology (UK) Ltd., Units 1-4, Block 9, Tweedbank Industrial Estate, Galashiels TD1 3RS and via its website www.holdersgroup.com.
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