REG - Holders Technology - Final Results
28/03/2022 07:00
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RNS Number : 1530G Holders Technology PLC 28 March 2022
Holders Technology plc
("the Group")
Specialised PCB Materials, Lighting and Wireless Control Solutions
Final results for the year ended 30 November 2021
Holders Technology plc (AIM: HDT) announces its audited results for the year
ended 30 November 2021.
The Group supplies specialty laminates and materials for printed circuit board
manufacture ("PCB") and operates as a Lighting and Control Solutions ("LCS")
provider. The Group operates from the UK and from Germany, with PCB
divisions and LCS divisions in each country. In addition, LCS operates joint
ventures in the UK, Austria, New Zealand and Australia.
Revenue and profitability for all divisions improved during the year, helped
by a general improvement in economic conditions. On 30 September 2021 the
Group disposed of certain commodity PCB assets from the UK and Germany
divisions.
An interim dividend of 0.50p per share was paid on 5 October 2021, and a
special dividend of 2.0p per share was paid on 28 January 2022. The
directors will recommend payment of a final dividend of 0.50p per share, a
total of 3.0p for the year (2020 total: 0.50p).
The results are summarised below.
2021 2020
£'000 £'000
· Revenue PCB 7,920 7,314
LCS 4,466 2,524
Group 12,386 9,838
· Gross Margins PCB 27.8% 24.4%
LCS 37.3% 36.5%
Group 31.2% 27.5%
· Operating Profit/ (Loss) PCB 434 102
LCS 32 (246)
Central costs (117) (105)
349 (249)
· Net Profit on Disposal of Assets* 445 -
Finance Costs (10) (16)
Income from Joint Ventures 3 1
· Profit/ (Loss) before Tax Group 787 (264)
Tax (92) -
Profit/ (Loss) after Tax 695 (264)
· Basic and diluted EPS/ (LPS) 16.45p (6.25p)
Dividend paid and proposed 3.00p 0.50p
Cash 3,192 1,113
* Profit on asset disposal £591,000 less related goodwill impairment
£146,000
This announcement contains inside information for the purposes of Article 7 of
Regulation (EU) 596/2014 which has been incorporated into UK law by the
European Union (Withdrawal) Act 2018.
For further information, contact:
Holders Technology plc 01896 758781
Rudi Weinreich, Executive Chairman
Victoria Blaisdell, Group Managing Director
Paul Geraghty, Group Finance Director
Website www.holderstechnology.com (http://www.holderstechnology.com)
SP Angel Corporate Finance LLP - Nominated Adviser & Broker 020 3470 0470
Matthew Johnson / Caroline Rowe
Chairman's statement
It is pleasing to be able to report that in the year to 30 November 2021,
group turnover grew to £12,386,000 (2020: £9,838,000), with the major part
of that growth coming from our LCS business.
The year saw a very significant development for the Group with the sale of our
commodity PCB product range. This has enabled us to concentrate on a number of
specialised PCB products whilst further growing our LCS business. Further
details of this transaction are given in the Operating and Business review and
the Financial Review.
The disposal has further strengthened our cash position, with cash at the end
of the year being £3.1m (2020: £1.1m). In recognition of this improved
position, a special dividend of 2.0p per share has been paid with the balance
of the disposal proceeds being available to further strengthen our growing LCS
activities.
LCS activities are primarily based in the Europe but during the year, in order
to extend our geographical coverage, we established joint venture operations
in New Zealand and Australia.
Shareholders will recognise that the expansion of our LCS business will
require significant investment to realise the expansion which we believe to be
possible. We have always been financially conservative and will continue to be
so and will incline to writing off rather than capitalising such expenditures,
this may impact short term profitability.
The potential impact of recent events in Ukraine inevitably cast a shadow over
the immediate business outlook but we can say that, in part due to the recent
disposal of certain activities, we have a strong balance sheet, and this
coupled with the opportunities we perceive leaves us, we believe, well
positioned to meet the challenges of the years ahead.
R W Weinreich
Executive Chairman
25 March 2022
Operating and Business Review
Corporate strategy
The Board seeks to enhance shareholder value over the medium to long term.
Our strategy to achieve this is to focus resources on business activities
which can generate profitable and sustainable growth.
In doing so, we ensure that risk is carefully managed, and that high standards
of corporate governance and transparency are maintained. Where a suitable
investment opportunity is identified, we invest within the bounds of
internally generated cash flow and bank facilities where appropriate.
Business strategy
The Group has operated for many years as a distributor of specialised
materials to the PCB industry in the UK and continental Europe. The European
PCB industry has strengths in the defence, aerospace, automotive and medical
sectors. The Group acts as an exclusive supplier of technically
sophisticated products to this sector, providing technical support and local
warehousing of stock.
With volume PCB manufacture moving to China, the Group views the PCB business
as a steady revenue stream, but not one which will provide significant growth
to the Group. However, the Group does expect future strong growth from the
LCS divisions.
The Group's LCS products range from the sale of lighting components to
supporting customers with the design and assembly of complete light engines.
LCS divisions also offer a complete ecosystem of wireless control solutions,
project services and data analytic solutions.
The Group's lighting components strategy is to provide a competitive premium
product range and value-added services to lighting manufacturers in our
markets. The Group's wireless lighting controls strategy is to focus on the
specification of the wireless technology, as well as all project and data
analytic services to lighting specifiers, M & E consultants, as well as
building engineering companies.
The Group continues to expand its wireless controls business into other
geographical territories. In August 2021 the Group established Holders
Technology (New Zealand) Ltd and Holders Technology Australia PTY Ltd, which
sell wireless lighting control solutions and all related project services and
data analytics in New Zealand and Australia.
Market Overview
PCB divisions in 2021 experienced significant instability, with widespread raw
material shortages and marked cost increases for goods and freight.
Alternative materials were sourced where available, and existing goods were
re-priced where possible. By the year end, revenue had increased from £7.3m
to £7.9m and operating profitability improved from £102,000 to £554,000.
LCS divisions in 2021 recovered strongly after the effects of the Covid-19
pandemic in 2020. LCS divisions' revenue grew from £2.5m to £4.5m and
operating profitability improved from £246,000 loss to £32,000 profit.
Business Review
In 2021, the Group divested certain assets of its PCB business. This enabled
the Group to remain focused on the retained and more technically sophisticated
PCB products, rather than the more commodity and lower margin products. This
also provided the company with additional cash reserves to invest in the
higher growth LCS divisions.
2021 was an exciting year in terms of our development and growth of the LCS
divisions. Highlights included the following:
· Successful implementation of large commercial, industrial, retail and
hospitality projects with wireless controls hardware provided by the Group, as
well as a full range of project services. These are a combination of new
build as well as retrofit projects.
· Announcement of a strategic partnership with Tridonic, a global
leading provider of wireless emergency lighting systems. The partnership
enables Holders Technology to promote wireless technology not only for
standard luminaires, but also for emergency luminaires within a building.
· Acquisition of first customers for the Holders Technology Data
Analytics solution. Using the wireless lighting control infrastructure, we
are able to supply customers with energy, lighting, and occupancy.
· Broadening of our range of wireless control products and supplier
relationships, to ensure the largest and most complete portfolio of products
available in our markets.
· Further investment in knowledgeable and experienced sales and
technical staff, across the Group.
· Expansion outside of Europe to New Zealand and Australia, leveraging
our supplier base and European expertise to these new joint venture companies.
Conclusion
2021 was a transitional year for the Group with divestment of certain PCB
assets and strengthening of our LCS businesses. In 2022, we expect our PCB
business to have continuing strong demand for the products we offer. For the
LCS business, we plan further staff recruitment and technology investment, to
strengthen our business and further enhance our product and services
portfolio.
Victoria Blaisdell
Group Managing Director
25 March 2022
Financial Review
Key performance indicators
The Board believes that the following key performance indicators are of most
significance to assessment of the Group's performance and financial position:
· Revenue
The turnover level is an important indication of the strength of the Group's
product range and coverage.
· Profitability
Profitability is largely a function of the gross margins achieved and
management's success in containing administrative expenses in relation to
turnover.
· Liquidity
The Group operates in a cyclical industry and the directors have consistently
adopted a conservative approach to financing the Group's activities. The key
measure is net liquid funds, as described below.
· Efficiency
Production efficiency is important in a competitive PCB market.
Revenue
Group revenue from continuing operations increased from £9.8m to £12.4m.
Overall PCB revenue increased by 8.3%, whilst Lighting and Controls revenue
increased by 76.9%.
Profitability
The operating profit was £469,000 compared to an operating loss of £249,000
in 2020. The gross profit margin was 31.2% compared to 27.5% in 2020.
Administration costs increased from £2.6m to £3.0m (2020 costs were lower
due to the implementation of measures in response to the Covid-19 pandemic.)
Administration costs, however, fell as a proportion of revenue from 26.0% in
2020 to 24.2% in 2021.
PCB Asset Disposal
On 31 September 2021 the Group disposed of various PCB assets in the UK and
Germany comprising machinery and commercial information relating to commodity
materials used in the production of PCBs in the European market. Proceeds of
the disposal were £1,634,000 and the profit on disposal was £471,000.
Goodwill of £146,000 relating to the Germany PCB acquisition in 2003 was
written off following the disposal.
Post tax result
The profit for the financial year after tax, attributable to equity
shareholders was £695,000 (2020: loss of £264,000). The basic and fully
diluted earnings per share was 16.45p (2020: 6.25p loss per share).
Principal risks and uncertainties
The directors believe that the following are the principal risks and
uncertainties faced by the Group:
· Competition
Both the PCB and Lighting and Controls sectors are highly competitive, and the
Group faces competition from a wide range of companies. The Group
continually seeks the most cost-effective sources for its products in order to
remain competitive.
· Customers
The Group is exposed to the risk of bad debts. Within the major European
markets, the Group uses credit analysis data to monitor customer risk levels
and maintain appropriate credit limits. Credit insurance is used for UK and
European customers whenever it is economically available.
· Suppliers
As with any distribution business, the Group is dependent on maintaining
supply. The Group has diversified its product range and sources in order not
to be overly dependent on any single supplier.
· Key Management
In order to ensure retention of key management, the Group offers competitive
remuneration, a stimulating working environment and clear two-way
communication.
· Business Interruption
In order to minimise the impact of business interruption, the Group offers
dual capacity in UK and Germany, and holds appropriate business interruption
insurance.
· Financial Control
Internal controls and multiple authorisation levels, with monthly review of
results and cash, are used to combat fraud and potential misstatement of
results.
· Covid-19
The Covid-19 pandemic has created risks in terms of market disruption and
health risk to our workforce. The Group continues to follow government health
advice in respect of the Covid-19 virus.
Cash flow, liquidity and financing
The Group's cash position improved during the year. Cash balances increased
from £1,113,000 to £3,192,000. The improvement principally arose from
operating profits plus proceeds from the PCB asset disposal. The Group does
not currently require or maintain an overdraft facility. A trade financing
facility is used for occasional letters of credit.
At 30 November 2021 the Group had net liquid funds (trade and other
receivables plus cash minus current liabilities excluding lease liabilities)
of £3.1m (2020: £1.3m). Net assets per ordinary share at 30 November 2021
were £1.07 (2020: £0.95).
Derivatives and other financial instruments
Operations are financed from retained profits. The Group's financial
instruments, other than forward currency contracts, comprise cash and items,
such as trade receivables and payables that arise directly from its
operations. The main purpose of these instruments is to provide finance for
operations if necessary. It is, and has been throughout the period under
review, the Group's policy that no trading in financial instruments shall be
undertaken.
Currency risk and exposure
The Group enters into forward currency contracts that are used to manage the
currency risks arising from purchases from foreign suppliers where the
products are sold in local currencies. The overseas sales operations during
the year were predominantly in the European Union. The Group has currency
exposures primarily in US dollars and Euros. Although daily transactional
exposures are regularly covered by forward contracts, the Group has an
underlying exposure, particularly to the Euro.
Net assets
Net assets at the 2021 year-end were £4,528,000 (2020: £3,999,000).
Conclusion
The Group enters 2021 with a stronger balance sheet and increased capacity for
investment as new opportunities are identified.
Paul Geraghty
Group Finance Director
25 March 2022
Group income statement for the year ended 30 November 2021
Note 2021 2020
£'000 £'000
Revenue 12,386 9,838
Cost of sales (8,516) (7,135)
Gross profit 3,870 2,703
Distribution costs (408) (348)
Administrative expenses (3,001) (2,562)
Impairment of goodwill (146) -
Other operating (expenses)/ income 8 (42)
Operating profit/ (loss) 323 (249)
Profit on disposal of assets 471 -
Income from joint ventures 3 1
Finance expense (10) (16)
Profit/ (loss) before taxation 787 (264)
Tax expense 2 (92) -
Profit/ (loss) after taxation attributable to equity shareholders 695 (264)
Basic and diluted earnings/ (loss) per share 4 16.45p (6.25p)
Group statement of comprehensive income for the year ended 30 November 2021
2021 2020
£'000 £'000
Profit for the year 695 (264)
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations (134) 120
Total comprehensive income/ (loss) for the year 561 (144)
Statement of changes in equity for the year ended 30 November 2021
Group Share capital Share premium account Capital redemption reserve Translation reserve Retained earnings Total equity
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 December 2019 422 1,590 1 128 2,023 4,164
Dividends - - - - (21) (21)
Transactions with owners - - - - (21) (21)
Loss for the year - - - - (264) (264)
Exchange differences on translating foreign operations
- - - 120 - 120
Total comprehensive (loss)/ income for the year
- - - 120 (264) (144)
Balance at 30 November 2020 422 1,590 1 248 1,738 3,999
Dividends - - - - (32) (32)
Transactions with owners - - - - (32) (32)
Loss for the year - - - - 695 695
Exchange differences on translating foreign operations
- - - (134) - (134)
Total comprehensive income/ (loss) for the year
- - - (134) 695 561
Balance at 30 November 2021 422 1,590 1 114 2,401 4,528
Group balance sheet at 30 November 2021
2021 2020
£'000 £'000
Assets
Non-current assets
Intangible fixed assets 220 381
Property, plant and equipment 82 219
Leased assets 97 341
Investments in joint ventures 111 28
Deferred tax assets 12 12
512 981
Current assets
Inventories 1,180 2,340
Trade and other receivables 1,593 1,420
Cash and cash equivalents 3,192 1,113
5,965 4,873
Liabilities
Current liabilities
Trade and other payables (1,661) (1,274)
Lease liabilities (58) (105)
(1,719) (1,379)
Net current assets 4,246 3,494
Non-current liabilities
Retirement benefit liability (186) (223)
Lease liabilities (58) (244)
Deferred tax liabilities (9) (9)
(230) (476)
4,528 3,999
Shareholders' equity
Share capital 422 422
Share premium account 1,590 1,590
Capital redemption reserve 1 1
Retained earnings 2,401 1,738
Cumulative translation adjustment reserve 114 248
4,528 3,999
Statement of cash flows for the year ended 30 November 2021
2021 2020
£'000 £'000
Cash flows from operating activities
Profit/ (loss) before tax from continuing operations
787 (264)
Depreciation 168 292
Gain on disposal of property, plant and equipment
(471) -
Impairment of goodwill 146 -
Decrease in inventories 1,093 284
(Increase)/ decrease in trade and other receivables
(527) 385
Increase/ (decrease) in trade and other payables
Interest expense 702 (50)
10 16
Cash generated from operations 1,907 663
Interest paid (10) (16)
Tax paid (92) -
Income from investments (3) (1)
Net cash (used in)/ generated from operations 1,801 646
Cash flows from investing activities
Purchase of property, plant and equipment (65) (25)
Investment in Joint Venture (80) (27)
Proceeds from sale of property, plant and equipment 553 -
Net cash (used in)/generated from investing activities 408 (52)
Cash flows from financing activities
Repayment of leases (37) (213)
Equity dividends paid (32) (21)
Net cash used in financing activities (69) (234)
Net change in cash and cash equivalents 2,139 360
Cash and cash equivalents at start of period 1,113 734
Effect of foreign exchange rates (61) 19
Cash and cash equivalents at end of period 3,192 1,113
Notes
1. Basis of preparation
The Group and parent company financial statements have been prepared in
accordance with International Accounting Standards (IAS), in conformance with
the requirements of the Companies Act 2006. All accounting standards and
interpretations issued by the International Accounting Standards Board
effective at the time of preparing these financial statements have been
applied.
2. Taxation
2021 2020
£'000 £'000
Analysis of the charge in the period
Current tax - Current period 92 -
Deferred tax charge - -
Total tax 92 -
Tax reconciliation
The tax for the period is lower (2020: lower) than the standard rate of
corporation tax in the UK, effectively 19.0% (2020: 19.0%) for the company's
financial year. The differences are explained below:
2021 2020
£'000 £'000
Profit/ (loss) before taxation 787 (264)
Profit/ (loss) before taxation multiplied by the rate of corporation tax in
the UK of 19.0% (2020: 19.0%)
150 (50)
Effects of:
Adjustment from prior years - -
Taxation losses (58) 50
Taxation 92 -
3. Dividends
The directors have proposed a final dividend of 0.50p per share payable on 31
May 2022 to shareholders on the register at close of business on 13 May
2022. The total dividend for the year, including the interim dividend of
0.50p (2020: 0.25p) per share paid on 5 October 2021, and the special dividend
of 2.00p (2020: nil) per share paid on 28 January 2022, amounts to £127,000
(2020: £21,000), which is equivalent to 3.00p (2020: 0.50p) per share.
4. The basic and diluted earnings per share are based on the profit for
the financial year of £787,000 (2020: loss of £264,000) and on ordinary
shares of 4,224,164 (2020: 4,224,164 shares), the weighted average number of
shares in issue during the year. There were no share options in issue during
either year.
5. This statement, which has been approved by the Board on 25 March
2022, is not the Company's statutory accounts. The statutory accounts for
each of the two years to 30 November 2020 and 30 November 2021 received audit
reports which were unqualified and did not contain statements under section
498(2) and section 498(3) of the Companies Act 2006. The 2020 accounts have
been filed with the registrar of Companies, but the 2021 statutory accounts
are not yet filed.
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