TIDMHDT

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 
                                                                          GBP'000   GBP'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) 
 
                                                                              445         - 
        *    Net Profit on Disposal of Assets* 
            Finance Costs                                                    (10)      (16) 
            Income from Joint Ventures                                          3         1 
 
  Group                                                                       787     (264) 
             *    Profit/ (Loss) before Tax                                  (92)         - 
 
 
             Tax 
            Profit/ (Loss) after Tax                                          695     (264) 
 
 
                                                                           16.45p   (6.25p) 
             *    Basic and diluted EPS/ (LPS)                              3.00p     0.50p 
 
 
             Dividend paid and proposed 
            Cash                                                            3,192     1,113 
 

* Profit on asset disposal GBP591,000 less related goodwill impairment GBP146,000

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 
 
 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 GBP12,386,000 (2020: GBP9,838,000), 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 GBP3.1m (2020: GBP1.1m). 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 GBP7.3m to GBP7.9m and operating profitability improved from GBP102,000 to GBP554,000.

LCS divisions in 2021 recovered strongly after the effects of the Covid-19 pandemic in 2020. LCS divisions' revenue grew from GBP2.5m to GBP4.5m and operating profitability improved from GBP246,000 loss to GBP32,000 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 GBP9.8m to GBP12.4m. Overall PCB revenue increased by 8.3%, whilst Lighting and Controls revenue increased by 76.9%.

Profitability

The operating profit was GBP469,000 compared to an operating loss of GBP249,000 in 2020. The gross profit margin was 31.2% compared to 27.5% in 2020. Administration costs increased from GBP2.6m to GBP3.0m (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 GBP1,634,000 and the profit on disposal was GBP471,000. Goodwill of GBP146,000 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 GBP695,000 (2020: loss of GBP264,000). 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 GBP1,113,000 to GBP3,192,000. 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 GBP3.1m (2020: GBP1.3m). Net assets per ordinary share at 30 November 2021 were GBP1.07 (2020: GBP0.95).

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 GBP4,528,000 (2020: GBP3,999,000).

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 
                                                         GBP'000   GBP'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 
                                                  GBP'000    GBP'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        Capital     Translation        Retained             Total equity 
                                       premium     redemption         reserve        earnings 
                                       account        reserve 
                        GBP'000        GBP'000        GBP'000         GBP'000         GBP'000                  GBP'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 
                                        GBP'000   GBP'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 
                                                           GBP'000   GBP'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                          553         - 
 and equipment 
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 
                                                                           GBP'000         GBP'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 
                                                                                                    GBP'000    GBP'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 GBP127,000 (2020: GBP21,000), 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 GBP787,000 (2020: loss of GBP264,000) 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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END

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March 28, 2022 02:00 ET (06:00 GMT)

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