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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