TIDMHDT
RNS Number : 0843U
Holders Technology PLC
24 March 2023
Holders Technology plc
("the Group")
Specialised PCB Materials, Lighting Component Solutions and
Wireless Lighting Control Solutions
Final results for the year ended 30 November 2022
Holders Technology plc (AIM: HDT) announces its audited results
for the year ended 30 November 2022.
The Group supplies specialty laminates and materials for printed
circuit board manufacture ("PCB") and operates as a Lighting and
Wireless Control Solutions ("LCS") provider. The Group principally
operates from the UK and from Germany, with PCB divisions and LCS
divisions in both countries. In addition, LCS operates joint
ventures in the UK, Austria, New Zealand and Australia.
Following the disposal of the PCB consumables business in 2021,
further investments were made in the LCS business during 2022. This
initially impacted first half profitability, but second half
revenues and profitability improved, and the second half achieved a
result close to breakeven. Growth from the continuing business was
7.6% overall.
An interim dividend of 0.50p per share was paid on 5 October
2022. The directors will recommend payment of a final dividend of
0.50p per share, a total of 1.00p for the year (2021 total:
3.00p).
The results are summarised below.
2022 2021
GBP'000 GBP'000
------------- ---------------
* Revenue PCB 2,667 7,920
LCS 5,652 4,466
------------- ---------------
Group 8,319 12,386
* Gross Margins PCB 35.4% 27.8%
LCS 34.5% 37.3%
Group 34.8% 31.2%
* Operating Profit/ (Loss) PCB 184 554
LCS (253) 32
Central costs (169) (117)
------------- ---------------
(238) 469
* Net Profit on Disposal of Assets* - 325
Finance Costs (13) (10)
Income from Joint Ventures (8) 3
Group (259) 787
* Profit/ (Loss) before Tax - (92)
Tax
Profit/ (Loss) after Tax (259) 695
(6.13p) 16.45p
* Basic and diluted EPS/ (LPS) 1.00p 3.00p
Dividend paid and proposed
Cash 2,270 3,192
* Profit on asset disposal GBP471,000 less related goodwill
impairment GBP146,000. Note
that this presentation differs from that shown on the Income
Statement.
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 / Harry Davies-Ball
Chairman's statement
This report covers the first full year of trading since the sale
of our PCB consumables business in October 2021. Whilst the first
half results for 2022 were behind expectation, I am pleased to
report that second half results show a meaningful improvement.
In the year to 30 November 2022, Group revenue from the
continuing business grew by 7.6% to GBP8,319,000 (2021:
GBP7,732,000). On a continuing basis PCB revenue reduced by 18.3%;
LCS revenue grew by 26.6%.
The full year Group result before tax was a loss of GBP259,000
(2021: profit GBP787,000), however the 2022 second half result was
much closer to breakeven (H1 pre-tax loss GBP226,000, H2 pre-tax
loss GBP33,000).
Our aim in 2022 has been to refocus our continuing PCB business
onto technically specialised products, and to further invest in the
LCS businesses. During the year further investments have been made
in staff, technology, and product development, to enable the LCS
divisions to realise the expansion which we believe to be possible.
These costs have initially contributed to an LCS margin reduction,
but revenues improved in the second half.
The margins in the PCB divisions improved due to the absence of
lower margin consumables revenue. Group margins also improved to
34.8% (2021: 31.2%).
The global economic and geo-political outlook remains uncertain,
and sales have been below expectation as we start the new financial
year. The Group continues to have a strong balance sheet and cash
position, and this coupled with the opportunities ahead, leaves us
well positioned to meet the challenges of the years ahead.
R W Weinreich
Executive Chairman
23 March 2023
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.
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, consultants and
building engineering companies.
Market Overview
PCB revenues and results in 2022 were lower mainly due to
customers reducing stock levels over the year. PCB revenue from the
continuing business decreased by 18.3% from GBP3.3m to GBP2.7m and
operating profitability decreased from GBP554,000 to GBP184,000.
2021 profitability had been enhanced by exceptional market
conditions and as a result we regard the PCB return as
satisfactory.
LCS divisions in 2022 achieved a 26.6% improvement in revenue:
however, the additional costs from our investment in staff,
technology and product development adversely impacted results,
particularly in the first half of the year. The operating result
for LCS divisions was a loss of GBP253,000 (2021: profit
GBP32,000).
Business Review
2022 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 lighting controls
hardware provided by the Group, as well as a full range of project
services.
-- Implementation of new wireless emergency lighting technology
into large scale projects, for the first time.
-- Launch of Generation 2 of our Holders Analytics platform.
Using the wireless lighting control infrastructure, we are able to
supply customers with energy, lighting, occupancy and environmental
data.
-- Development of Holders own brand products for use on our projects.
-- Broadening of our range of wireless lighting control products
and supplier relationships, to ensure the largest portfolio of
products available in our markets.
-- Further investment in knowledgeable and experienced sales and
technical staff, across the Group.
Conclusion
In 2023, we expect our PCB business to have continuing demand
for the products we offer. For the LCS business, we plan to focus
on converting the business opportunity available to us in our
markets and investing in our own product development to enhance our
product portfolio as well as technology to support the growth of
the business.
Victoria Blaisdell
Group Managing Director
23 March 2023
Financial Review
Key performance indicators
The Board believes that the following key performance indicators
are most significant in assessing 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 GBP7.7m
to GBP8.3m. Overall PCB revenue from the continuing business
decreased by 18.3%, whilst Lighting and Controls revenue increased
by 26.6%.
Profitability
The operating result was a loss of GBP238,000 compared to an
operating profit of GBP469,000 in 2021. (Note that the 2021
presentation differs from that shown on the Income Statement.) The
gross profit margin was 34.8% compared to 31.2% in 2021.
Administration costs decreased from GBP3.0m to GBP2.9m, however
they increased as a proportion of revenue from 24.2% in 2021 to
35.4% in 2022.
Post tax result
The result for the financial year after tax, attributable to
equity shareholders was a loss of GBP259,000 (2021: profit of
GBP695,000). The basic and fully diluted loss per share was 6.13p
(2021: 16.45p earnings 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.
-- Inflation
Inflation risk is an inherent feature of the business. Prices
are continuously monitored and managed with suppliers and customers
to ensure that margins are maintained. When an opportunity arises,
the Group will purchase inventory at an advantageous price.
Cash flow, liquidity and financing
The Group's cash position decreased during the year, from
GBP3,192,000 to GBP2,270,000. The decrease principally arose from
the operating loss plus increases in working capital, capital
expenditure, and dividends paid to shareholders.
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 2022 the Group had net liquid funds (trade and
other receivables plus cash minus current liabilities excluding
lease liabilities) of GBP2.4m (2021: GBP3.1m). Net assets per
ordinary share at 30 November 2022 were GBP0.99 (2021:
GBP1.07).
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. Currency contracts at the
year-end are detailed in note 21.
Net assets
Net assets at the 2022 year-end were GBP4,172,000 (2021:
GBP4,528,000).
Conclusion
The Group enters 2022 with a strong balance sheet and increased
capacity for investment as new opportunities are identified.
Paul Geraghty
Group Finance Director
23 March 2023
Group income statement for the year ended 30 November 2022
Note 2022 2021
GBP'000 GBP'000
--------------------------------------------- ----- -------- --------
Revenue 8,319 12,386
Cost of sales (5,425) (8,516)
----------------------------------------------- ----- -------- --------
Gross profit 2,894 3,870
Distribution costs (197) (408)
Administrative expenses (2,943) (3,001)
Impairment of goodwill - (146)
Other operating (expenses)/ income 8 8
----------------------------------------------- ----- -------- --------
Operating profit/ (loss) (238) 323
Profit on disposal of assets - 471
Income from joint ventures (8) 3
Finance expense (13) (10)
----------------------------------------------- ----- -------- --------
Profit/ (loss) before taxation (259) 787
Tax expense 2 - (92)
----------------------------------------------- ----- -------- --------
Profit/ (loss) after taxation
attributable to equity shareholders (259) 695
----------------------------------------------- ----- -------- --------
Basic and diluted earnings/ (loss) per share 4 (6.13p) 16.45p
----------------------------------------------- ----- -------- --------
Group statement of comprehensive income for the year ended 30
November 2022
2022 2021
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Profit for the year (259) 695
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translating
foreign operations 29 (134)
---------------------------------------------- --------- ---------
Total comprehensive income/ (loss)
for the year (230) 561
---------------------------------------------- --------- ---------
Statement of changes in equity for the year ended 30 November
2022
Group Share capital Share premium Capital Translation Retained Total equity
account redemption reserve earnings
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Balance at 1
December 2020 422 1,590 1 248 1,738 3,999
Dividends - - - - (32) (32)
Transactions
with owners - - - - (32) (32)
Profit for the
year - - - - 695 695
Exchange
differences
on
translating
foreign
operations - - - (134) - (134)
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Total
comprehensive
(loss)/
income for
the year - - - (134) 695 561
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Balance at 30
November 2021 422 1,590 1 114 2,401 4,528
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Dividends - - - - (126) (126)
Transactions
with owners - - - - (126) (126)
Loss for the
year - - - - (259) (259)
Exchange
differences
on
translating
foreign
operations - - - 29 - 29
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Total
comprehensive
income/
(loss) for
the year - - - 29 (259) (230)
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Balance at 30
November 2022 422 1,590 1 143 2,016 4,172
--------------- -------------- -------------- ------------- -------------- -------------- ----------------------
Group balance sheet at 30 November 2022
2022 2021
GBP'000 GBP'000
---------------------------------- -------- --------
Assets
Non-current assets
Intangible fixed assets 190 220
Property, plant and equipment 226 82
Leased assets 63 97
Investments in joint ventures 103 111
Deferred tax assets 12 12
------------------------------------- -------- --------
594 512
---------------------------------- -------- --------
Current assets
Inventories 1,362 1,180
Trade and other receivables 1,636 1,593
Cash and cash equivalents 2,270 3,192
------------------------------------- -------- --------
5,268 5,965
Liabilities
Current liabilities
Trade and other payables (1,456) (1,661)
Lease liabilities (51) (58)
------------------------------------- -------- --------
(1,507) (1,719)
Net current assets 3,761 4,246
------------------------------------- -------- --------
Non-current liabilities
Retirement benefit liability (165) (186)
Lease liabilities (9) (35)
Deferred tax liabilities (9) (9)
------------------------------------- -------- --------
(183) (230)
---------------------------------- -------- --------
4,172 4,528
---------------------------------- -------- --------
Shareholders' equity
Share capital 422 422
Share premium account 1,590 1,590
Capital redemption reserve 1 1
Retained earnings 2,016 2,401
Cumulative translation adjustment
reserve 143 114
------------------------------------- -------- --------
4,172 4,528
---------------------------------- -------- --------
Statement of cash flows for the year ended 30 November 2022
2022 2021
GBP'000 GBP'000
--------------------------------------------------- -------- --------
Cash flows from operating activities
Profit/ (loss) before tax from
continuing operations (259) 787
Depreciation 141 168
Loss/ (Gain) on disposal of
property, plant and equipment 3 (471)
Impairment of goodwill - 146
Decrease in inventories (173) 1,093
(Increase)/ decrease in trade
and other receivables (409) (527)
Increase/ (decrease) in trade
and other payables
Interest expense 169 702
13 10
--------------------------------------------------- -------- --------
Cash generated from operations (515) 1,908
Interest paid 8 (3)
Tax paid - (92)
Income from investments (21) (10)
Net cash (used in)/ generated
from operations (528) 1,803
------------------------------------------------------ -------- --------
Cash flows from investing activities
Purchase of property, plant
and equipment (212) (65)
Investment in Joint Venture - (80)
Interest received 42 -
Proceeds from sale of property, plant
and equipment 2 553
Net cash (used in)/generated from
investing activities (168) 408
------------------------------------------- -------- -------- --------
Cash flows from financing activities
Repayment of leases (57) (37)
Equity dividends paid (126) (32)
------------------------------------------------------ -------- --------
Net cash used in financing activities (183) (69)
------------------------------------------------------ -------- --------
Net change in cash and cash
equivalents (879) 2,142
Cash and cash equivalents at
start of period 3,192 1,113
Effect of foreign exchange rates (43) (63)
------------------------------------------------------ -------- --------
Cash and cash equivalents at
end of period 2,270 3,192
------------------------------------------------------ -------- --------
Notes
1. Basis of preparation
The Group and parent company financial statements have been
prepared in accordance with UK-adopted 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
2022 2021
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 (2021: lower) than the standard rate of corporation tax in
the UK, effectively 19.0% (2021: 19.0%) for the company's financial year. The differences
are explained below:
2022 2021
GBP'000 GBP'000
------------------------------------------------------------------------------------------------ --------- ---------
Profit/ (loss) before taxation (259) 787
------------------------------------------------------------------------------------------------ --------- ---------
Profit/ (loss) before taxation multiplied by the rate of corporation tax in the UK of 19.0%
(2021: 19.0%) (48) 150
Effects of:
Adjustment from prior years - -
Taxation losses 48 (58)
Taxation - 92
------------------------------------------------------------------------------------------------ --------- ---------
3. Dividends
The directors have proposed a final dividend of 0.50p per share
payable on 6 June 2023 to shareholders on the register at close of
business on 19 May 2023. The total dividend for the year, including
the interim dividend of 0.50p (2021: 0.50p) per share paid on 4
October 2022, amounts to GBP42,000 (2021: GBP126,000), which is
equivalent to 1.00p (2021: 3.00p) per share.
4. The basic and diluted earnings per share are based on the
loss for the financial year of GBP259,000 (2021: profit of
GBP787,000) and on ordinary shares of 4,224,164 (2021: 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 23
March 2023, is not the Company's statutory accounts. The statutory
accounts for each of the two years to 30 November 2021 and 30
November 2022 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 2021 accounts have been filed with the
registrar of Companies, but the 2022 statutory accounts are not yet
filed.
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END
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