Final Results
Holders Technology PLC
09 March 2005
Holders Technology plc
Providers of specialised materials, equipment and services for the electronics
and telecommunications industries
Audited results for the year ended 30 November 2004
Holders Technology plc announces its audited results for the year ended 30
November 2004.
Highlights
The European electronics industry started 2004 strongly. Whilst the pace of
activity slackened in the second half, the full year results were satisfactory.
• Turnover grew 10% to £15.7m
• Operating profit (before goodwill) grew 65% to £0.8m
• PBT grew 123% to £0.7m
• Sale of surplus properties yielded £0.6m cash
• Further investment made in Topgrow Technologies Limited
• Final dividend increased by 10%
• Forthcoming year likely to be challenging
Chairman's statement
Financials
In the year to 30 November 2004, turnover increased to £15.7m (2003: £14.2m).
The Group achieved a pre-tax profit of £0.7m (2003: £0.3m). The earnings per
share were 11.00p (2003: 2.67p). Your directors are recommending a final
dividend of 2.75p (2003: 2.50p) per share, which will be payable on 24 May 2005
to shareholders on the register at close of business on 29 April 2005. The
final dividend makes a total for the year of 4.75p (2003: 4.50p) per share. The
shares will go ex dividend on 27 April 2005.
The second half of the year saw slower trading conditions in mainland Europe as
compared with the first half. In August 2004, we increased our holding in
Topgrow Technologies, a Hong Kong company, to 60% and Topgrow is now
consolidated within the Group's turnover figure. On a like for like basis,
Group turnover grew by 7.1% in the year.
A favourable product mix enabled margins for the year to be maintained at
planned levels and this, coupled with a policy of strict containment of
overheads, led to a marked improvement in operating profit in comparison with
the preceding year.
In the UK, we have benefited both from the specialist nature of our customer
base, which features a bias towards the defence and avionics areas, and
opportunities arising from a reduction in the number of suppliers to the PCB
industry. If, as we expect, this process occurs in Europe generally, we believe
we will be well placed to take advantage of this, as we are now one of the
largest European distributors of supplies for the PCB industry, both in terms of
product range and sales coverage.
Whilst our trading benefited from favourable exchange movements, particularly in
regard to products sourced from the USA, these have had an adverse effect on a
number of companies in Europe and we are seeing a further transfer of long
production run items to the Far East, particularly to China. We continue to
seek to counter the potential impact of this by extending the range of products
and services which we offer and this, coupled with redirected sales effort, will
ensure that we maximise our participation in the shorter run specialist business
which will remain in Europe.
Our most recent acquisitions were HT Cimatec in Germany and Screen Circuit in
Holland. HT Cimatec, despite a subdued domestic economy, has made and continues
to make sound and profitable progress. The same has not been true of Screen
Circuit. Whilst this acquisition has provided access to certain customers with
whom we did not previously trade and opportunities to reduce costs elsewhere in
the group, Screen Circuits itself has been loss making. We now intend
substantially to restructure this company and have therefore made a provision of
£47,000 against the goodwill carried by the group in respect of the acquisition
cost of Screen Circuits.
During 2004, we increased our holding in Topgrow Technologies from 35% to 60%.
In common with most overseas investors, we have viewed the Chinese market as
potentially very attractive but fraught with complications. Recently, the
Chinese authorities have agreed to adopt World Trade Organisation guidelines.
When fully implemented, these changes will considerably ease some of the
difficulties currently inherent in trading within China. Given the high
probability that China will continue to experience very high growth rates in the
market areas we serve, we intend, albeit with caution, to increase our
investment in this market.
Our balance sheet liquidity has been noticeably strengthened by the disposal of
properties in Germany and Holland and we closed the year with positive net funds
of £0.1m. These disposals have enabled us to concentrate our activities into
fewer facilities and to reduce overheads accordingly. We continue to appraise
opportunities further to progress this approach when appropriate.
Employees
As in previous years I would like to record the board's appreciation of the
efforts our staff have made in helping to achieve the improvement in
profitability realised in the year to 30 November 2004.
So as to ensure a clear separation between the operational and the corporate
elements of the Group, Mike Batsch stood down from the plc board on his taking
the post of sales director of Holders Technology UK Limited, our most
established trading subsidiary.
Outlook
We are undertaking a number of measures in the current year designed to enable
us to continue to be an efficient low cost supplier. These include a
reorganisation of our UK production facilities and further development of our IT
systems.
Trading in the current year has generally been somewhat below the levels we
experienced in the second half of last year and the first quarter is well below
the first quarter of last year and, at present, there are no signs that this
position will ease. The planned expansion in China, whilst potentially of
considerable benefit when completed, will not yield immediate benefits to offset
what is likely to be a challenging year for the group.
R W Weinreich
Chairman and Chief Executive
9 March 2005
Consolidated profit and loss account
for the year ended 30 November 2004
Note 2004 2003
£'000 £'000
Group turnover
Current year acquisition 271 -
Other continuing operations 15,387 14,155
15,658 14,155
Discontinued operation - 46
Group turnover 15,658 14,201
Cost of sales (11,023) (10,211)
Gross profit 4,635 3,990
Distribution costs (483) (358)
Administrative expenses (3,498) (3,424)
Other operating income 66 176
Analysis of group operating profit
Current year acquisition (2) (119)
Other continuing operations 722 579
Total continuing operations 720 460
Discontinued operation - (76)
Group operating profit 720 384
Share of associates operating profit / (loss) 4 (22)
Total operating profit 724 362
Profit on disposal of subsidiary - discontinued operation 24 26
Profit on ordinary activities before interest and tax 748 388
Interest receivable 15 6
Interest payable and similar charges (31) (66)
Profit on ordinary activities before taxation 732 328
Tax on profit on ordinary activities 1 (274) (218)
Profit on ordinary activities after taxation 458 110
Minority interests - equity (2) -
Profit for the financial year 456 110
Dividends (all equity) 2 (197) (190)
Transfer to / (from) reserves 259 (80)
Basic earnings per share 3 11.00p 2.67p
Diluted earnings per share 3 10.83p 2.63p
Consolidated balance sheet
at 30 November 2004
2004 2003
£'000 £'000
Fixed assets
Intangible assets 424 209
Tangible fixed assets 640 1,136
Investment in associated undertaking 97 207
1,161 1,552
Current assets
Stocks 2,607 2,159
Debtors 2,804 2,813
Cash at bank and in hand 480 394
5,891 5,366
Creditors: amounts falling due within one year (2,217) (2,566)
Net current assets 3,674 2,800
Total assets less current liabilities 4,835 4,352
Creditors: amounts falling due after one year (25) (51)
Provision for liabilities and charges (104) (11)
4,706 4,290
Capital and reserves
Called up share capital 414 414
Share premium account 1,525 1,525
Capital redemption reserve 1 1
Profit and loss account 2,643 2,350
Equity shareholders' funds 4,583 4,290
Minority interests - equity 123 -
4,706 4,290
Consolidated cash flow statement
for the year ended 30 November 2004
Note 2004 2003
£'000 £'000
Net cash inflow from operating activities 837 327
Returns on investment and servicing of finance
Interest received 15 6
Interest paid (25) (59)
Finance lease interest (6) (7)
Net cash outflow from returns on investment and
servicing of finance (16) (60)
Taxation (paid) / received
UK Corporation tax (63) (129)
Overseas corporation tax (157) 146
(220) 17
Capital expenditure
Payments to acquire tangible fixed assets (253) (168)
Receipts from sales of tangible fixed assets 554 49
301 (119)
Acquisitions and disposals
Acquisition of business 4 (76) (125)
Net cash/(overdraft) acquired with subsidiary undertaking 8 (186)
Payment in respect of existing subsidiary - (206)
Investment in associated undertaking (24) (234)
Sale of subsidiary undertaking 24 120
(68) (631)
Equity dividends paid (187) (187)
Cash flow before financing 647 (653)
Financing
Capital element of finance leases (32) (13)
(Repayment)/draw-down of bank loan (598) 598
(630) 585
Increase/(decrease) in cash 17 (68)
Notes
1. Taxation comprises United Kingdom corporation tax of £198,000 (2003:
£142,000), foreign tax of £107,000 (2003: £122,000) and deferred taxation of £
(31,000) (2001: £(46,000)).
2. The directors have recommended a final dividend of 2.75p (2003: 2.50p)
per share payable on 24 May 2005 to shareholders on the register at close of
business on 29 April 2005. The total dividend for the year, including the
interim dividend of 2.0p (2003: 2.0p) per share paid on 21 September 2004,
amounts to £197,000 (2003: £190,000), which is equivalent to 4.75p (2003: 4.50p)
per share.
3. The basic earnings per share are based on the profit for the financial
year of £456,000 (2003: £110,000) and on 4,144,551 ordinary shares (2003:
4,122,842), the weighted average number of shares in issue during the year.
Diluted earnings per share are based on 4,209,551 ordinary shares (2003: 4,
177,842), being the weighted average number of ordinary shares after an
adjustment of 65,000 shares (2003: 55,000) in relation to share options.
4. Acquisition
On 3 August 2004, the company increased its stake in Topgrow Technologies
Limited from 35% to 60% of the company. This transaction has been accounted for
as an acquisition. The following sets out the effect on the consolidated
balance sheet:
Balance sheet of Fair value Fair value of acquired
acquired business adjustment business
£'000 £'000 £'000
Investment in associated company 118 (46) 72
Stock 98 - 98
Debtors 318 (13) 305
Cash 8 - 8
Creditors (264) - (264)
Net assets acquired 278 (59) 219
Net assets acquired 219
Minority interest (87)
Goodwill capitalised 282
Consideration 414
Satisfied by
Year ended
30 November 2003 3 August 2004
Cash 206 71 277
Deferred consideration - 104 104
Costs 27 6 33
233 181 414
The fair value adjustments comprise provisions against the carrying value of the
investment in associated company and trade debtors.
Deferred consideration is payable at 30% of profits above £24,000 in each of the
eight years following the acquisition, subject to an overall maximum of
£104,000.
The acquired businesses generated turnover of £824,000 and a loss before tax of
£90,000 in the twelve months to 31 December 2003. In the 7 months to 31 July
2004, the acquired businesses generated turnover of £541,000 and a profit before
tax of £20,000.
5. This preliminary statement which has been approved by the Board on 9
March 2005 is not the Company's statutory accounts. The statutory accounts for
each of the two years to 30 November 2003 and 30 November 2004 received audit
reports, which were unqualified and did not contain statements under section 237
(2) or (3) of the Companies Act 1985. The 2003 accounts have been filed with
the Registrar of Companies but the 2004 accounts are not yet filed.
ENDS
For further information, contact:
Mr Rudi Weinreich, Chairman and Chief Executive, Holders Technology plc,
on 020 8343 7095
Mr Barrie Newton, Director, Rowan Dartington and Company Limited,
on 0117 933 0020.
This information is provided by RNS
The company news service from the London Stock Exchange