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Holders Technology (HDT)

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Friday 21 August, 2020

Holders Technology

Half Year Report 2020

RNS Number : 7525W
Holders Technology PLC
21 August 2020
 

 

21 August 2020

Holders Technology plc

("Holders Technology" or the "Company")

Half Year Report 2020

Holders Technology, (AIM: HDT), is pleased to announce its unaudited half year results for the six months ended 31 May 2020.

Highlights

 

Holders Technology plc supplies specialty laminates and materials for printed circuit board manufacturers ("PCB") and operates as a lighting and control solutions ("LCS") provider to the lighting market and commercial buildings sector.

 

Unaudited results for the half year ended 31 May 2020 are summarised as follows:

 

 

2020

2019

 

 

£'000

£'000

 

 

 

 

Revenue

PCB

4,157

4,291

 

LCS

1,170

1,737

 

Total

5,327

6,028

 

 

 

 

Gross profit

 

1,398

1,579

Margins

 

26.2%

26.2%

 

 

 

 

Overheads

 

1,482

1,570

 

 

 

 

Operating (loss)/ profit

(84)

9

 

 

 

 

Finance (expense)/ income

(6)

11

(Loss)/ profit before tax

(90)

20

 

 

 

 

Taxation

 

-

29

(Loss)/ profit after tax

(90)

49

 

 

 

 

(Loss)/ earnings per share

   (2.13p)

1.17p

Interim dividend per share

0.25p

0.25p

Net assets per share

99p

100p

Chairman's statement

 

Inevitably these interim results were heavily impacted by the economic consequences of the Covid-19 pandemic. The two segments of our business were affected differently. Details of this are set out below.

 

We have taken full benefit of all applicable assistance schemes, both in the UK and Germany, in order to reduce our costs. We have supplemented these with pay and other cost reductions wherever we can.

 

Against the background of the exceptionally difficult conditions, the board considers the result for the first half to be acceptable.

 

Group revenue decreased by 11.6% to £5.3m (H1 2019: £6.0m), gross margins were unchanged at 26.2%, and the pre-tax result was a loss of £90,000 (H1 2019: profit of £20,000). 

 

PCB

 

PCB sales in the period decreased by 3.1%, from £4,291,000 in 2019 to £4,157,000, and PCB gross margins increased by 0.8% to 23.3%.  The first half revenues benefitted from increased demand from healthcare applications and a degree of stockpiling by our customers due to global uncertainty.  The Government support referred to above enabled us to reduce PCB overheads as a percentage of sales by 1.7% to 16.4%.  Overall, our PCB activities recorded a pre-tax profit of £124,000 (H1 2019: profit of £30,000).

 

LCS

 

Lighting and Control Solutions division operations in the UK and Germany experienced a difficult first half due to the economic impact of Covid-19.  A number of projects were delayed in the UK and the market in Germany weakened.  Revenue reduced by 32.6% from £1,737,000 in H1 2019 to £1,170,000 but gross margins improved from 35.2% to 36.8%.  Overheads as a percentage of revenue increased from 31.1% to 49.7%.  The overall result for the LCS divisions was a loss of £174,000 (H1 2019: profit of £31,000). 

 

In March 2020, the Group invested c. £15,000 in a 50:50 Joint Venture with a sales partner based in Austria.  The new company, called Holders Technology Austria GmbH, will develop intelligent lighting business in Austria, Switzerland, Czechia, and Slovakia.

 

Cash and Debt

 

During the Covid-19 crisis management have increased focus on controlling days of stock and debtors' days.  Net cash of £107,000 was generated from operations.  Group cash at the period end was £723,000 (H1 2019: £674,000).  Other than lease liabilities, the company has no debt. 

 

Outlook

 

At present we have only limited visibility as to the likely level of trading in the second half of the year. We are encouraged by recent improvements in some divisions, both in quotations and order intake, as compared to the first half but cannot be certain that this will follow through to the end of the year. Our management team and work force remain committed to managing costs and containing working capital, so that the business may benefit from any improvement in trading conditions.

 

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

 

For further information, contact:

 

 

Rudolf W. Weinreich    Holders Technology plc 

Executive Chairman  27-28 Eastcastle Street

  London W1W 8HD

For further information, contact:

 

Holders Technology plc

Rudi Weinreich, Executive Chairman  01896 758781

Victoria Blaisdell, Group Managing Director

Paul Geraghty, Group Finance Director

 

SP Angel Corporate Finance LLP - Nomad and Broker

Matthew Johnson/ Caroline Rowe, Corporate Finance

Abigail Wayne, Corporate Broking       020 3470 0470

 

Website

www.holdersgroup.com

 

 

 

Consolidated income statement

for the half year ended 31 May 2020 (Unaudited)

 

 

 

Half year

ended 31

May 2020

 

Half year

ended 31

May 2019

 

Full year

ended 30

Nov 2019

Notes

£'000

 

£'000

 

£'000

 

Revenue

4

5,327

 

6,028

 

12,162

Cost of sales

 

(3,929)

 

(4,449)

 

(8,770)

Gross profit

 

1,398

 

1,579

 

3,392

Distribution costs

 

(186)

 

(199)

 

(419)

Administrative expenses

 

(1,294)

 

(1,369)

 

(2,890)

Other operating (expenses)/ income

 

(2)

 

(2)

 

61

Operating (loss)/ profit

 

(84)

 

9

 

144

Finance (costs)/ income

 

(6)

 

11

 

6

Profit before taxation

 

(90)

 

20

 

150

Taxation

5

-

 

29

 

31

Profit for the period

 

(90)

 

49

 

181

 

Total and continuing

 

 

 

 

 

 

Basic earnings per share

7

(2.13p)

 

1.17p

 

4.31p

Diluted earnings per share

7

(2.13p)

 

1.17p

 

4.30p

 

 

 

                 

 

 

 

Consolidated statement of comprehensive income

for the half year ended 31 May 2020 (Unaudited)

 

 

 

Half year

ended 31

May 2020

 

Half year

ended 31

May 2019

 

Full year

ended 30

Nov 2019

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

(Loss)/ profit for the period

(90)

 

49

 

181

Reserves adjustment for IFRS 16

 

(10)

 

-

 

-

Exchange differences on translation of foreign operations

 

 

133

 

 

6

 

 

(94)

Total comprehensive income for the period

 

 

33

 

 

55

 

 

87

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of changes in equity

for the half year ended 31 May 2020 (Unaudited)

 

 

Share capital

Share

premium

Capital
redemption   reserve

Translation    reserve

Retained   earnings

Total equity

 

  £'000

  £'000

  £'000

  £'000

  £'000

  £'000

 

 

 

 

 

 

 

Balance 1 Dec 2018

416

1,590

1

222

1,870

4,099

 

Dividends

-

-

-

-

(32)

(32)

Shares issued

6

-

-

-

-

6

Share based payments

 -

-

-

-

4

4

Transactions with owners

 6

-

-

-

(28)

(22)

Profit for the year

 -

-

-

-

181

181

Exchange differences on translating foreign operations

 -

-

-

(94)

-

(94)

Total comprehensive income for the year

 -

-

(94)

181

87

Balance 30 Nov 2019

422 

1,590

1

128

2,023

4,164

Loss for the period

 -

-

-

-

(90)

(90)

Reserves adjustment for IFRS 16

--

-

-

-

(10)

(10)

Exchange differences on translating foreign operations

 -

-

-

133

-

133

Total comprehensive income for the period

 -

133

(100)

33

Balance 31 May 2020

422 

1,590

1

261

1,923

4,197

 

 

Consolidated balance sheet

at 31 May 2020 (Unaudited)

 

 

 

Half year

ended 31

May 2020

 

Half year

ended 31

May 2019

 

Full year

ended 30

Nov 2019

 

Notes

£'000

 

£'000

 

£'000

Assets

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

Intangible fixed assets

 

388

 

318

 

394

 

Property, plant and equipment

 

245

 

338

 

237

 

Right-of-use assets

3

409

 

-

 

-

 

Investment in joint venture

 

15

 

-

 

-

 

Deferred tax assets

 

12

 

9

 

12

 

 

 

1,069

 

665

 

643

 

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

 

Inventories

 

2,358

 

2,459

 

2,530

 

Trade and other receivables

 

1,461

 

1,542

 

1,758

 

Cash and cash equivalents

 

723

 

674

 

734

 

 

 

4,542

 

4,675

 

5,022

Liabilities

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

Trade and other payables

 

(765)

 

(988)

 

(1,280)

 

Lease liabilities

3

(419)

 

-

 

-

 

Current tax liabilities

 

-

 

-

 

-

 

 

 

(1,184)

 

(988)

 

(1,280)

 

 

 

 

 

 

 

 

Net current assets

 

3,358

 

3,687

 

3,742

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

 

Retirement benefit liability

 

(221)

 

(207)

 

(212)

 

Deferred tax liabilities

 

(9)

 

(6)

 

(9)

 

 

 

(230)

 

(213)

 

(221)

 

 

 

 

 

 

 

 

Net assets

 

4,197

 

4,139

 

4,164

 

 

 

 

 

 

 

Shareholders' equity

 

 

 

 

 

 

 

Share capital

 

422

 

422

 

422

 

Share premium account

 

1,590

 

1,590

 

1,590

 

Capital redemption reserve

 

1

 

1

 

1

 

Retained earnings

 

1,923

 

1,898

 

2,023

 

Cumulative translation adjustment

 

 

261

 

228

 

128

Equity attributable to the shareholders of the parent

 

 

4,197

 

 

4,139

 

 

4,164

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated cash flow statement

for the half year ended 31 May 2020 (Unaudited)

 

 

Half year

ended 31

May 2020

 

Half year

ended 31

May 2019

 

Full year

ended 30

Nov 2019

 

 

£'000

 

£'000

 

£'000

 

 

Cash flows from operating activities

 

 

 

 

 

 

 

(Loss)/ profit before tax from continuing operations

 

(90)

 

 

20

 

 

150

 

 

Share-based payment charge

-

 

-

 

4

 

 

Depreciation

150

 

76

 

74

 

 

Decrease in inventories

261

 

375

 

237

 

 

(Increase)/ decrease in trade and other receivables

(75)

 

104

 

(140)

 

 

(Decrease)/ increase in trade and other payables

(139)

 

(221)

 

92

 

 

Interest expense/ (credit)

6

 

(14)

 

(6)

 

 

 

 

 

 

 

 

 

 

Cash generated from operations

113

 

340

 

411

 

 

 

 

 

 

 

 

 

 

Interest paid

(6)

 

-

 

(8)

 

 

Net cash generated from operations

107

 

340

 

403

 

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

 

Purchase of property, plant, and equipment

(21)

 

(57)

 

(42)

 

 

Purchase of ROU assets

(514)

 

-

 

-

 

 

Proceeds from sale of property, plant, and equipment

 

-

 

 

-

 

 

1

 

 

Investment in joint venture

(15)

 

-

 

-

 

 

 

 

 

 

 

 

 

 

Net cash used in investing activities

(550)

 

(57)

 

(41)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

 

Equity dividends paid

-

 

(21)

 

(32)

 

 

Ordinary shares issued

-

 

6

 

6

 

 

Proceeds of lease agreements

524

 

-

 

-

 

 

Lease payments

(116)

 

-

 

-

 

 

 

 

 

 

 

 

 

 

Net cash used in financing activities

408

 

(15)

 

(26)

 

 

 

 

 

 

 

 

 

Net change in cash and cash equivalents

(35)

 

268

 

336

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at start of period

734

 

403

 

403

 

 

Effect of foreign exchange rates

24

 

3

 

(5)

 

 

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

723

 

674

 

734

 

 

 

 

 

 

Notes

 

1.  General information

 

Holders Technology plc is incorporated in the United Kingdom under the Companies Act 2006.  The principal activity of the group is to provide specialised materials, components and solutions to the electronics and lighting industries.

 

2.  Basis of preparation

 

The condensed consolidated half year financial statements have been prepared in accordance with the AIM Rules for Companies and prepared on a basis consistent with International Financial Reporting Standards ("IFRS") as adopted by the EU and the accounting policies set out in the group's financial statements for the year ended 30 November 2019.

 

The half year financial statements are unaudited and include all adjustments which management considers necessary for a fair presentation of the group's financial position, operating results and cash flows for the 6-month periods ended 31 May 2019 and 31 May 2020.

 

The half year financial statements do not constitute statutory accounts as defined by Section 434 of the Companies Act 2006. A copy of the group's financial statements for the year ended 30 November 2019 prepared in accordance with IFRS as adopted by the EU has been filed with the Registrar of Companies. The auditors' report on those financial statements was not qualified and did not contain statements under s498(2) of s498(3) of the Companies Act 2006.

 

As permitted, the group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these half year financial statements and therefore the half year financial information is not in full compliance with IFRS.

 

The preparation of half year financial statements requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income, and expenses.  Actual results may differ from these estimates. 

 

  These half year financial statements have been prepared under the historical cost convention.

 

  The board of Holders Technology plc approved this half yearly report on 20 August 2020.

 

 

3. IFRS 16 Leases

 

The half year statements include the impact of IFRS 16 "Leases" for the first time.  The group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2019 periods, under the transitional provisions in the standard.  The reclassifications and adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 December 2020.

 

On adoption of IFRS 16, the group recognised lease liabilities in relation to leases which had previously been classified as operating leases under the principles of IAS 17 Leases.  These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019.

 

Right of use ("ROU") assets and lease liabilities were recognised as follows:

 

 

 

PCB

LCS

Total

 

 

£'000

£'000

£'000

 

 

 

 

 

At 1 December 2019

 

 

 

 

ROU assets

Property

279

-

279

 

Equipment

243

-

243

 

Motor vehicles

-

7

7

 

Total

522

7

529

Lease liabilities

 

534

5

539

 

 

 

 

 

At 31 May 2020

 

 

 

 

ROU assets

Property

186

-

186

 

Equipment

221

-

221

 

Motor vehicles

-

2

2

 

Total

407

2

409

Lease liabilities

 

417

2

419

 

As a result of the above adjustments, retained reserves at 1.12.19 were reduced by £10,000. 

The impact on the 6-month period to 31 May 2020 was a credit to administrative expenses of £6,000 (all PCB segment), and a charge to interest of the same amount.   

 

4. Segmental information

 

  Management currently identifies two operating segments:

 

1.  PCB distributes materials, equipment and supplies to the PCB industry.

2.  LCS provides lighting and control solutions to the lighting market and commercial buildings sector.

 

Analysis by operating segment for the half year ended 31 May 

 

PCB

LCS

Central Costs

Total

 

2020

2019

2020

2019

2020

2019

2020

2019

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

 

Revenue

4,157

4,291

1,170

1,737

-

-

5,327

6,028

Cost of sales

3,189

3,324

740

1,125

-

-

3,929

4,449

Gross Profit

968

967

430

612

  -

-

1,398

1,579

Distribution costs

164

159

22

40

-

-

186

199

Administration costs

680

778

582

541

34

52

1,296

1,371

Segment Profit/ (Loss)

124

30

(174)

31

(34)

(52)

(84)

9

 

 

5. The tax provision for the six months ended 31 May 2020 is calculated based on the tax rates applicable in the country in which each company operates.

 

6. A final dividend of 0.25p per share on the total issued share capital of 4,224,164 10p ordinary shares was paid on 23 June 2020 in respect of the year ended 30 November 2019. 

 

An interim dividend payment of 0.25p per share (2019: 0.25p per share) will be payable on 6 October 2020 to shareholders on the register at 11 September 2020.  The shares will go ex-dividend on 10 September 2020.  The interim dividend had not been approved by the board at 31 May 2020 and accordingly, has not been included as a liability as at that date.

 

7.         The basic earnings per share for continuing operations are based on the loss for the period of £90,000 (2019: profit £49,000) and on 4,224,164 ordinary shares (2019: 4,172,759), the weighted average number of shares in issue during the period.  Diluted earnings per share for continuing operations are based on 4,224,164 ordinary shares (2019: 4,194,313), being the weighted average number of ordinary shares after an adjustment of nil shares (2019: 21,554 shares) in relation to share options.

 

8. A copy of this half yearly report is being sent to shareholders and is available for inspection at the company's offices at Holders Technology (UK) Ltd., Units 1-4, Block 9, Tweedbank Industrial Estate, Galashiels TD1 3RS and via its website www.holdersgroup.com.

 

 

 

 


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