20 Feb 2014 07:00
Holders Technology plc
Specialised Materials, LED Components and Lighting Solutions
Audited results for the year ended 30 November 2013
Holders Technology plc ("Holders Technology" or "the Group") announces its audited results for the year ended 30 November 2013. Holders Technology supplies special laminates and materials for printed circuit board manufacture ("PCB"), and operates as a LED solutions provider to the lighting and industrial markets.
The overall results for 2013 were mixed. In Germany the PCB and LED divisions both made good progress. However, in the UK, PCB revenue fell and LED revenue was impacted by the loss of a major customer and reduced revenue while its components division was restructured. Chinese operations incurred further losses and were sold in January 2014. The result from the discontinued Chinese business was £269,000 loss compared to £326,000 loss in 2012.
Highlights relating to continuing operations included:
· Group revenue growth 4.7%
· LED revenue growth 25.4%
· Operating profit £105,000
· Basic earnings per share 1.85p
· Cash balances £1.29 million. No debt
· Proposed final dividend 1.0 pence per share
Chairman's statement
At the interim stage I was able to report an improvement in the result for the first half of the year as compared to the preceding year. This improved position was maintained during the second half of the year with operating profit from continuing operations amounting to £105,000 (2012 loss £56,000).
During the year China operations incurred losses and following a strategic review it was decided to dispose of these businesses. This was achieved on 3 January 2014. The loss incurred by the discontinued China operations was £269,000 (2012: loss £326,000). Further details of these items are given in the Financial review.
The major element of our PCB activities is our German subsidiary which in the year under review increased its turnover to £7.8m (2012 £7.0m). The German PCB market experienced only slight growth in the year and we believe our activities outperformed the market as a whole; however, competitive pressures remain strong and thus the growth in sales was not fully reflected in increased trading profits.
The UK PCB business is heavily dependent on aerospace and defence and the defence area saw a significant contraction during the year. Against this background it is commendable that while sales declined by 19.5% to £3.3m (2012 £4.1m) tight management of costs restricted the decline in operating profit to 1.4%.
Whilst our PCB activities remain the core element of the Group's continuing business with turnover of £11,011,000 accounting for some 78% of total turnover we continue to seek significant growth from our LED activities.
During the year the general market for LEDs continued to grow with significant technical advances being made by a number of major manufacturers. We remain focussed on positioning our activities in a manner designed to ensure we can benefit from these market developments. We are making progress towards this goal but we have yet to achieve critical mass and were adversely affected by the loss of a major UK customer in the year. Despite this set back, LED sales from continuing operations increased from £2,595,000 to £3,254,000.
We have also made marked progress in relocating our UK production facilities and strengthening both our UK and German sales teams. Coupled with these changes we have been able further to extend our range of products and its technical sophistication.
During the course of the year to 30 November 2013 it became clear that as a result of changes in customer demand and the successful expansion of our in-house assembly capability in our Galashiels facility the role for our Chinese joint venture was much reduced. We will, as required, still deal directly with suppliers in the Far East including China but we disposed of our 70% holding in Topgrow Technologies Limited on 3 January 2014. The resulting non cash impairment of £213,000 while impacting profitability in the year under review will eliminate the considerable amount of senior management time that has had to be diverted to this activity in recent years and will, we believe, be of overall financial benefit to the Group in future years.
As always on behalf of the board and shareholders I would like to thank our staff whose continued support gives us confidence that we will be able to maintain our position in our PCB markets and grow our LED presence significantly.
Given our financial strength and the board's belief in the Group's future we consider it appropriate to recommend a final dividend for the past year of 1.0p per share.
While it would be wrong to imply that there will not be challenges across the Group in the current year we believe that our German PCB activities will maintain the progress they have made. The addition of a major new product range will aid our UK PCB operations to maximise their share of the market available to them.
We expect LED operations generally to make good progress this year but I would caution that this will mainly be weighted towards the second half of the year.
R W Weinreich
Executive Chairman
19 February 2014
Consolidated income statement for the year ended 30 November 2013
Note | 2013 | 2012 Restated | |||
£'000 | £'000 | ||||
Continuing operations | |||||
Revenue | 14,265 | 13,631 | |||
Cost of sales | (10,798) | (10,047) | |||
Gross profit | 3,467 | 3,584 | |||
Distribution costs | (381) | (376) | |||
Administrative expenses | (3,049) | (3,275) | |||
Other operating (expenses)/ income | 68 | 11 | |||
Operating profit/ (loss) | 105 | (56) | |||
Finance income | 4 | 1 | |||
Finance expenses | (12) | (13) | |||
Profit/ (loss) before taxation | 97 | (68) | |||
Tax expense | 2 | (24) | (43) | ||
Profit/ (loss) for the year from continuing operations | 73 | (111) | |||
Loss for the year from discontinued operations | 3 | (269) | (326) | ||
(Loss)/ profit for the year | (196) | (437) | |||
(Loss)/ profit for the year attributable to: | |||||
Owners of the parent | (179) | (374) | |||
Non-controlling interest | (17) | (63) | |||
(Loss)/ profit for the financial year | (196) | (437) | |||
Basic earnings/ (loss) per share - continuing operations | 5 | 1.85p | (2.82p) | ||
Diluted earnings/ (loss) per share - continuing operations | 5 | 1.78p | (2.82p) | ||
Basic and diluted loss per share - discontinued operations | 5 | (6.83p) | (8.27p) | ||
Total loss per share | 5 | (4.98p) | (11.09p) | ||
Consolidated statement of comprehensive income for the year ended 30 November 2013
2013 £'000 | 2012 £'000 | ||||
(Loss)/ profit for the year | (196) | (437) | |||
Items that will not be reclassified subsequently to profit or loss: | |||||
Change in actuarial assumption re pension liability | - | (45) | |||
Items that may be reclassified subsequently to profit or loss: | |||||
Exchange differences on translating foreign operations | 114 | (168) | |||
Total comprehensive income and expense for the year | (82) | (650) | |||
Total comprehensive income and expense for the year attributable to: | |||||
Owners of the parent | (70) | (582) | |||
Non-controlling interests | (12) | (68) | |||
(82) | (650) | ||||
Statements of changes in equity
Group | Share capital | Share premium | Capital redemption reserve | Translation reserve | Retained earnings | Total attribut-able to owners of parent | Non-controlling interest | Total equity |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 December 2011 | 416 | 1,531 | 1 | 268 | 3,725 | 5,941 | 76 | 6,017 |
Dividends | - | - | - | - | (168) | (168) | - | (168) |
Employee share-based payment options | - | - | - | - | 1 | 1 | - | 1 |
Transactions with owners Profit/(loss) for the year | - - | - - | - - | - - | (167) (374) | (167) (374) | - (63) | (167) (437) |
Effect of change in pension liability assumptions | - | - | - | - | (45) | (45) | - | (45) |
Exchange differences on translating foreign operations | - | - | - | (163) | - | (163) | (5) | (168) |
Total comprehensive income for the year | - | - | - | (163) | (419) | (582) | (68) | (650) |
Balance at 30 November 2012 | 416 | 1,531 | 1 | 105 | 3,139 | 5,192 | 8 | 5,200 |
Dividends | - | - | - | - | (78) | (78) | - | (78) |
Employee share-based payment options | - | - | - | - | 9 | 9 | - | 9 |
Transactions with owners | - | - | - | - | (69) | (69) | - | (69) |
Profit/(loss) for the year | - | - | - | - | (179) | (179) | (17) | (196) |
Reclassification adjustment related to terminated foreign operations | - | - | - | (45) | 45 | - | - | - |
Exchange differences on translating foreign operations | - | - | - | 109 | - | 109 | 5 | 114 |
Total comprehensive income for the year | - | - | - | 64 | (134) | (70) | (12) | (82) |
Balance at 30 November 2013 | 416 | 1,531 | 1 | 169 | 2,936 | 5,053 | (4) | 5,049 |
Company | Share capital | Share premium | Capital redemption reserve | Retained earnings | Total equity |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 December 2011 | 416 | 1,531 | 1 | 728 | 2,676 |
Profit/ (loss) and total comprehensive income for the year | - | - | - | (166) | (166) |
Dividends | - | - | - | (168) | (168) |
Share-based payment charge | - | - | - | 1 | 1 |
Balance at 30 November 2012 | 416 | 1,531 | 1 | 395 | 2,343 |
Profit/ (loss) and total comprehensive income for the year | - | - | - | (284) | (284) |
Dividends | - | - | - | (78) | (78) |
Share-based payment charge | - | - | - | 9 | 9 |
Balance at 30 November 2013 | 416 | 1,531 | 1 | 42 | 1,990 |
Balance sheets at 30 November 2013
Company number: 1730535 | Group | Company | |||
Note | 2013 | 2012 | 2013 | 2012 | |
£'000 | £'000 | £'000 | £'000 | ||
Assets | |||||
Non-current assets | |||||
Goodwill | 13 | 320 | 318 | - | - |
Property, plant and equipment | 14 | 320 | 398 | 16 | 21 |
Investments in subsidiaries | 15 | - | - | 2,308 | 2,780 |
Investment in joint venture | 16 | - | - | 15 | 15 |
Deferred tax assets | 22 | 41 | 41 | - | - |
681 | 757 | 2,339 | 2,816 | ||
Current assets | |||||
Inventories | 17 | 2,799 | 3,140 | - | - |
Trade and other receivables | 18 | 1,927 | 2,397 | 225 | 387 |
Current tax assets | 26 | 57 | - | - | |
Cash and cash equivalents | 1,290 | 700 | 480 | 6 | |
6,042 | 6,294 | 705 | 393 | ||
Liabilities | |||||
Current liabilities | |||||
Trade and other payables | 19 | (1,413) | (1,556) | (1,019) | (800) |
Current tax liabilities | (34) | (35) | (32) | (32) | |
(1,447) | (1,591) | (1,051) | (832) | ||
Net current assets | 4,595 | 4,703 | (346) | (439) | |
Non-current liabilities | |||||
Borrowings | 20 | - | - | - | - |
Retirement benefit liability | 21 | (205) | (199) | - | - |
Contingent consideration | 28 | - | (29) | - | (29) |
Deferred tax liabilities | 22 | (22) | (32) | (3) | (5) |
(227) | (260) | (3) | (34) | ||
5,049 | 5,200 | 1,990 | 2,343 | ||
Shareholders' equity | |||||
Share capital | 23 | 416 | 416 | 416 | 416 |
Share premium account | 1,531 | 1,531 | 1,531 | 1,531 | |
Capital redemption reserve | 1 | 1 | 1 | 1 | |
Retained earnings | 2,936 | 3,139 | 42 | 395 | |
Cumulative translation adjustment reserve | 169 | 105 | - | - | |
Equity attributable to the shareholders of the parent | 5,053 | 5,192 | 1,990 | 2,343 | |
| Non-controlling interest | (4) | 8 | - | - | |
5,049 | 5,200 | 1,990 | 2,343 | ||
The financial statements were approved by the Board on 19 February 2014 and signed on its behalf by:
R W Weinreich
Director
Statements of cash flows for the year ended 30 November 2013
Group | Company | ||||
2013 | 2012 | 2013 | 2012 | ||
£'000 | £'000 | £'000 | £'000 | ||
Cash flows from operating activities | |||||
Operating (loss)/ profit | (148) | (365) | (369) | (175) | |
Share-based payment credit | 9 | 1 | 9 | 1 | |
Depreciation | 110 | 151 | 8 | 9 | |
Impairment costs | 213 | 287 | 472 | - | |
(Gain)/ Loss on sale of property, plant and equipment | 1 | (3) | - | - | |
(Increase)/decrease in inventories | 348 | 488 | - | - | |
(Increase)/decrease in trade and other receivables | 322 | 415 | 157 | 289 | |
Increase/(decrease) in trade and other payables | (87) | (92) | 219 | 34 | |
Cash (used in)/generated from operations | 768 | 882 | 496 | 158 | |
Corporation tax (paid)/received | (18) | 15 | 72 | (1) | |
Net cash (used in)/generated from operations | 750 | 897 | 568 | 157 | |
Cash flows from investing activities | |||||
Purchase of property, plant and equipment | (48) | (74) | (3) | (1) | |
Proceeds from sale of property, plant and equipment | 1 | 18 | - | - | |
Interest received | 4 | 1 | 13 | 14 | |
Net cash (used in)/generated from investing activities | (43) | (55) | 10 | 13 | |
Cash flows from financing activities | |||||
Interest paid | (14) | (15) | (2) | (5) | |
Loan repayments | - | (26) | - | - | |
Settlement of contingent consideration | (24) | - | (24) | - | |
Equity dividends paid | (78) | (168) | (78) | (168) | |
Net cash used in financing activities | (116) | (209) | (104) | (173) | |
Net change in cash and cash equivalents |
586 |
633 |
474 |
(3) | |
Cash and cash equivalents at start of period | 700 | 67 | 6 | 9 | |
Effect of foreign exchange rates | 4 | - | - | - | |
Cash and cash equivalents at end of period | 1,290 | 700 | 480 | 6 | |
Notes
1. Basis of preparation
The group and parent company financial statements have been prepared in accordance with EU endorsed International Financial Reporting Standards (IFRS), International Financial Reporting Interpretations Committee (IFRIC) interpretations and with those parts of the Companies Act applicable to companies reporting under IFRS. All accounting standards and interpretations issued by the International Accounting Standards Board and the International Financial Reporting Interpretations Committee effective at the time of preparing these financial statements have been applied.
2. Taxation
2013 £'000 | 2012 £'000 | |
| Analysis of the charge in the period | ||
Current tax | ||
- Current period | 30 | 15 |
- Adjustments in respect of prior periods | 4 | (7) |
34 | 8 | |
Deferred tax | (10) | 35 |
Total tax | 24 | 43 |
Tax reconciliation | ||
The tax for the period is higher (2012: higher) than the standard rate of corporation tax in the UK, effectively 23.67% (2012: 24.67%) for the company's financial year. The differences are explained below: | ||
2013 £'000 | 2012 £'000 | |
Profit/(loss) before taxation | 97 | (68) |
Profit/(loss) before taxation multiplied by the rate of corporation tax in the UK of 23.67 % (2012: 24.67%) |
23 |
(17) |
Effects of: | ||
Differences between capital allowances and depreciation | (2) | (2) |
Amounts not deductible for taxation purposes | - | 3 |
Non-taxable income | - | - |
Adjustments in respect of prior years | - | - |
Taxation losses | 2 | 43 |
Other temporary differences | 1 | 16 |
Taxation | 24 | 43 |
3. Discontinued operations
On 3 January 2014, the Group's 70% shareholding in Topgrow Technologies Ltd was sold for a cash consideration of one Hong Kong dollar plus a future consideration of 440,000 Hong Kong dollars.
The Topgrow Technologies Ltd disposal has been presented as discontinued operations in the income statement and the Board are of the view that this presentation of information enables the users of the financial statements to understand the financial effects of these operations no longer being part of the Group.
In the cash flow statement, the cash flows of the discontinued business have been aggregated with those of continuing businesses, but are also shown separately in the note below.
The information presented in this note is presented at the lower of cost and fair value less costs to sell as prescribed in IFRS 5. As a result of this treatment as impairment charge of £213,000 relating to fixed assets, inventories and receivables has been recognised in the income statement in the year 30 November 2013 (2012: £287,000). This, combined with an operating loss of £56,000 (2012: loss £39,000), results in a loss on discontinued operations of £269,000 (2012: £326,000).
The results from discontinued operations which have been included in the income statement are as below:
2013 £'000 | 2012 £'000 | |
Revenue | 990 | 1,974 |
Cost of sales | (714) | (1,716) |
Gross profit | 276 | 258 |
Distribution costs | (26) | - |
Administrative expenses | (266) | (275) |
Other operating costs | (24) | (5) |
Operating loss | (40) | (22) |
Impairment costs | (213) | (287) |
Finance expense | (2) | (2) |
Loss before tax | (255) | (311) |
Taxation on discontinued operations | (14) | (15) |
Loss for the period from discontinued operations | (269) | (326) |
4. The directors have proposed a final dividend of 1.0p per share payable on 20 May 2014 to shareholders on the register at close of business on 30 April 2014. The total dividend for the year, including the interim dividend of 1.0p (2012: 1.0p) per share paid on 3 October 2013, amounts to £79,000 (2012: £79,000), which is equivalent to 2.0p (2012: 2.0p) per share.
5. The basic earnings per share are based on the profit for the financial year attributable to the equity shareholders of £105,000 (2012: loss of £56,000) and on ordinary shares 3,939,551 (2012: 3,939,551), the weighted average number of shares in issue during the year, excluding treasury shares. Diluted earnings per share are based on 4,094,272 ordinary shares (2012: 3,939,551), being the weighted average number of ordinary shares after an adjustment of 154,721 shares (2012: nil) in relation to share options.
6. This preliminary statement, which has been approved by the Board on 19 February 2014, is not the Company's statutory accounts. The statutory accounts for each of the two years to 30 November 2012 and 30 November 2013 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 2012 accounts have been filed with the Registrar of Companies but the 2013 accounts are not yet filed.
For further information, contact:
Rudi Weinreich, Executive Chairman, Holders Technology plc,
Tel. 020 8236 1490
Paul Geraghty, Group Finance Director, Holders Technology plc,
Tel. 020 8236 1490
William Vandyk, Director, Corporate Finance, Northland Capital Partners Ltd,
Tel. 020 7382 1100
Website www.holderstechnology.com
ENDS