HDT.L Regulatory News (HDT)

9 Mar 2005 07:00

Holders Technology PLC09 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 30November 2004. Highlights The European electronics industry started 2004 strongly. Whilst the pace ofactivity 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 pershare were 11.00p (2003: 2.67p). Your directors are recommending a finaldividend of 2.75p (2003: 2.50p) per share, which will be payable on 24 May 2005to shareholders on the register at close of business on 29 April 2005. Thefinal dividend makes a total for the year of 4.75p (2003: 4.50p) per share. Theshares will go ex dividend on 27 April 2005. The second half of the year saw slower trading conditions in mainland Europe ascompared with the first half. In August 2004, we increased our holding inTopgrow Technologies, a Hong Kong company, to 60% and Topgrow is nowconsolidated 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 atplanned levels and this, coupled with a policy of strict containment ofoverheads, led to a marked improvement in operating profit in comparison withthe preceding year. In the UK, we have benefited both from the specialist nature of our customerbase, which features a bias towards the defence and avionics areas, andopportunities arising from a reduction in the number of suppliers to the PCBindustry. If, as we expect, this process occurs in Europe generally, we believewe will be well placed to take advantage of this, as we are now one of thelargest European distributors of supplies for the PCB industry, both in terms ofproduct range and sales coverage. Whilst our trading benefited from favourable exchange movements, particularly inregard to products sourced from the USA, these have had an adverse effect on anumber of companies in Europe and we are seeing a further transfer of longproduction run items to the Far East, particularly to China. We continue toseek to counter the potential impact of this by extending the range of productsand services which we offer and this, coupled with redirected sales effort, willensure that we maximise our participation in the shorter run specialist businesswhich will remain in Europe. Our most recent acquisitions were HT Cimatec in Germany and Screen Circuit inHolland. HT Cimatec, despite a subdued domestic economy, has made and continuesto make sound and profitable progress. The same has not been true of ScreenCircuit. Whilst this acquisition has provided access to certain customers withwhom we did not previously trade and opportunities to reduce costs elsewhere inthe group, Screen Circuits itself has been loss making. We now intendsubstantially to restructure this company and have therefore made a provision of£47,000 against the goodwill carried by the group in respect of the acquisitioncost 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 aspotentially very attractive but fraught with complications. Recently, theChinese authorities have agreed to adopt World Trade Organisation guidelines.When fully implemented, these changes will considerably ease some of thedifficulties currently inherent in trading within China. Given the highprobability that China will continue to experience very high growth rates in themarket areas we serve, we intend, albeit with caution, to increase ourinvestment in this market. Our balance sheet liquidity has been noticeably strengthened by the disposal ofproperties in Germany and Holland and we closed the year with positive net fundsof £0.1m. These disposals have enabled us to concentrate our activities intofewer facilities and to reduce overheads accordingly. We continue to appraiseopportunities further to progress this approach when appropriate. Employees As in previous years I would like to record the board's appreciation of theefforts our staff have made in helping to achieve the improvement inprofitability realised in the year to 30 November 2004. So as to ensure a clear separation between the operational and the corporateelements of the Group, Mike Batsch stood down from the plc board on his takingthe post of sales director of Holders Technology UK Limited, our mostestablished trading subsidiary. Outlook We are undertaking a number of measures in the current year designed to enableus to continue to be an efficient low cost supplier. These include areorganisation of our UK production facilities and further development of our ITsystems. Trading in the current year has generally been somewhat below the levels weexperienced in the second half of last year and the first quarter is well belowthe first quarter of last year and, at present, there are no signs that thisposition will ease. The planned expansion in China, whilst potentially ofconsiderable benefit when completed, will not yield immediate benefits to offsetwhat 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 £'000Group turnoverCurrent year acquisition 271 -Other continuing operations 15,387 14,155 15,658 14,155Discontinued operation - 46 Group turnover 15,658 14,201Cost of sales (11,023) (10,211) Gross profit 4,635 3,990Distribution costs (483) (358)Administrative expenses (3,498) (3,424)Other operating income 66 176 Analysis of group operating profitCurrent year acquisition (2) (119)Other continuing operations 722 579 Total continuing operations 720 460Discontinued operation - (76) Group operating profit 720 384Share of associates operating profit / (loss) 4 (22) Total operating profit 724 362Profit on disposal of subsidiary - discontinued operation 24 26 Profit on ordinary activities before interest and tax 748 388 Interest receivable 15 6Interest payable and similar charges (31) (66) Profit on ordinary activities before taxation 732 328Tax on profit on ordinary activities 1 (274) (218) Profit on ordinary activities after taxation 458 110Minority interests - equity (2) - Profit for the financial year 456 110Dividends (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 £'000Fixed assetsIntangible assets 424 209Tangible fixed assets 640 1,136Investment in associated undertaking 97 207 1,161 1,552 Current assetsStocks 2,607 2,159Debtors 2,804 2,813Cash at bank and in hand 480 394 5,891 5,366Creditors: 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 reservesCalled up share capital 414 414Share premium account 1,525 1,525Capital redemption reserve 1 1Profit 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 financeInterest received 15 6Interest paid (25) (59)Finance lease interest (6) (7) Net cash outflow from returns on investment and servicing of finance (16) (60) Taxation (paid) / receivedUK Corporation tax (63) (129)Overseas corporation tax (157) 146 (220) 17 Capital expenditurePayments to acquire tangible fixed assets (253) (168)Receipts from sales of tangible fixed assets 554 49 301 (119) Acquisitions and disposalsAcquisition 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) FinancingCapital 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 ofbusiness on 29 April 2005. The total dividend for the year, including theinterim 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 financialyear 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 anadjustment 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 TechnologiesLimited from 35% to 60% of the company. This transaction has been accounted foras an acquisition. The following sets out the effect on the consolidatedbalance sheet: Balance sheet of Fair value Fair value of acquired acquired business adjustment business £'000 £'000 £'000 Investment in associated company 118 (46) 72Stock 98 - 98Debtors 318 (13) 305Cash 8 - 8Creditors (264) - (264) Net assets acquired 278 (59) 219 Net assets acquired 219Minority 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 theinvestment in associated company and trade debtors. Deferred consideration is payable at 30% of profits above £24,000 in each of theeight 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 July2004, the acquired businesses generated turnover of £541,000 and a profit beforetax of £20,000. 5. This preliminary statement which has been approved by the Board on 9March 2005 is not the Company's statutory accounts. The statutory accounts foreach of the two years to 30 November 2003 and 30 November 2004 received auditreports, 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 withthe 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