Holders Technology : Preliminary Results

Holders Technology plc Annual Report & Accounts 2016

Specialised PCB Materials, LED Components, and Lighting Solutions

Year in brief

Holders Technology supplies specialty laminates and materials for printed circuit board manufacture

("PCB"), and operates as an LED solutions provider to the lighting and industrial markets.

PCB and LED segments achieved modest revenue growth in the year, and margins were maintained. PCB overheads were reduced, while LED overheads increased due to additional sales recruitment. The result before restructuring and impairment costs was somewhat behind 2015.

During the year, PCB divisions were restructured and costs reduced, and the LED Opteon Germany division was closed. The restructuring costs are shown below.

The directors propose to pay a final dividend of 0.25p per share. Highlights included:

• Results compared to 2015:

  Group revenue 1.7% higher

  PCB revenue 0.4% higher

  LED revenue 5.3% higher

  Group gross margins Unchanged

• Operating loss before impairment

  and restructuring costs £191,000

• Operating loss £374,000

• Cash balances £781,000 (£338,000 higher than 2015) Results are summarised below:

Contents

STRATEGIC REPORT

Page

Chairman's statement 1

Operating review 2

Financial review 4

BOARD REPORTS

Company information 6

Report of the directors 7

Directors' remuneration report 10

Corporate governance 11

Independent auditor's report to the members of Holders Technology plc 13

FINANCIAL STATEMENTS

Group income statement 14

Group statement of comprehensive income 14

Statements of changes in equity 15

Balance sheets 16

Statements of cash flows 17

Notes to the financial statements 18

AGM

Notice of annual general meeting 43

Five-year summary 46

STRATEGIC REPORT

Chairman's statement

In my statement accompanying the 2015 Annual Report and Accounts I stated that the board was evaluating various options to return Holders Technology Group ("The Group") to profitability. As a result of this review some changes to our management team were made, coupled with a significant restructuring programme and the closure of an unprofitable division. A number of sales staff have been changed and investments made to enhance our plant and machinery.

Inevitably changes of this nature impose a major short term cost but we believe they are essential to achieving our goal of restored profitability.

The overall Group result, excluding restructuring costs, was broadly similar to the preceding year with revenue increasing by 1.7% from £11.2 to £11.4m. The 2016 year did not include any revenue from our former Indian joint venture which we exited in 2015 but the impact of the stronger Euro following the EU referendum in June had a significant offsetting impact on the 2016 result. The impact of the referendum result is explained in more detail in the Financial Review.

The Group operating result before impairment and restructuring costs was a loss of £191,000 (2015: operating loss £126,000). Impairment and restructuring costs increased the operating loss to

£374,000 (2015: £151,000).

The PCB divisions together had revenues of £8.3m (2015: £8.3m) and achieved an operating profit of

£115,000 (2015: loss £3,000) before restructuring costs of £116,000. Including restructuring and impairment costs, the PCB divisions made an operating loss of

£1,000 (2015: loss £28,000).

Our German operations remain the predominant element of the Group's PCB sales, the second half of the year saw some benefit from the restructuring programme and the operations were profitable. The UK PCB operations, as anticipated, saw a reduction in revenue but the major changes made within this entity enabled it to achieve a small positive contribution for the year.

Total LED revenues amounted to £3.0m (2015: £2.9m). Combined operating losses before restructuring costs of £67,000 totalled £275,000 (2015: loss of £26,000). The LED divisions made an operating loss after restructuring costs of £342,000 (2015: £26,000).

The various LED elements of our business had very mixed results but taken together they were behind our expectations. While the UK division, Holders Components, achieved growth in both revenue and profitability and Holders Germany maintained its position, NRGstar saw a marked decline as did Opteon Germany. Action has been taken to change the sales teams in a number of these entities and Opteon Germany has been closed.

Last year I reported that the Group faced a potential EU Cross Border Group Relief claim totalling £192,000 and that we had fully provided for this amount in that year's accounts. While some of the claim has been agreed a balance of £126,000 is still subject to further discussion.

2016 was a difficult year for the Group but our staff showed commitment and support throughout the year for which we thank them.

The Board has a continuing belief in the Group's ability to overcome the difficulties it confronts. It is heartened by the initial signs of improved PCB performance, and by the customer interest in the new "smart lighting" products added into the LED divisions. Given this belief the Board considers it appropriate to recommend a final dividend of 0.25p for the 2016 year.

Holders Technology plc | Annual Report & Accounts 2016 1