Holders Tech (LSE:HDT) has not been a great investment. The managers seem to be in the groove of doing the same old loss-making thing year after year. This makes me question whether this is a good company to back. I’ll present some numbers and then draw a conclusion in this Newsletter.
Net current asset value
This was bought as a NCAV investment so I’ll start with an up-date on the balance sheet. (MCap is currently 4.06m share x £0.4 = £1.6m)
The balance sheet
£m November | 2012 | 2013 | 2014 | 2015 | 2016 | 2016 with one-third off inventories and one-fifth off receivables |
Property, plant and equipment | 0.40 | 0.32 | 0.27 | 0.33 | 0.40 | |
Inventories | 3.14 | 2.80 | 2.74 | 2.53 | 2.37 | 1.58 |
Receivables | 2.40 | 1.93 | 1.95 | 1.56 | 1.79 | 1.43 |
Cash | 0.70 | 1.29 | 0.63 | 0.44 | 0.78 | 0.78 |
Other current assets | 0.06 | 0.03 | 0.07 | 0.06 | 0 | 0 |
Deduct current liabilities | -1.59 | -1.45 | -1.31 | -1.19 | -1.58 | -1.58 |
Deduct LT liabilities | -0.26 | -0.23 | -0.22 | -0.19 | -0.22 | -0.22 |
NET CURRENT ASSET VALUE | 4.45 | 4.37 | 3.86 | 3.21 | 3.14 | 1.99 |
Net asset value | 5.20 | 5.05 | 4.49 | 3.87 | 3.86 | |
Per share NCAV | 98p | 82p | 77p | 49p | ||
Per share NAV | 114p | 98p | 95p |
Net current asset value, after conservatively valuing inventories and receivables, at £1.99m remains larger than MCap at £1.6m. Also, 39% of the NCAV is cash.
However, over the period 2012 to 2016 NCAV dropped by £1.31m or an average of £327,500 per year. It’ll only take a few more months of that trend for NCAV to fall below MCap.
Trading profits and costs
The volume of sales across the Group fell by £0.4m (4%) in 2016 if the exchange rate boost is removed (as the euro rose German sales were worth more in the reporting currency, sterling). This follows a sorry pattern.
£000’s | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 |
Sales | 19,636 | 15,605 | 14,265 | 13,478 | 11,195 | 11,380 |
Profit after tax | 264 | -111 | 73 | -373 | -361 | -395 |
DPS | 5.35p | 2p | 2p | 1.25p | 0.50p | 0.50p |
Here is a breakdown of the sales and profit figures into the two division, PCBs and LEDs.
Components for printed circuit boards
The overall PCB market in 2016 was “challenging”, and both the German business and the UK business were “restructured”.
- German division. Focused on PCB components for automotive and industrial sectors. Operates from a holding, production and warehousing area of approx. 21,500 sq ft., with additional offices, occupying approx. 4,100 sq ft (in Kirchheimbolanden). Revenue £7m (2015: £6.4m) – most of this increase in sterling terms was due to the fall in the pound vis-à-vis the euro.
- UK division. Focused on aerospace and defence industries. Leases a Galashiels storage, product and warehousing area of approximately 1,170m² with additional offices, occupying approximately 270m². Revenue of ……………………………
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