TIDMSOLI
RNS Number : 0258X
Solid State PLC
21 November 2017
Solid State plc
("Solid State", the "Group" or the "Company")
Interim Results for six months ended 30 September 2017
Solid State plc (AIM: SOLI), the AIM listed supplier of
specialist industrial/ruggedised computers, electronic components,
advanced antenna products, communications systems and battery power
solutions to the electronics market, is pleased to announce its
interim results for the six months ended 30 September 2017.
Highlights in the period include:
Financial: underlying continuing operations shown to reflect the
exclusion of the discontinued activities of MoJ and SEMS business
unit
2017 2016 Change
Revenue GBP22.5m GBP20.1m GBP2.4m +12%
Adjusted profit before
tax GBP1.6m GBP2.0m (GBP0.4m) (20%)
Adjusted diluted earnings
per share (note 6) 16.1p 20.1p (4.0p) (20%)
Adjusted gross profit margin 28.4% 31.2% (2.8%) (280bps)
Dividend 4.0p 4.0p - -
Dividend cover 3.3x 4.8x (1.5x) (31%)
Operational:
-- Organic growth in distribution division of nearly 20%.
-- Reported manufacturing revenues are 7% up on the prior year
despite over GBP2.5m of rail printer revenue in the comparative
period which did not occur in this period.
-- Completion of the re-organisation of the manufacturing
division - consolidation of the power business unit in Crewkerne,
Somerset, and re-location of the communications business unit to
the new Leominster facility, Herefordshire - that will deliver
tangible operational improvements in H2.
-- Installation of the environmental testing capabilities into Leominster facility.
-- Investment in the commercial and engineering teams in the
communications business unit and production resources in the power
business unit.
-- Increase in field sales force headcount by 7 (circa 50%).
-- Further development in own brand products.
-- Group open order book as at 31/10/17 GBP20.1m (31/10/16: GBP14.6m).
-- Acquisition focus is on larger businesses in the turnover range of GBP10m - GBP20m.
Commenting on the results and prospects, Tony Frere, Chairman of
Solid State said:
"I am pleased to report on a period which demonstrates further
progress in our strategy for delivering sustainable growth.
"The success of the growth strategy in action is amply
demonstrated by the 9% organic growth in the computer business unit
and near 20% growth in the distribution division in the period. The
Board expects the strategy to deliver across other business units
in a similar fashion.
"The open order book at 31 October 2017 was GBP20.1m which is
38% up on the prior year of GBP14.6m. Order intake in October was
at a record level, with the largest individual order representing
10% of the month's total and demonstrating a good spread of
customers. The Directors are pleased with the new business pipeline
and level of new contract awards across the Group.
"This gives the Board confidence that despite the reduction in
the margin as a result of the mix of product sales, the markets
that the Company services are resilient and that the Group can
deliver a strong second half performance and continue to deliver
growth for the Company and its shareholders.
"On behalf of the Board, I would like to acknowledge the
significant contribution of our staff to Solid State's continued
progress."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information please contact:
Solid State plc 01527 830 630
Gary Marsh - Chief Executive investor.information@solidstateplc.com
Peter James - Group Finance
Director
WH Ireland (Nominated Adviser
& Joint Broker) 0117 945 3470
Mike Coe / Ed Allsopp (Corporate
Finance)
Jasper Berry / David Kilbourn
(Corporate Broking / Sales)
finnCap (Joint Broker)
Ed Frisby / Kate Bannatyne
(Corporate Finance)
Emily Morris / Rhys Williams
(Corporate Broking / Sales) 020 7220 0500
Walbrook PR (Financial PR) 020 7933 8780
Tom Cooper / Paul Vann 0797 122 1972
tom.cooper@walbrookpr.com
Notes to Editors:
Solid State plc (SOLI) is a leading value added group of
companies providing specialist design-in and manufacturing services
to those acquiring industrial/rugged computing products, battery
power solutions, communications systems, advanced antenna products
and electronic components for use in harsh environments.
Serving niche markets in oil & gas production, medical,
construction, security, military and field maintenance, Solid State
acts as both a distributor to OEMs and bespoke manufacturer of
specialist units to clients with complex requirements.
Headquartered in Redditch, Solid State employs over 200 staff
across five sites. Solid State operates through two main divisions:
Solid State Supplies and Steatite.
Solid State was established in 1971 and admitted to AIM in June
1996.
Our Vision
We are well placed to exploit the significant opportunities that
exist in all of our target markets; we aspire to double the size of
the business over the next five years. We will deliver this through
a combination of organic growth and strategic acquisitions.
Our Mission
"To remain at the forefront of electronics technology,
delivering reliable, high quality products and services. Adding
value at every opportunity, from enquiry to order fulfilment;
consistently meeting customer and partner expectations."
Our Strategy
Our strategy has three key elements:
1) Investment in our people, our technical knowledge and our
capabilities, to ensure we remain at the forefront of electronics
technology and be the 'go to' technical solutions provider of
choice, enabling us to develop and maintain long term client
relationships as a trusted adviser with the sector 'know how'.
2) Continue to develop our strategic partnerships with customers
and suppliers within the electronics industry, building our
portfolio of value added services.
3) Targeting strategic acquisitions which are aligned with our
core capabilities which provide access to new markets or deepen our
knowledge, ability and enhance the value we can add to our
customers.
CHAIRMAN'S STATEMENT
Unaudited Interim Results of the six months ended 30 September
2017
I am pleased to report on a period which demonstrates further
progress in our strategy for delivering sustainable growth.
Group revenue for the period has increased by 12% to GBP22.5m
(2016: GBP20.1m), reflecting strong organic growth in the
distribution division of close to 20% and a 7% increase in the
manufacturing division reported revenues. However, as we have
experienced in previous years, changes in product mix affect
overall Group gross margin. In this period, as previously announced
in the Group's October trading update, the combination of the
increased proportion of distribution sales and a change in mix of
sales within the manufacturing business resulted in a 2.8%
reduction in the Group gross margin to 28.4% (2016: 31.2%).
Nevertheless, the Board remains confident about the prospects
across the Group and expects a strong performance in the second
half. This expectation is supported by the strong open order book
and the resilience of the Group which is a result of its broad base
of products and clients in a range of market sectors.
Our review of business below sets out the progress we have made
within our divisions in implementing our strategy.
Financial Review
Group revenue for the period increased to GBP22.5m (H1 2016:
GBP20.1m). The distribution division delivered close to 20% organic
growth with a revenue increase of GBP1.6m, whilst manufacturing
revenues increased by GBP0.8m, primarily driven by the full year
impact of the Creasefield acquisition revenues. Within the
manufacturing division over GBP2.5m of rail printer revenue in the
comparative period, which did not occur in this period, has been
replaced by new power and computing revenues.
At an individual business unit level, product line margins
within both divisions have been maintained. However, as we have
experienced in previous years, changes in product mix affect
overall Group gross margin as we have seen in this reporting
period. The combination of the increased proportion of distribution
sales and change in mix of sales within the manufacturing business,
excluding the benefit of the rail printers supplied in the first
half of 2016, in addition to slight foreign exchange headwinds, has
resulted in a reduction in the Group gross margin to 28.4% (H1
2016: 31.2%).
The investment in and restructuring of the communications
business unit and Leominster operations, as outlined in the Final
Results announcement, is now complete and has positioned the
business for future growth. Despite an improvement in revenues
relative to the comparative period, the lead time to win and
deliver some of the complex antenna programmes has taken longer
than expected, as previously announced, resulting in a performance
below management's expectations. The prospect pipeline remains
encouraging, positioning the communications business unit for a
stronger 2018/19. Post the period end, an important order for mesh
radios was secured from a Government customer, establishing
Steatite's position as a key provider of mesh communications
systems.
The planned investment in sales and marketing to drive long term
organic growth and margin enhancement across the Group and the full
year impact of the Creasefield acquisition resulted in continuing
adjusted overheads increasing to GBP4.8m (H1 2016: GBP4.2m). This
reflects additional overhead investment in the first half of
GBP0.6m (primarily field sales resource where we have increased the
headcount by 3 in manufacturing and 4 in distribution; an overall
increase of circa 50%) and GBP0.2m in relation to the full period
impact of the Creasefield overhead. The benefits of these sales
initiatives are starting to be realised as evidenced by the organic
growth rates achieved in the distribution division and the growth
in manufacturing sales, even after having to replace the
significant reduction in rail printer revenues which did not
feature in the reported period.
Good progress is being made in implementing the Group's margin
enhancement strategy through additional added value services and
operational efficiencies; this is particularly aimed at addressing
certain low margin battery business inherited from the Creasefield
acquisition. The benefits of this activity should start to be seen
in the last quarter of this financial year and into the next
financial year.
Adjusted profit before tax for the first half of GBP1.6m (H1
2016: GBP2.0m) is reported before a share based payments charge of
GBP0.1m (H1 2016: nil), amortisation of acquisition intangibles
GBP0.1m (H1 2016: GBP0.1m) and acquisition and re-organisation
costs GBP0.1m (H1 2016: nil).
Adjusted profit after tax was GBP1.4m (2016: GBP1.7m) and
reported profit after tax was GBP1.1m (2016: GBP1.6m).
Adjusted diluted earnings per share from continuing operations
was 16.1p (2016: 20.1p).
In the comparative period there was a GBP0.3m loss from
discontinued operations in respect of the closure of the Steatite
Electronic Monitoring Systems (SEMS) business unit which was closed
in the prior year.
Total comprehensive income for the period was GBP1.1m (2016:
GBP1.4m).
Group order intake in the period increased by 31% to GBP23.9m
(2016: GBP18.2m) and as at 31 October 2017 the open order book
amounted to GBP20.1m (31 October 2016: GBP14.6m), the majority of
which is expected to be delivered in the next 12 months.
Cash flow from operations
Cash flows from operating activities of GBP1.2m outflow is down
from GBP6.1m inflow in 2016 primarily due to a cash outflow of
GBP3.0m (H1 2016: inflow GBP4.1m) from working capital, with
underlying cash profit from operations before working capital being
broadly stable at circa GBP1.8m (H1 2016: GBP2.0m).
The working capital outflow is primarily driven by inventory
which has risen in the period (in common with this point in prior
years), however the increase in the first half of the current year
is more significant as a result of a number of significant
strategic investments which include risk mitigation for potential
component shortages:
-- Within our distribution division we have taken circa GBP0.4m
of a new product line into inventory (with full return rights to
the component manufacturer) to support a multiyear space customer
in an obsolescence management programme. In addition, we have
invested circa GBP0.5m in inventory for a customer specific product
to secure supply and pricing for committed orders.
-- Within our manufacturing division we have invested circa
GBP0.9m in to WIP in relation to on-going projects which are
currently scheduled to ship in the second half.
In addition to the above, we have made strategic investments to
secure supply and pricing as lead times are increasing in a number
of areas such as battery cells, memory and component assemblies
(modules) in the distribution division.
Dividends
The Directors are declaring an interim dividend of 4.0p per
share (H1 2016: 4.0p) which is covered 3.3 times by earnings (H1
2016: 4.8).
The interim dividend will be paid on 16 February 2018 to
shareholders on the register at the close of business on 25 January
2018. The shares will go ex-dividend on 26 January 2018.
Business Overview
The Group is focussed on the supply and support of specialist
electronics equipment which include high tolerance battery packs
and energy storage solutions, specialist electronic components,
advanced antennas, secure communications systems and
industrial/rugged computers.
The market for the Group's products and services is driven by
the need for custom electronic solutions to address complex needs,
typically in harsh environments where enhanced durability and
resilience to extreme and volatile temperatures, humidity or
pressures is vital. Drivers in our markets include efficiency
improvement, cost saving, environmental monitoring and, above all,
safety.
The companies in the Solid State group have distinct
characteristics in their market places. A depth of technical
understanding and a collaborative approach to client relationships
have always promoted an integrated process of product design and
supply. The degree of co-operation has always been appreciated by
our clients and we believe it is of significant commercial value,
both to us and our customers. Solid State will continue to pursue
this approach and to extend it into new relationships where
appropriate.
Our stated strategy is to supplement organic growth with
selective acquisitions within the electronics industry which will
complement our existing Group companies and enable us to achieve
improved operating margins through the employment of operational
efficiencies, scale and distribution.
The Board remains active in pursuing acquisition opportunities;
however we have refined our focus where we are now concentrating on
finding larger acquisition targets which will be earnings enhancing
and deliver additional shareholder value. The Board has, and will
continue to, apply its rigorous due diligence processes in
implementing its acquisition strategy; in the period we pulled out
of certain negotiations due to strategic fit, market risk and
vendor price expectations.
Divisional Review
Manufacturing Division
Trading under the Steatite brand, our manufacturing division is
a leading UK supplier of specialist electronic equipment. Key to
its strategy is the ability to design, manufacture and test to
customer requirements, and against the most stringent of standards
and qualifications, products for use in some of the most difficult
and harsh environments.
Our Group and manufacturing division's strength and resilience
over an extended period has come in large part from its market
diversity. In the current period sales have been split
approximately 25% from oil and gas markets, 25% from defence and
security, 25% from a broad industrial customer base and the balance
from other sectors including transport, aerospace, and utilities.
As well as market sector diversity, we benefit from a wide mix of
products and services which further enhances the Group's
resilience.
The business addresses these markets with discrete business
units in the following sectors; Computing, Power and
Communications.
In our computing business unit we offer simple motherboard and
memory products for commercial applications at one end of the scale
to complex military-certified and classified integrated bespoke
computer solutions at the other end.
The power proposition ranges from the sale of a simple battery
cell through complex industrial battery packs to integrated energy
storage solutions for use in defence applications.
Communications encompass the resale of third party radio
products and advanced antenna solutions for the likes of the Met
Office that are conceived, designed, manufactured and tested in an
in house dedicated facility.
As such we experience and manage varying product margins to
reflect the technical complexity, the level of value added service
and build times applied.
What frequently ties the business solutions together across all
markets and product offerings is the need to address "size weight
and power (SWaP)", likewise the need for a safety first approach
and domain experience combined with the agility of a British
supplier. These are key decision factors for Steatite
customers.
The manufacturing division has delivered a 7% increase in
reported revenues at GBP12.9m (H1 2016: GBP12.1m) reflecting that
the substantially reduced rail printer revenues (which in the prior
year were in excess of GBP2.5m) have been replaced with additional
revenues within the power and computing business units.
Margins within the manufacturing division have been maintained
at individual business unit product level, however, compared to the
prior year there has been a shift in customer and product mix which
has resulted in a reduction in the overall gross margin.
We have continued to implement the planned investments in
personnel to deliver the growth and margin initiatives to drive
improved performance in future years.
Power
The power business is responding to strong levels of enquiries
in varied applications. We are seeing firm and demonstrable
evidence that the oil and gas sector is showing sustained recovery,
beyond just a restocking "spike" evidenced by a new battery pack
project for use in a brand new well development in Africa. The
harsh environment robotics project referenced in the FY16/17 full
year results continues to progress well through the engineering
phases, with the aim to complete the product development in first
half of 2018 and then move to review production opportunities.
In evaluating the attractions of, and following the acquisition
of the Creasefield business, we identified a number of areas for
improvement in both value added and operational efficiency; in
implementing these initiatives we have invested in additional
production resources to facilitate the growth in the power business
unit. We have made good progress in both these areas however expect
the benefits to be more fully reflected in the 2018/2019 financial
year and beyond.
Computing
The computing business unit had a strong performance in the
first half with bookings and billings being ahead of plan and
product margins being maintained. This trend, which reflects a 9%
improvement in billings on 2016, is the result of the investment in
sales initiatives and demonstrates the growth strategy in
action.
Traditional customers remain loyal to the business, valuing
technical knowhow, speed of delivery and naturally a quality
solution above a "low bidder" alone choice.
We are actively targeting a number of new opportunities and
programmes in the rail sector which we hope will be an exciting new
market for our computing business unit.
Communications
The investment and restructuring of the communications business
unit and Leominster operations has positioned the business for
future growth, however, as previously reported the performance has
fallen short of management expectations as the lead time to win and
deliver some of the complex antenna programmes has been longer than
expected.
None of the significant opportunities have been lost therefore
management believes the business unit is well positioned for a
stronger 2018/19. Post the period end saw the award of a second
contract from a Government customer for advanced Radio products. We
are now achieving a tipping point that will see increased
opportunity as the end customer standardises on the Steatite
supplied solution. The business is now looking to add additional
value to our advanced Radio product offering through the design and
provision of an in-house antenna solution.
The business is well known in the industry for the one-off
solutions and technically complex sophisticated systems. These are
world class offerings commanding strong margins. We are now looking
to augment these complex short run solutions with less complex
offerings that complement our radio solutions to achieve a more
balanced profile delivering increased level of revenue and improved
margins.
Distribution Division
The distribution division distributes specialist components to
the UK OEM community; selling semiconductors, related components
and modules for embedded processing, IoT, control and
communications switches, power management units and LED
lighting.
The first half of FY 2017 has seen the investments made to
increase organic growth come to fruition. The distribution division
has delivered close to a 20% increase in reported revenues at
GBP9.5m (H1 2016: GBP7.9m) reflecting strong organic growth across
its product range. Order intake in the first half of 2017 is up by
39% over the same period in the previous year whilst billings have
increased by close to 20% over the same period.
The annualised ratio of order intake to sales out (book:bill) is
now at 1.2:1.0 against an industry figure of 1.04:1.0 (Source ECSN
Sept 2017) and the total open order book is at record levels. This
presents a sound base for the second half.
The market remains margin sensitive, however the Group reviews
this on a regular basis and takes steps where practical to maintain
or improve margin.
The business continues to improve its offering in the growth
markets of wireless, cellular and Internet of Things (IoT) whilst
maintaining a strong offering in the highly specialist areas of
Military and Aerospace. Investments in engineering support in these
areas have led to significantly increased business levels in, for
example, the Global Systems for Mobile communications (GSM)
arena.
Investments that have been made in the sourcing and obsolescence
services operation are expected to start to bear fruit in the
second half of the year and investment continues in this area to
provide secure storage areas within the existing warehouse.
Efficiency improvements are now well underway with a wireless
warehouse project to speed productivity expected to complete before
the year end. Investment continues in personnel and the working
environment with continuous training and infrastructure
improvements including the conversion of all lighting to LED
luminaires.
The division expects to hit its second half organic growth
targets, meet its revenue targets and exceed its order input
targets, positioning the business well for the 2018/19 financial
year.
Outlook
The Group has a broad base of clients, products and markets
which give a high degree of confidence in the stability and
resilience of the Group.
The success of the growth strategy in action is amply
demonstrated by the 9% organic growth in the computer business unit
and near 20% growth in the distribution division in the period. The
Board expects the strategy to deliver across other business units
in a similar fashion.
The open order book at 31 October 2017 was GBP20.1m which is 38%
up on the prior year of GBP14.6m. Order intake in October was at a
record level, with the largest individual order representing 10% of
the month's total and demonstrating a good spread of customers. The
Directors are pleased with the new business pipeline and level of
new contract awards across the Group.
This gives the Board confidence that despite the reduction in
the margin as a result of the mix of product sales, the markets
that the Company services are resilient and that the Group can
deliver a strong second half performance and continue to deliver
growth for the Company and its shareholders.
Finally, on behalf of the Board, I would like to acknowledge the
significant contribution of our staff to Solid State's continued
progress.
Tony Frere
Non-Executive Chairman
INTERIM CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2017
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Continuing Operations
Revenue 22,455 20,086 40,021
Cost of sales (16,076) (13,826) (27,994)
---------- ---------- ----------
Gross profit 6,379 6,260 12,027
Sales, general and administration
expenses (5,106) (4,287) (9,291)
Profit from operations 1,273 1,973 2,736
Finance costs (7) (41) (42)
Profit before taxation 1,266 1,932 2,694
Tax expense (161) (302) (405)
Adjusted profit after tax 1,370 1,703 2,693
Adjustments to profit (265) (73) (404)
---------------------------------------- ---------- ---------- ----------
Profit after taxation 1,105 1,630 2,289
Loss from discontinued operations - (233) (438)
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS
OF THE PARENT 1,105 1,397 1,851
Other comprehensive income - - -
TOTAL COMPREHENSIVE INCOME FOR
THE PERIOD 1,105 1,397 1,851
Earnings per share (see below)
Basic EPS from continuing operations 13.1p 19.4p 27.2p
Basic EPS from discontinued operations - (2.8p) (5.2p)
Basic EPS from profit for the
year 13.1p 16.6p 22.0p
Diluted EPS from continuing operations 13.0p 19.2p 27.1p
Diluted EPS from discontinued
operations - (2.7p) (5.2p)
Diluted EPS from profit for the
year 13.0p 16.5p 21.9p
---------- ---------- ----------
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2017
(unaudited)
Share Share Capital Shares
Capital premium Redemption Retained held
reserve Reserve Earnings in Total
Treasury
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------- --------- ------------ ----------- ---------- --------
Balance at 31 March
2016 421 3,629 5 11,991 (281) 15,765
Total comprehensive
income for the period - - - 1,397 - 1,397
Issue of new shares 4 - - - - 4
Dividends - - - (677) - (677)
Share based payment - - - - - -
expense
Balance at 30 September
2016 425 3,629 5 12,711 (281) 16,489
Total comprehensive
income for the period - - - 454 - 454
Issue of new shares - - - - - -
Dividends - (339) - (339)
Share based payment - - - - - -
expense
Transfer of shares
into All Employee
Ownership Plan - - - - 38 38
Balance at 31 March
2017 425 3,629 5 12,826 (243) 16,642
Total comprehensive
income for the period - - - 1,105 - 1,105
Issue of new shares - - - - - -
Dividends - - - (677) - (677)
Share based payment
expense - - - 75 - 75
Balance at 30 September
2017 425 3,629 5 13,329 (243) 17,145
CONSOLIDATED BALANCE SHEET
as at 30 September 2017
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- --------
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 2,386 1,501 2,406
Intangible assets 6,190 6,021 6,224
---------- ---------- --------
TOTAL NON-CURRENT ASSETS 8,576 7,522 8,630
CURRENT ASSETS
Inventories 8,013 6,421 5,577
Trade and other receivables 9,247 9,083 8,085
Corporation tax recoverable - - -
Cash and cash equivalents - 232 909
---------- ---------- --------
TOTAL CURRENT ASSETS 17,260 15,736 14,571
TOTAL ASSETS 25,836 23,258 23,201
LIABILITIES
CURRENT LIABILITIES
Bank overdraft (1,336) (435) -
Trade and other payables (6,544) (5,500) (5,908)
Corporation tax liabilities - (173) (324)
---------- ---------- --------
TOTAL CURRENT LIABILITIES (7,880) (6,108) (6,232)
NON-CURRENT LIABILITIES
Trade and other payables - (8) -
Corporation tax liabilities (470) (254) -
Deferred tax liability (341) (399) (327)
---------- ---------- --------
TOTAL NON-CURRENT LIABILITIES (811) (661) (327)
TOTAL LIABILITIES (8,691) (6,769) (6,559)
TOTAL NET ASSETS 17,145 16,489 16,642
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT
Share capital 425 425 425
Share premium reserve 3,629 3,629 3,629
Capital redemption reserve 5 5 5
Retained earnings 13,329 12,711 12,826
Shares held in treasury (243) (281) (243)
---------- ---------- --------
TOTAL EQUITY 17,145 16,489 16,642
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2017
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- --------
OPERATING ACTIVIES
Net profit from ordinary activities
before taxation 1,266 1,641 2,155
Adjustments for: Depreciation 238 205 447
Amortisation 192 119 387
Profit on disposal of property,
plant and equipment (2) (9) (17)
Loss on disposal of intangible
fixed assets - - 28
Share based payment expense 75 - -
Finance costs 7 41 42
Other - - 38
Operating profit before changes
to working capital and provisions 1,776 1,997 3,080
(Increase)/decrease in inventories (2,436) (185) 626
(Increase)/Decrease in trade and
other receivables (1,161) 5,209 6,179
Increase/(Decrease) in trade and
other payables 635 (915) (548)
Cash (absorbed by)/ generated from
operations (1,186) 6,106 9,337
Income taxes paid - - (185)
Income taxes recovered - - -
Cash flows from operating activities (1,186) 6,106 9,152
INVESTING ACTIVITIES
Purchase of property, plant and
equipment (247) (232) (1,477)
Purchase of intangible assets (158) (11) (426)
Proceeds from sale of property,
plant and equipment 30 107 183
Consideration paid on acquisition
of subsidiaries - (1,941) (1,941)
Cash with subsidiaries over which
control has been obtained - (114) (114)
(375) (2,191) (3,775)
FINANCING ACTIVITIES
Issue of ordinary shares - 4 4
Interest paid (7) (41) (42)
Dividends paid to equity shareholders (677) (677) (1,026)
(684) (714) (1,064)
(DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (2,245) 3,201 4,313
Cash and cash equivalents brought
forward 909 (3,404) (3,404)
CASH AND CASH EQUIVALENTS CARRIED
FORWARD (1,336) (203) 909
Represented by:
Cash at bank and in hand - 232 909
Bank overdrafts (1,336) (435) -
(1,336) (203) 909
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2017
1. Basis of preparation of interim financial information
General information
Solid State PLC ("the Company") is a public company
incorporated, domiciled and registered in England and Wales in the
United Kingdom. The registered number is 00771335 and the
registered address is: 2 Ravensbank Business Park, Hedera Road,
Redditch, B98 9EY.
The interim financial statements are unaudited and do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006. Statutory accounts for the year ended 31
March 2017, prepared in accordance with IFRS, have been filed with
the Registrar of Companies. The Auditors' Report on these accounts
was unqualified, did not include any matters to which the Auditors
drew attention by way of emphasis without qualifying their report
and did not contain any statements under section 498 of the
Companies Act 2006.
Basis of preparation
These condensed interim financial statements for the six months
ended 30 September 2017 have been prepared in accordance with IAS
34, 'Interim financial reporting', as adopted by the European
Union. The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 March 2017, which have been prepared in accordance with IFRSs as
adopted by the European Union.
The consolidated interim financial statements have been prepared
in accordance with the recognition and measurement principles of
International Financial Reporting Standards as endorsed by the
European Union ("IFRS") and expected to be effective at the year
end of 31 March 2018.
Going concern
The Directors, after making enquiries, and considering the
available resources, the financial forecast together with available
cash and committed borrowing facilities, have formed a judgement
that there is a reasonable expectation that the Company and the
Group have adequate resources to continue operating for the
foreseeable future and therefore the going concern basis has been
adopted in preparing these financial statements.
In reaching this conclusion, the Board has considered the
magnitude of potential impacts resulting from uncertain future
events or changes in conditions, the likelihood of their occurrence
and the likely effectiveness of mitigating actions that the
Directors would consider undertaking.
2. Accounting policies
The accounting policies are unchanged from the financial
statements for the year ended 31 March 2017.
Recent accounting developments
During the current reporting period there were no new standards
or amendments which had a material impact on the net assets of the
Group. In addition, standards or amendments issued but not yet
effective are not expected to have a material impact on the net
assets of the Group. However, the Group is closely monitoring the
IASB projects on Contract Revenue recognition and the Lease
accounting overhaul as they could potentially have a material
impact on the Group's results.
Financial Instruments
The carrying value of cash, trade and other receivables, other
equity instruments, trade and other payables and borrowings also
represent their estimated fair values. There are no material
differences between carrying value and fair value at 30 September
2017.
Additional disclosure of the basis of measurement and policies
in respect of financial instruments are described on pages 56 to 62
of our 2017 Annual Report and remain unchanged at 30 September
2017.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2017.
Impairment
No Impairment charges have been recognised in the period to 30
September 2017.
3. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are
described on pages 8 to 11 of our 31 March 2017 Annual Report and
remain unchanged at 30 September 2017.
They include: Acquisition, product / technology change, supply
chain interruption, retention of key employees, competition,
financial liquidity, legislative environment and compliance,
failure or malicious damage to IT systems and natural
disasters.
4. Segmental information
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Revenue
Manufacturing 12,930 12,119 23,542
Distribution 9,525 7,967 16,479
---------- ---------- ----------
Group revenue 22,455 20,086 40,021
5. Adjusted profit measures
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Continuing operations
Acquisition and re-organisation
costs in cost of sales - - 175
Acquisition and re-organisation
costs in sales, general and administration 100 - 61
--------------------------------------------- ---------- ---------- ----------
Total acquisition and re-organisation
costs 100 - 236
Amortisation of acquisition intangibles 110 91 203
Share based payments 75 - -
Taxation effect (20) (18) (35)
---------- ---------- ----------
Total adjustments to profit 265 73 404
Reported gross profit from continuing
operations 6,379 6,260 12,027
Adjusted gross profit from continuing
operations 6,379 6,260 12,202
Reported gross margin percentage
from continuing operations 28.4% 31.2% 30.1%
Adjusted gross margin percentage
from continuing operations 28.4% 31.2% 30.5%
Reported operated profit from
continuing operations 1,273 1,973 2,736
Adjusted operated profit from
continuing operations 1,558 2,064 3,175
Reported operating margin percentage
from continuing operations 5.7% 9.8% 6.8%
Adjusted operating margin percentage
from continuing operations 6.9% 10.3% 7.9%
Reported profit before tax from
continuing operations 1,266 1,932 2,694
Adjusted profit before tax from
continuing operations 1,551 2,023 3,133
Reported profit after tax from
continuing operations 1,105 1,630 2,289
Adjusted profit after tax from
continuing operations 1,370 1,703 2,693
6. The earnings per share
The earnings per share is based on the following:
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Adjusted continuing earnings
post tax 1,370 1,703 2,693
Reported continuing earnings
post tax 1,105 1,630 2,289
Discontinued earnings post
tax - (233) (438)
Adjusted total earnings post
tax 1,370 1,488 2,255
Reported total earnings post
tax 1,105 1,397 1,851
Weighted average number of
shares 8,464,582 8,391,742 8,426,418
Diluted weighted average number
of shares 8,528,217 8,475,740 8,474,578
Reported EPS
Basic EPS from continuing operations 13.1p 19.4p 27.2p
Basic EPS from discontinued
operations - (2.8p) (5.2p)
Basic EPS from profit for the
year 13.1p 16.6p 22.0p
Diluted EPS from continuing
operations 13.0p 19.2p 27.1p
Diluted EPS from discontinued
operations - (2.7p) (5.2p)
Diluted EPS from profit for
the year 13.0p 16.5p 21.9p
Adjusted EPS
Adjusted basic EPS from continuing
operations 16.2p 20.3p 32.0
Adjusted basic EPS from discontinued
operations - (2.8p) (5.2p)
Adjusted basic EPS from profit
for the year 16.2p 17.5p 26.8p
Adjusted diluted EPS from continuing
operations 16.1p 20.1p 31.8p
Adjusted diluted EPS from discontinued
operations - (2.7p) (5.2p)
Adjusted diluted EPS from profit
for the year 16.1p 17.4p 26.6p
7. Dividends
Dividends paid during the period from 1 April 2016 to 30
September 2017 were as follows:
23 September 2016 Final dividend year ended 31 March 2016 8.00p
per share
20 January 2017 Interim dividend year ended 31 March 2017 4.00p
per share
22 September 2017 Final dividend year ended 31 March 2017 8.00p
per share
The directors are intending to pay an interim dividend for the
year ended 31 March 2018 on 16 February 2018 of 4.00p per share.
This dividend has not been accrued at 30 September 2017.
8. Share capital
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
No. No. No.
---------- ---------- ----------
Allotted issued and fully paid
Number of ordinary 5p shares 8,496,512 8,496,512 8,496,512
Unaudited Unaudited
Six Six Audited
months months Year
to to to
30 Sept 30 Sept 31 Mar
17 16 17
GBP'000 GBP'000 GBP'000
---------- ---------- ----------
Allotted issued and fully paid
Ordinary 5p shares 425 425 425
---------- ---------- ----------
9. Related party transactions
Consistent with the year ended 31 March 2017 the only related
party transactions in the period were those with the trading
companies which are used by the non-executive directors for their
consultancy services. These transactions are disclosed in note 5 in
the annual report to the 31 March 2017 and will be updated in the
full year report to the 31 March 2018. There are no other related
party transactions.
The statement will be available to download on the Company's
website: www.solidstateplc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR URABRBOAAUAA
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