TIDMSOLI
RNS Number : 3923V
Solid State PLC
03 December 2019
Solid State plc
("Solid State", the "Company" or the "Group")
Interim Results for the six months ended 30 September 2019
Solid State plc (AIM: SOLI), the AIM listed manufacturer of
computing, power and communications products, and value added
distributor of electronic components, is pleased to announce its
Interim Results for the six months ended 30 September 2019.
Highlights in the period include:
H1 2019/20 H1 2018/19 Change
Reported revenue GBP33.6m GBP23.5m +43%
Proforma revenue* GBP33.6m GBP30.3m +11%
Reported operating profit margin (note 5) 7.1% 5.7% +140bps
Adjusted profit before tax (note 5) GBP2.67m GBP1.66m +61%
Proforma adjusted profit before tax** GBP2.67m GBP1.67m +60%
Adjusted diluted earnings per share (note
6) 27.8p 16.9p +64%
Interim dividend 5.25p 4.20p +25%
*Proforma 2018 restates the prior year on a like for like basis
to include the GBP7.7m Pacer revenue for H1 2018/19 and excludes
GBP1.0m non recurring electronics revenue as reported in prior
year.
** Proforma 2018 restates the prior year on a like for like
basis to include the GBP0.26m Pacer EBIT for H1 2018/19 and
excludes GBP0.25m non recurring electronics EBIT as reported in
prior year.
Financial highlights:
-- Organic revenue growth of 22% in the Manufacturing division with slightly improved margins.
-- Proforma like for like revenues in VAD reflect 4% organic revenue growth.
-- Strong operating cash generation results in a return to net
cash of GBP0.3m (31 March 2019 net debt GBP1.9m).
-- Significant contract wins previously announced have resulted
in a solid Group open order book as at 31 October 2019 of GBP37.8m
up 5.3% (31 October 2018: like for like GBP35.9m; previously
reported GBP29.4m).
Operational highlights:
-- Securing enlarged Microchip franchise announced in July 2019 is expected to positively impact VAD order intake in
the second half.
-- Significantly enhanced value added capability as a result of the investment in the Weymouth facility.
-- Continued development of own brand computing products and investment in research & development particularly in
the Computing, Power and Opto-electronics business units supporting the margin improvement.
-- Investment in Business Development resource to target new customers and markets across both divisions.
Commenting on the results and prospects, Tony Frere, Chairman of
Solid State said:
"I am very pleased to present a strong set of results which will
be my last as Chairman of Solid State. In the five years of leading
the Board we have worked very hard to build a resilient business
with key points of difference in its industry. These record results
vindicate our strategy and ensure a strong platform for future
growth."
Investor Site Visits:
Solid State conducts site visits for investors at its Redditch
head office where operations for both the value added distribution
and manufacturing operations can be seen. Those interested in
attending should contact Tom Cooper on tom.cooper@walbrookpr.com or
0797 122 1972.
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 / Chris Savidge (Corporate
Finance)
Jasper Berry / David Kilbourn (Corporate
Broking / Sales)
finnCap (Joint Broker)
Ed Frisby (Corporate Finance)
Rhys Williams (Sales) 020 7220 0500
Walbrook PR (Financial PR) 020 7933 8780
Tom Cooper / Paul Vann 0797 122 1972
solidstate@walbrookpr.com
Notes to Editors:
Solid State plc (SOLI) is a value added electronics group
supplying industrial and military markets with ruggedised/durable
components, assemblies and manufactured units for use in harsh
environments. The Group's mantra is - 'Trusted technology for
demanding applications'. To see an introductory video on the Group
- https://youtu.be/bp4WfLCEc5Y
Operating through two main divisions: Manufacturing (Steatite)
and Value Added Distribution (Solid State Supplies & Pacer);
the Group specialises in complex engineering challenges often
requiring design-in support and component sourcing for computing,
power, communications, electronic and optoelectronic products.
Headquartered in Redditch, Solid State employs over 200 staff
across the UK with a branch office in the USA, serving specialist
markets in oil & gas production, transportation, medical,
construction, security, military and field maintenance.
Solid State was established in 1971 and admitted to AIM in June
1996. The Group has grown organically and by acquisition - having
made 10 acquisitions.
Our Vision
To exploit the significant opportunities that exist in our
target markets; we aspire to double the size of the business over
the mid-term. We expect to 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 to deliver this has three key elements:
1) investment in our people, our technical knowledge and
resources to ensure we remain at the forefront of electronics
technology. To constantly seek opportunity to add value fulfilling
our customers' unmet needs and as such maintaining long term
relationships as the trusted advisor and subject matter
experts.
2) targeting strategic acquisitions which are aligned with our
core capabilities and provide access to new markets or deepen our
knowledge, ability and enhance the value we can add to our
customers; and,
3) continue to develop our strategic partnerships with customers
and suppliers within the electronics industry, building our
portfolio of value added services.
Unaudited Interim Results of the six months ended
30 September 2019
I am pleased to report that the first half was a record trading
period for the Group and one which also showed continued progress
in delivering our strategy.
Group revenue for the period increased by 43% to GBP33.6m (H118:
GBP23.5m), reflecting strong organic growth in the Manufacturing
division and the first period benefit of the acquisition of Pacer
Technologies Ltd ("Pacer") within the Value Added Distribution
("VAD") division. Like for like revenue on a pro-forma basis
(adjusted for the effect of acquisition and non-recurring items in
the prior year) showed robust growth of 11%.
In the period, the Group's gross margin increased 100bps to
30.1% (H118: 29.1%) primarily reflecting the benefit of foreign
exchange tailwinds in the first half. Pleasingly, underlying
product margins in both divisions are stable or show a slight
improvement. This strong trading performance translates into a 64%
increase in adjusted diluted earnings per share to 27.8p (H118:
16.9p). The Board has proposed a 25% increase in the interim
dividend to 5.25p (H118: 4.20p).
Trading in the first half has benefitted from favourable
currency movements and, as announced in September, the acceleration
of certain strong margin project work that had been expected in the
second half. Therefore the result of the year as a whole is
expected to be first half weighted. Although the macro-economic
environment remains very challenging, current trading since the
period end has continued in-line with management expectations, and
the Board remains confident of meeting the recently increased
market expectations for the full year. Prospects for the remainder
of the financial year are underpinned by the solid open order book
and the resilience and diversity of the Group, resulting from its
broad base of products and clients across a range of market
sectors.
Business Overview
The Solid State Group supplies electronics solutions to its
customers from value added distribution of electronic and
opto-electronic components and displays, to highly technical
bespoke engineered and manufactured assemblies. These products are
provided across its three core business areas of Computing, Power
and Communications.
The Group operates through two operating divisions; VAD and
Manufacturing. These divisions have distinct characteristics in
their respective market places; however, they have a common
mission, a clear delivery strategy, and consistent business
values.
The VAD division is focusing its activities into three business
units; Electronics, Opto-electronics and Sourcing and Obsolescence.
The VAD division is a market leader in delivering innovative,
valuable, technical solutions for customers seeking specialist,
electronic and opto-electronic components and displays with world
class value added capabilities.
The Manufacturing division is a market leader in the design,
development and supply of high specification industrial computers,
custom battery packs providing portable power and energy storage
solutions and advanced communication systems, encompassing wideband
antennas and high performance video transmission products.
Across the Group our depth of understanding and a collaborative
approach to client relationships have always promoted an integrated
process of product design and supply. This co-operation and
collaboration is valued by our clients and we believe it is of
significant commercial value both to us and our customers. The
Group will continue to pursue this approach and extend it into new
relationships.
The market for the Group's products and services is driven by
the need for bespoke electronic solutions to address complex needs,
typically in harsh environments where enhanced durability and
resistance to extreme and volatile humidity, temperature, pressure
and wind is vital. The drivers of value in our markets include
safety, technical performance, efficiency improvements, cost
savings, and environmental monitoring.
Our stated strategy is to supplement organic growth with
selective acquisitions within the electronics industry which will
complement our existing Group companies and over time enable us to
achieve improved operating margins through the delivery of
operational efficiencies and scale.
Divisional Review
Manufacturing Division
The Manufacturing division has seen organic revenue growth of
22%, with first half billings being particularly pleasing within
the Power Business unit. The continued focus on delivering high
value solutions, has resulted in a favourable mix of sales where
our customers recognise the added value provided in our
solutions.
Our continued focus on marketing effort is delivering an
increase in quality lead generation to support the focused sales
activities where we have concentrated on key account development
and growing the order book.
The improved utilisation of our facilities and infrastructure
leverages the operational gearing, which has delivered the
improvement in divisional profitability.
Operationally we have continued to implement the planned
investments in research and development, personnel, equipment and
facilities. We have invested in business development resource and
we have continued to develop our battery management systems
capability at the Crewkerne site, which is the centre of excellence
for our Power business. We also completed the commissioning of the
environmental test equipment at the Leominster facility allowing
the pre compliance testing of products from across the Group. We
are now looking to strengthen our Attenuation and Electromagnetic
Compatibility (EMC) testing capability at our Redditch
facility.
These investments represent an important operational
cornerstone, as the division seeks to continue to deliver the
growth and margin initiatives such as own brand product
development.
Value Added Distribution (VAD) Division
The VAD division continues to trade well and to outperform all
metrics published by the industry association body. Revenues
increased to GBP19.5m (H118: GBP12.0m) principally as a result of
the contribution of the Pacer acquisition.
The acquisition of Pacer in November 2018 has significantly
expanded the division's value added services which now includes sub
module optical assembly alongside class 7 clean room facilities in
Weymouth. The clean room facilities allow for precise optical
alignment and the addition of display overlays in dust free
conditions along with clean room manufacturing and testing.
This division's world class facilities, together with our
programming, tape and reeling, bake and seal, and mini reeling
capabilities in our existing electro static discharge safe
facility, are allowing customers to focus on their core business
and take our products direct to their production lines.
Following the acquisition of Pacer, a strategic review of the
Opto-electronics business unit was undertaken to identify
opportunities and leverage the scale of the enlarged VAD division.
In undertaking the review, operational efficiencies where
appropriate, such as consolidation of the warehousing in our
Redditch facility, have been implemented and a more sales focused
operation has been established which is already improving the order
book.
Furthermore, our strategic investment in people and inventories
has resulted in a significant improvement in the quality and
quantity of pipeline opportunities generated across the VAD
division.
In July 2019 it was announced that the division had secured the
enlarged Microchip franchise. Pleasingly we have already seen our
first billings of Microchip product and this is expected to
positively impact VAD order intake in the second half. The
continuing development of supplier franchises such as the Microchip
franchise, in conjunction with the open order book, will support
second half billings.
Financial Review
The Group has delivered record first half revenue of GBP33.6m
(H118: GBP23.5m) which is up 43% (GBP10.1m). On a proforma basis,
revenue (including Pacer and excluding GBP1m non-recurring VAD
revenue) is up 11% (GBP3.3m) to GBP33.6m (H118 proforma
GBP30.3m).
The Manufacturing division recorded organic revenue growth of
22% with revenue increasing to GBP14.1m (H118: GBP11.5m).
In the VAD Division, revenues increased to GBP19.5m (H118:
GBP12.0m) principally as a result of the contribution from the
Pacer acquisition. Proforma like for like revenues in VAD grew 4%
year on year despite the c.3% decline in the UK distribution market
as reported by AFDEC, our industry association. While the
Electronics business unit was flat with revenues at circa GBP11m
(H118: GBP11.0m, excluding the non-recurring revenue GBP1.0m
previously reported), growth within the Opto-electronics business
unit was around 11% giving revenues of GBP8.5m (H118: GBP7.7m).
Group margin improved 100bps to 30.1% (H118: 29.1%) despite the
dilutive impact of the larger proportion of VAD revenue. The
improvement primarily reflects the benefit of foreign exchange
tailwinds of approximately GBP0.3m in the first half which could
unwind in the second half. Pleasingly, underlying product margins
in both divisions are stable or showed slight improvements.
Overheads have increased to GBP7.7m (H118: GBP5.5m) principally
due to the first full period addition of the Pacer overhead at
approximately GBP1.6m. The additional overheads of GBP0.6m reflect
approximately GBP0.4m investment in personnel and approximately
GBP0.2m overhead inflation.
Operating margin, an increasingly important measure of Group
performance, has improved 140bps to 7.1% (H118: 5.7%) reflecting
the beneficial operational gearing effect on Group profitability
and the foreign exchange tailwinds. The improvement in operating
margin in the Manufacturing division has more than offset the
expected dilution of the enlarged VAD division.
Adjusted profit before tax for the first half was up 61% to
GBP2.67m (H118: GBP1.66m). Reported profit before tax was up 75% to
GBP2.32m (H118: GBP1.33m). This is reported after a share based
payments charge of GBP0.15m (H118: GBP0.08m), amortisation of
acquisition intangibles of GBP0.19m (H118: GBP0.11m) and
acquisition and re-organisation costs of GBPnil (H118:
GBP0.15m).
Adjusted profit after tax was up 65% to GBP2.40m (H118:
GBP1.46m). Reported profit after tax was up 79% to GBP2.12m (H118:
GBP1.19m).
Adjusted diluted earnings per share from continuing operations
were up 64% to 27.8p (H118: 16.9p) with basic EPS up 79% to 25.0p
(H118: 14.0p).
The inflow of cash from operating activities was GBP3.5m (H118
outflow GBP2.2m). The increased cash generation is primarily due to
the increased profitability with working capital being broadly
consistent with the H118 inflow of GBP0.16m.
Pleasingly, the Group has reported a return to net cash of
GBP0.3m at 30 September 2019 following strong cash generation in
the first half. This has enabled the repayment of the debt taken on
to fund the Pacer acquisition to be accelerated while maintaining
GBP7.5m of unutilised bank facilities which can be used for future
acquisitions.
The adoption of IFRS16 Leases is effective for periods beginning
on or after 1 January 2019. IFRS16 removes the operating and
finance lease classification in IAS17 Leases and replaces them with
the concept of right-of-use ('ROU') assets and associated financial
liabilities.
Prior periods have not been restated. The impact on EBITDA of
adopting IFRS16 in the period is an increase of GBP0.3m, with an
equivalent charge to depreciation cost resulting in no impact to
profit before tax. ROU assets recognised on the balance sheet are
GBP0.87m with associated financial liabilities of GBP0.88m and an
equity adjustment of GBP0.01m. Further details are provided in the
notes to these interim results.
Dividends
The Board typically declare an interim dividend which equates to
approximately one third of the anticipated full year dividend.
Based on the record trading performance in the first half of the
year, the Board is pleased to declare a 25% increase in the interim
dividend to 5.25p per share (H118: 4.2p).
The interim dividend will be paid on 14 February 2020 to
shareholders on the register at the close of business on 24 January
2020. The shares will go ex-dividend on 23 January 2020.
Board changes
A number of changes to the Board were announced in the period.
In July, Nigel Rogers was appointed as a Non-Executive Director and
at the end of August John Lavery stood down after many years
valuable service to the Group in a number of roles. It was also
announced that after nearly six years in the role Tony Frere, the
Company's Chairman, intends to retire at the end of the financial
year. We are pleased to confirm that the recruitment process for a
new Non-Executive Director is underway and we expect to announce a
new appointment in the coming months.
With the significant strategic progress we have made in the last
twelve months, including Board changes, we are in the process of
revisiting and refining the Group strategy which will provide
updated KPIs and metrics for future growth. We expect to report on
these longer term aims and objectives as part of year end
reporting.
Outlook
The first half has seen record trading for the Group. With 22%
organic growth in the Manufacturing division in the period and the
success of the Pacer acquisition providing scale and margin
improvement in the VAD division, the Board is confident that it is
adopting the right strategy.
The Board is confident of meeting the recently increased market
expectations for the full year, which are underpinned by a solid
open order book and the resilience and diversity of the Group,
which results from its broad base of products and clients in a
range of market sectors.
Pleasingly the open order book at 31 October 2019 was GBP37.8m
which is 5.3% up on the prior year of GBP35.9m (restated on a like
for like basis). Due to the uncertainty in the overall market, we
are seeing a shortening in the order book visibility which is
resulting in slower growth in the order book than seen in previous
periods. That said, this is a familiar pattern seen in times of
relative uncertainty and, as a result, the Directors are
comfortable with the new business pipeline and level of new
contract awards across the Group.
The Board is very pleased with the acquisition of Pacer. As we
continue to progress with the integration and implementation of the
strategy for the Opto-electronics business unit, the Board is
excited by the opportunities that the increased scale, enhanced
capability and new customer base brings to the Group.
Strategic acquisitions remain a key part of the Group's growth
strategy. Our acquisition strategy is to identify targets which
will complement the Group, enhancing our Intellectual Property,
knowhow and capabilities, to deliver additional shareholder
value.
We have a strong pipeline of potential acquisition targets which
are at the early stages of discussion and evaluation. As ever, the
Board will continue to apply its rigorous due diligence processes
in implementing its acquisition strategy.
Current trading since the end of the first half of the year has
continued in-line with management expectations. Overall, the Board
is pleased with the progress of the Group and confident that the
prospects for the remainder of the year and beyond are positive. It
believes the Group is well positioned for future growth both
organically and through further acquisitions and to deliver
enhanced value for the Company and its shareholders.
Finally, on behalf of the Board, I would like to acknowledge the
significant contribution of our staff across the Group to Solid
State's continued progress.
Gary Marsh
Chief Executive Officer
3 December 2019
INTERIM CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2019
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 GBP'000
GBP'000 GBP'000
Continuing Operations
Revenue 33,587 23,545 56,299
Cost of sales (23,476) (16,697) (39,927)
_______ _______ _______
Gross profit 10,111 6,848 16,372
Sales, general and administration expenses (7,719) (5,510) (13,452)
_______ _______ _______
Profit from operations 2,392 1,338 2,920
Finance costs (67) (11) (109)
_______ _______ _______
Profit before taxation 2,325 1,327 2,811
Tax expense (203) (140) (153)
_______ _______ _______
Adjusted profit after tax 2,401 1,458 3,108
Adjustments to profit (279) (271) (450)
_______ _______ _______
Profit after taxation 2,122 1,187 2,658
_______ _______ _______
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 2,122 1,187 2,658
Other comprehensive income - - -
_______ _______ _______
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 2,122 1,187 2,658
_______ _______ _______
Earnings per share (see below)
Basic EPS from profit for the period 25.0p 14.0p 31.3p
Diluted EPS from profit for the period 24.6p 13.8p 30.7p
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2019
(unaudited)
Share Share Foreign Capital Shares
Capital Premium Exchange Redemption Retained held
Reserve Reserve Reserve Earnings in Total
Treasury
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2018 425 3,629 - 5 14,204 (243) 18,020
Total comprehensive
income for the period - - - - 1,187 - 1,187
Issue of new shares 2 (2) - - - - -
Dividends - - - - (679) - (679)
Share based payment
expense - - - - 75 - 75
_______ _______ ______ _______ _______ _______ ______
Balance at 30 September
2018 427 3,627 - 5 14,787 (243) 18,603
Total comprehensive
income for the period - - - - 1,471 - 1,366
Foreign exchange - - (5) - - - (5)
Transfer of treasury
shares to AESP - - - - (105) 105 -
Purchase of treasury
shares - - - - - (34) (34)
Dividends - - - - (357) - (357)
Share based payment
expense - - - - 225 - 225
_______ _______ ______ _______ _______ _______ ______
Balance at 31 March
2019 427 3,627 (5) 5 16,021 (172) 19,903
IFRS16 Leases adjustment
on adoption - - - - (14) - (14)
Total comprehensive
income for the period - - - - 2,122 - 2,122
Foreign exchange - - 2 - - - 2
Dividends - - - - (706) - (706)
Share based payment
expense - - - - 150 - 150
_______ _______ ______ _______ _______ _______ ______
Balance at 30 September
2019 427 3,627 (3) 5 17,573 (172) 21,457
_______ _______ ______ _______ _______ _______ ______
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 September 2019
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
19 18 19
ASSETS GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 2,259 2,133 2,425
Intangible assets 8,668 5,947 8,892
Right of use lease assets 870 - -
_______ _______ _______
TOTAL NON-CURRENT ASSETS 11,797 8,080 11,317
CURRENT ASSETS
Inventories 9,404 7,146 9,648
Trade and other receivables 11,674 9,728 13,389
Deferred tax asset 103 - 105
Cash and cash equivalents 1,267 1,794 3,692
_______ _______ _______
TOTAL CURRENT ASSETS 22,448 18,668 26,834
_______ _______ _______
TOTAL ASSETS 34,245 26,748 38,151
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (7,570) (5,642) (8,725)
Contract liabilities (1,811) (1,551) (2,511)
Current borrowings (666) - (1,333)
Corporation tax liabilities (750) - (519)
Right of use lease liabilities (332) - -
_______ _______ _______
TOTAL CURRENT LIABILITIES (11,129) (7,193) (13,088)
NON-CURRENT LIABILITIES
Non current borrowings (334) - (4,334)
Provisions (250) - (250)
Deferred tax liability (528) (376) (576)
Right of use lease liabilities (547) - -
Corporation tax liabilities - (576) -
_______ _______ _______
TOTAL NON-CURRENT LIABILITIES (1,659) (952) 5,160
_______ _______ _______
TOTAL LIABILITIES (12,788) (8,145) 18,248
_______ _______ _______
TOTAL NET ASSETS 21,457 18,603 19,903
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 427 427 427
Share premium reserve 3,627 3,627 3,627
Capital redemption reserve 5 5 5
Foreign exchange reserve (3) - (5)
Retained earnings 17,573 14,787 16,021
Shares held in treasury (172) (243) (172)
_______ _______ _______
TOTAL EQUITY 21,457 18,603 19,903
_______ _______ _______
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2019
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar 19
19 18
GBP'000 GBP'000 GBP'000
OPERATING ACTIVITIES
Profit before taxation 2,325 1,327 2,811
Adjustments for:
Depreciation 530 236 698
Amortisation 403 370 732
(Profit) / loss on disposal of
property, plant and equipment (9) 4 6
Share based payment expense 150 75 300
Finance costs 67 11 109
_______ _______ _______
Profit from operations before changes
in working capital and provisions 3,466 2,023 4,917
Decrease / (increase) in inventories 263 (323) (1,198)
Decrease / (increase) in trade
and other receivables 1,747 320 (1,071)
(Decrease) / increase in trade
and other payables (1,910) 160 2,540
Decrease in provisions - - (10)
_______ _______ _______
Cash generated from operations 3,566 2,180 4,395
Income taxes paid (20) - (243)
_______ _______ _______
(20) - (243)
Net cash flows from operating activities 3,546 2,180 4,674
INVESTING ACTIVITIES
Purchase of property, plant and
equipment (183) (165) (600)
Purchase of intangible assets (180) (150) (300)
Payment obligations for right of (224) - -
use assets
Proceeds from sale of property,
plant and equipment 35 44 113
Consideration paid on acquisition
of subsidiaries - - (3,812)
_______ _______ _______
Net cash flow from investing activities (552) (271) (4,599)
FINANCING ACTIVITIES
Issue of ordinary shares - - (34)
Borrowings drawn - - 6,000
Borrowings repaid (4,667) - (1,776)
Interest paid (52) (11) (109)
Dividends paid to equity shareholders (706) (679) (1,036)
_______ _______ _______
Net cash flow from financing activities (5,425) (690) 3,045
_______ _______ _______
(DECREASE) / INCREASE IN CASH AND
CASH EQUIVALENTS (2,431) 1,219 3,120
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
19 18 19
GBP'000 GBP'000 GBP'000
Translational foreign exchange on opening
cash 6 - (3)
Net (decrease) / increase in cash and
cash equivalents (2,431) 1,219 3,120
Cash and cash equivalents brought forward 3,692 575 575
_______ _______ _______
Cash and cash equivalents carried forward 1,267 1,794 3,692
_______ _______ _______
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
19 18 19
GBP'000 GBP'000 GBP'000
Represented by:
Cash available on demand 1,267 1,794 3,692
_______ _______ _______
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2019
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 2019, 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 2019 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 2019, 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 2020.
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 2019 other than as noted
below.
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
2019.
Additional disclosure of the basis of measurement and policies
in respect of financial instruments are described on pages 77 to 82
of our 2019 Annual Report and remain unchanged at 30 September
2019.
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 2019.
Impairment
No Impairment charges have been recognised in the period to 30
September 2019.
Recent accounting developments
The accounting policies adopted are consistent with those of the
previous financial year except as described below:
In preparing the interim financial statements, the Group has
adopted the following Standards, amendments and interpretations,
which are effective for 2019/20 and will be adopted in the
financial statements for the year ended 31 March 2020:
-- IFRS 16 'Leases'.
-- Amendments to IAS 19 'Employee Benefits' which clarifies the accounting for defined benefit plan amendments,
curtailments and settlements.
-- Amendment to IAS 28 'Investments in associates and joint ventures' which clarifies the accounting for long-term
interests in an associate or joint venture, which in substance form part of the net investment in the associate
or joint venture, but to which equity accounting is not applied.
-- Amendments to IFRS 10 'Consolidated financial statements' and IAS 28 'Investments in associates and joint
ventures' which clarifies the accounting treatment for sales or contribution of assets between an investor and
its associates or joint ventures.
-- Interpretation 23 'Uncertainty over Income Tax Treatments' which explains how to recognise and measure deferred
and current income tax assets and liabilities where there is uncertainty over a tax treatment.
The adoption of these standards and amendments has not had a
material impact on the interim financial statements, except for
IFRS 16, 'Leases'.
Adoption of IFRS 16, 'Leases'
The Group has applied judgement to determine the lease term for
some lease contracts in which as lessee there includes a renewal
option. The assessment of whether the Group is reasonably certain
to exercise such options impacts the lease term, which affects the
amount of lease liabilities and right-of-use assets recognised.
Implementation of IFRS 16 'Leases' requires the Group to
recognise new right of use assets and lease liabilities for certain
operating leases that principally relate to the Group's
manufacturing facilities.
The nature of expenses related to these leases has changed in
the six months ended 30 September 2019 because the Group now
recognises a depreciation charge for the right of use assets and an
interest expense on lease liabilities.
Previously, for non-variable lease expenses, the Group
recognised operating lease costs on a straight-line basis over the
lease term and recognised assets and liabilities only to the extent
that there was a timing difference between actual lease payments
and the expense recognised.
This change results in the recognition of a liability on the
balance sheet for all leases which convey a right to use the asset
for the period of the contract.
The lease liability reflects the present value of the future
rental payments and interest, discounted using either the effective
interest rate or the incremental borrowing rate of the entity.
Solid State PLC has adopted IFRS16 using the modified
retrospective transition approach, with the cumulative effect of
adopting the new standard being recognised in equity as an
adjustment to the opening balance of retained earnings for the
current period.
The implementation of IFRS 16 at 1 April 2019, which had no
material impact on total net assets or cash, is summarised in the
narrative and table set out below:
Reported Adoption
31 March of IFRS16 1 April
2019 19
ASSETS GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Non current assets previously reported 11,317 - 11,317
Right of use lease assets - 953 953
_______ _______ _______
TOTAL NON-CURRENT ASSETS 11,317 953 12,270
Total current assets previously reported 26,834 - 26,834
_______ _______ _______
TOTAL CURRENT ASSETS 26,834 - 26,834
_______ _______ _______
TOTAL ASSETS 38,151 953 39,104
LIABILITIES
CURRENT LIABILITIES
Current liabilities previously reported (13,088) - (13,088)
Right of use lease liabilities - (447) (447)
_______ _______ _______
TOTAL CURRENT LIABILITIES (13,088) (447) (13,535)
NON-CURRENT LIABILITIES
Non current liabilities previously reported (5,160) - (5,160)
Non current right of use lease liabilities - (520) (520)
_______ _______ _______
TOTAL NON-CURRENT LIABILITIES (5,160) (520) (5,680)
_______ _______ _______
TOTAL LIABILITIES (18,248) (967) (19,215)
_______ _______ _______
TOTAL NET ASSETS 19,903 (14) 19,889
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Retained earnings 16,021 (14) 16,007
Other reserves as previously reported 3,882 - 3,882
_______ _______ _______
TOTAL EQUITY 19,903 (14) 19,889
_______ _______ _______
3. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are
described on pages 8 to 11 of our 31 March 2019 Annual Report and
remain unchanged at 30 September 2019.
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 Audited
Six months Six months Year
to to to
30 Sept 30 Sept 31 Mar
19 18 19
GBP'000 GBP'000 GBP'000
Revenue
Manufacturing 14,088 11,543 25,897
Value Added Distribution 19,499 12,002 30,402
_______ _______ _______
Group revenue 33,587 23,545 56,299
_______ _______ _______
5. Adjusted profit measures
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 GBP'000
GBP'000 GBP'000
Continuing operations
Acquisition and re-organisation costs - 149 149
Amortisation of acquisition intangibles 195 110 284
Share based payments 150 75 300
Non recurring tax credits - - (141)
Taxation effect (66) (63) (142)
_______ _______ _______
Total adjustments to profit 279 271 450
_______ _______ _______
Reported operated profit 2,392 1,338 2,920
Adjusted operated profit 2,737 1,672 3,653
Reported operating margin percentage 7.1% 5.7% 5.2%
Adjusted operating margin percentage 8.1% 7.1% 6.5%
Reported profit before tax 2,325 1,327 2,811
Adjusted profit before tax 2,670 1,661 3,544
Reported profit after tax 2,122 1,187 2,658
Adjusted profit after tax 2,401 1,458 3,108
6. The earnings per share
The earnings per share is based on the following:
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 GBP'000
GBP'000 GBP'000
Adjusted continuing earnings post
tax 2,401 1,458 3,108
Reported continuing earnings post
tax 2,122 1,187 2,658
_______ _______ _______
Weighted average number of shares 8,497,977 8,472,070 8,488,675
Diluted weighted average number of
shares 8,625,945 8,632,114 8,648,719
_______ _______ _______
Reported EPS
Basic EPS from profit for the period 25.0p 14.0p 31.3p
Diluted EPS from profit for the period 24.6p 13.8p 30.7p
Adjusted EPS
Adjusted basic EPS from profit for
the period 28.3p 17.2p 36.6p
Adjusted diluted EPS from profit for
the period 27.8p 16.9p 35.9p
7. Dividends
Dividends paid during the period from 1 April 2018 to 30
September 2019 were as follows:
20 September 2018 Final dividend year ended 31 March 2018 8.00p
per share
15 February 2019 Interim dividend year ended 31 March 2019 4.20p
per share
19 September 2019 Final dividend year ended 31 March 2019 8.30p
per share
The Directors are intending to pay an interim dividend for the
year ending 31 March 2020 on 14 February 2020 of 5.25p per share.
This dividend has not been accrued at 30 September 2019.
8. Share capital
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 No.
No. No.
Allotted issued and fully paid
Number of ordinary 5p shares 8,532,878 8,532,878 8,532,878
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 GBP'000
GBP'000 GBP'000
Allotted issued and fully paid
Ordinary 5p shares 427 427 427
9. Related party transactions
Consistent with the year ended 31 March 2019 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
remuneration report in the annual report to the 31 March 2019 and
will be updated in the full year report to the 31 March 2020. There
are no other related party transactions.
10. Non-current assets
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 19
19 18 GBP'000
GBP'000 GBP'000
Goodwill 6,300 4,543 6,300
Acquisition intangibles 2,023 992 2,218
Research and development 184 289 267
Software 161 123 107
_______ _______ _______
Intangible assets 8,668 5,947 8,892
Property plant and equipment 2,259 2,133 2,425
Right of use asset 870 - -
_______ _______ _______
Total Non Current Assets 11,797 8,080 11,317
_______ _______ _______
On the 9 November 2018 Solid State PLC acquired the Pacer group
of companies for GBP3,812k resulting in goodwill arising on
acquisition of GBP1,757k and GBP1,400k of IFRS 3 acquisition
intangibles.
The statement will be available to download on the Company's
website: www.solidstateplc.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR UUANRKKAURAA
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