2012 Preliminary Results

RNS Number : 8134F

Solid State PLC

21 June 2012

 



21st June 2012

Solid State plc

("Solid State" or the "Group")

Preliminary Results for the year ended 31 March 2012

Solid State plc (AIM: SSP), the AIM listed supplier of industrial/ruggedised computers, specialist electronic components and battery power solutions to the electronics market, is pleased to announce its Preliminary Results for the year ended 31 March 2012. 

Highlights in the period include:

Financial:

	2012	2011	Change
Turnover	£25.87m	£21.17m	+22%
Profit before tax	£1.60m	£1.24m	+29%
Earnings per share (basic)	19.5p	15.7p	+24%
Gross profit margin	27.8%	27.8%	0%
Operating margin	6.4%	6.1%	+30bps
Dividend	7.25p	6.0p	+21%

Operational:

·      Acquisition of trade and assets of Blazepoint Ltd in October 2011 for £200k

·      Strong performance from all operating divisions

·      Planned relocation of Solid State Supplies Ltd to achieve improved operational efficiencies

Commenting on the results, Gordon Comben, Chairman of Solid State said:

"These results demonstrate the value of building embedded partnerships with our clients in targeted niche sectors.  This is the second successive year of record results.

"We continue to see opportunities for both organic and acquisitive growth in a market which demands increasing levels of product customisation.  This plays very much to our strengths, the prospects for Solid State are extremely positive."

For further information please contact:

Solid State plc	01892 839 313
Gary Marsh - Chief Executive	[e-mail]
WH Ireland (Nominated Adviser)	0117 945 3470
Mike Coe/Marc Davies
Winningtons (Financial PR)	020 3176 4722
Tom Cooper/Paul Vann	0797 122 1972
	[e-mail]

Notes to Editors:

Solid State plc (SSP) is a leading value added group of companies providing specialist distribution, design-in and manufacturing services to those acquiring industrial/rugged computing products, battery power solutions 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 Paddock Wood in Kent, Solid State employs over 100 staff across four 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.

CHAIRMAN'S STATEMENT

I am very pleased to report that the Group has continued to build on the strong performance achieved last year, delivering a second consecutive year of record results. 

Financial Review

Revenues increased by 22% to £25.87m (2011: £21.17m) with profit before tax rising by 29% to £1.60m (2011: £1.24m).  Underlying growth in the core business, excluding costs of £223k associated with the recent acquisition of the trade and assets of Blazepoint Ltd saw revenue increase by 20% and profits increase by 34%.

The Group typically experiences margin variation due to order size and product mix however retains its ability to command good margins due to the value added nature of its offering.  Pleasingly, despite lower margins in the first half of the year due to the product mix and continuing margin pressures resulting from broader economic conditions and competition, Group gross profit margins were maintained at 27.8% for the year as a whole.

The operating margins increased to 6.4% when including the gain on the acquisition of the trade and assets of Blazepoint Ltd (2011: 6.1%).  Profit before tax has increased by 29% to £1.6m (2011: £1.24m) and earnings per share have increased by 24% to 19.5p (2011: 15.7p).

The balance sheet continues to strengthen.  Total net assets have increased 30% to £5.1m (2011: £3.94m).  Working capital requirements have increased in line with sales and at the year end the Company had a net gearing level of 47% (2011: 40%).

Dividends

The Directors recommend that a final dividend of 4.75p per share be paid.  An interim dividend of 2.5p per share was paid in January 2012 giving a total dividend in respect of the year of 7.25p per share (2011: 6p per share).  The final dividend will be paid on 31st August 2012 to shareholders on the register at the close of business on 10th August 2012.  The shares will go ex-dividend on 8th August 2012.

Business Review

The Group is focussed on the supply and support of specialist electronics equipment which include high tolerance and tailor made battery packs, specialist electronic components 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 resistance to extreme and volatile temperatures is vital.  Drivers in our markets include efficiency improvement, cost saving, environmental monitoring and safety.

Divisional Review

The key performance indicators measured by management are billings, bookings and gross profit margins. Bookings are sales orders received and billings are sales delivered.

Solid State Supplies Ltd

Solid State Supplies is a distributor of specialist components to the UK OEM community; selling semiconductors, related components and modules for embedded processing, control and communications switches, power management units and LED lighting.

The financial year to 31^st March 2012 saw a continuation of the growth achieved in the previous year with bookings growing 15% and billings 39% year on year.

Whilst gross margins on sales remain under pressure the total gross margin including commissions held up well at 27.6% (2011: 27.3%, 2010: 27.2%).

New product franchises acquired during the current and previous financial years have started to reflect in the growth numbers and are now contributing well to the overall billings of the company. This trend is expected to continue into FY2012/13 with new franchises accounting for a larger percentage of the overall sales. The company's dependence on sales to the military sector reduced during the year thus reducing the exposure to the Government's austerity measures.  Pleasingly the company's design-in pipeline (designs in progress at customers) has strengthened throughout the year.

FY2012/13 will see the company relocating to larger and more suitable premises adjacent to its sister company, Steatite, in Redditch. The company will enter the value added market space within the electronics distribution sector, consequently strengthening the company's position both with key customers and key suppliers. The outlook for specialist electronic distribution and technical support remains buoyant and the company expects to see sustained but single digit growth throughout the 2012/13 year.

Steatite Ltd (including Blazepoint Ltd)

Steatite designs, manufactures and supplies a range of products and solutions that include bespoke Lithium battery packs, rugged mobile computing/radio solutions and industrial computer hardware and software. Key to its strategy is the ability to design, manufacture and test to customer requirements for usage in some of the most difficult and harsh environments against the most stringent of standards and qualifications.

Steatite went into the second period of last year with a large order book resulting in a very strong result for the year. Sales increased during the year by 14% whilst profit increased by 22.5%. In October 2011 the company acquired the trade and assets of Blazepoint Ltd and traded the business as Steatite Blazepoint Ltd for the balance of the fiscal year.   Excluding the results of Steatite Blazepoint Ltd in the period would have resulted in an increase in sales of 11.7% and profits of 24.9% in the underlying business on a like for like basis.

For the year ahead Steatite Blazepoint Ltd will trade as a division of Steatite Ltd with most of the restructuring having taken place. This will enable it to contribute within Steatite to a greater level enhancing its product range and prospects for the year ahead. One-off costs for the year totalled £110k of which all relates to the cost of acquisition and restructuring of Blazepoint Ltd.

The prospects for Steatite Ltd for the year ahead remain positive.  It continues to add to a strong order book and is competing and winning some major contracts in all its chosen fields of expertise. The economy continues to present challenges with order visibility difficult to predict.  Nevertheless, we are confident that remaining focussed on our strategy of supplying leading edge solutions will continue to build long term growth and value.

Divisional Summary

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.

Outlook

The Group will continue its stated strategy of both organic and acquisitive growth.  The successful acquisition and integration of both Rugged Systems in 2010 and Blazepoint in October 2011 demonstrates that we can enhance shareholder value through our policy of selective acquisitions in our chosen fields of computing, components and batteries.  We will continue to seek further acquisitions that complement our growth strategy and benefit shareholders.

We are mindful of the current economic environment but remain confident of the Group's prospects for the year ahead and beyond.  We entered the new financial year with a strong order book which at 31^st March 2012 stood at £10.5m (31^st March 2011: £8.4m).  This has been underpinned with the recent announcement of a £3.5m order to be delivered during H1 2012.   This confidence is reflected in the Board's decision to declare a final dividend of 4.75p giving a total dividend for the year 7.25p, a 21% increase on the 2011 dividend of 6.0p.  The prospects for Solid State are extremely positive.

Finally, I would like to thank my fellow Directors and all the staff for their continued support in what has been an outstanding year for the Group.

Gordon Comben

Chairman

20th June 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st March 2012

		2012	2011
	Notes	£	£
Revenue	5	25,874,151	21,169,308
Cost of sales		(18,676,947)	(15,282,648)
GROSS PROFIT		7,197,204	5,886,660
Distribution costs		(2,318,809)	(1,844,559)
Administrative expenses		(3,371,930)	(2,745,555)
Gain on acquisition		160,287	-
		_________	_________
PROFIT FROM OPERATIONS		1,666,752	1,296,546
Finance costs		(67,608)	(53,150)
PROFIT BEFORE TAXATION		1,599,144	1,243,396
Tax expense	6	(282,159)	(274,912)
		_________	_________
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT		1,316,985	968,484
OTHER COMPREHENSIVE INCOME		-	4,708
Translation differences on overseas operations		_________	_________
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		1,316,985	973,192
		_________	_________
EARNINGS PER SHARE
Basic	3	19.5p	15.7p
Diluted	3	19.2p	15.0p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March 2012

		Share	Capital	Foreign
	Share	Premium	Redemption	Exchange	Retained
	Capital	Reserve	Reserve	Reserve	Earnings	Total
Balance at 31st March 2010	307,826	756,980	4,674	55,126	2,070,876	3,195,482
Total comprehensive income
For the year ended 31st March 2011	-	-	-	4,708	968,484	973,192
Share based payment expense	-	-	-	-	16,188	16,188
Dividends	-	-	-	-	(246,260)	(246,260)
	_______	_______	_______	_______	_______	_______
Balance at 31st March 2011	307,826	756,980	4,674	59,834	2,809,288	3,938,602
Total comprehensive income
For the year ended 31st March 2012	-	-	-	-	1,316,985	1,316,985
Issue of new shares	31,746	168,254	-	-	-	200,000
Share based payment expense	-	-	-	-	92,023	92,023
Dividends	-	-	-	-	(441,443)	(441,443)
Reallocation on winding up of a subsidiary	-	-	-	(59,834)	59,834	-
	_______	_______	_______	_______	_______	_______
Balance at 31st March 2012	339,572	925,234	4,674	-	3,836,687	5,106,167
	_______	_______	_______	_______	_______	_______

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31st March 2012

		2012	2012	2011	2011
		£	£	£	£
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment			851,170		613,756
Intangible assets			2,425,579		2,374,618
			________		________
TOTAL NON-CURRENT ASSETS			3,276,749		2,988,374
CURRENT ASSETS
Inventories		3,062,005		2,765,672
Trade and other receivables		6,872,680		4,214,693
Cash and cash equivalents		41,868		73,003
		________		________
TOTAL CURRENT ASSETS			9,976,553		7,053,368
			_________		_________
TOTAL ASSETS			13,253,302		10,041,742
			_________		_________
LIABILITIES
CURRENT LIABILITIES
Bank overdraft		1,367,995		481,232
Trade and other payables		5,365,567		3,911,120
Bank borrowings		1,064,417		1,184,964
Corporation tax liabilities		261,353		258,826
		________		________
TOTAL CURRENT LIABILITIES			8,059,332		5,836,142
NON CURRENT LIABILITIES
Borrowings		-		200,000
Deferred tax liability		87,803		66,998
		________		________
TOTAL NON-CURRENT LIABILITIES			87,803		266,998
			________		________
TOTAL LIABILITIES			8,147,135		6,103,140
			________		________
TOTAL NET ASSETS			5,106,167		3,938,602
			________		________
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
Share capital			339,572		307,826
Share premium reserve			925,234		756,980
Capital redemption reserve			4,674		4,674
Foreign exchange reserve			-		59,834
Retained earnings			3,836,687		2,809,288
			________		________
TOTAL EQUITY			5,106,167		3,938,602
			________		________

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31st March 2012

	2012	2012	2011	2011
	£	£	£	£
OPERATING ACTIVITIES
Profit before taxation		1,599,144		1,243,396
Adjustments for:
Depreciation		196,778		113,193
Amortisation		34,153		22,080
Loss/(profit) on disposal of property, plant and equipment		8,095		(6,179)
Share based payment expense		92,023		16,188
Finance costs		67,608		53,150
Gain on acquisition		(160,287)		-
		________		________
Profit from operations before changes
in working capital and provisions		1,837,514		1,441,828
(Increase) in inventories	(96,333)		(826,550)
(Increase) in trade and other receivables	(2,657,987)		(1,268,263)
Increase in trade and other payables	1,147,734		1,216,980
		(1,606,586)		(887,833)
		_______		_______
Cash generated from operations		230,928		553,995
Income taxes paid	(258,826)		(114,439)
	_______		_______
		(258,826)		(114,439)
		_______		_______
Cash flow from operating activities		(27,898)		439,556
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(288,787)		(483,553)
Purchase of computer software	(8,114)		(13,777)
Proceeds of sales from property, plant and equipment	36,500		70,466
Consideration paid on acquisition of subsidiary	-		(225,263)
Consideration paid on acquisition of business	(200,000)		-
Cash within subsidiary over which control has been obtained	-		157,528
	_______		_______
		(460,401)		(494,599)
		_______		_______
		(488,299)		(55,043)
FINANCING ACTIVITIES
Issue of ordinary shares	200,000		-
Medium term loan received	-		200,000
Repayment of debt factoring	-		(255,900)
Repayment of finance lease	-		(6,053)
Invoice discounting finance (net movement)	(120,548)		121,261
Interest paid	(67,608)		(53,150)
Dividend paid to equity shareholders	(441,443)		(246,260)
	_______		_______
		(429,599)		(240,102)
		_______		_______
(DECREASE) IN CASH AND CASH
EQUIVALENTS		(917,898)		(295,145)
		_______		_______

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31st March 2012 (continued)

Cash and cash equivalents comprise:
	2012	2011
	£	£
Net (decrease) in cash and cash equivalents	(917,898)	(295,145)
Cash and cash equivalents at beginning of year	(408,229)	(117,792)
Exchange gains on cash and cash equivalents	-	4,708
	_________	_______
Cash and cash equivalents at end of year	(1,326,127)	(408,229)
	_________	_______
There were no significant non-cash transactions.
	2012	2011
	£	£
Cash available on demand	41,868	73,003
Overdrafts	(1,367,995)	(481,232)
	_________	_______
	(1,326,127)	(408,229)
	_________	_______

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st March 2012

1)   The financial information in the preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 March 2012 or 31 March 2011.  The financial information for the year ended 31 March 2011 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 2006, s 498 (2) or (3).  The financial information for the year ended 31 March 2012 is unaudited.  Statutory accounts for that will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of Companies following the Company's annual general meeting. 

2)   ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS

The financial information in this preliminary announcement has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs).  The principal accounting policies used in preparing the preliminary announcement are those the Group will apply in its financial statement for the year ended 31 March 2012 and are unchanged from those disclosed in the Group's Report and Financial Statements for the year ended 31 March 2011. 

3)   EARNINGS PER SHARE

The earnings per share is based on the following:

	2012	2011
	£	£
Earnings	1,316,985	968,484
Weighted average number of shares	6,770,613	6,156,511
Diluted number of shares	6,870,252	6,444,348
Earnings per share	19.5p	15.7p
Diluted earnings per share	19.2p	15.0p

Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the year.  The weighted average number of equity shares in issue was 6,770,613 (2011: 6,156,511).

The Diluted earnings per share is based on 6,870,252 (2011: 6,444,348) ordinary shares which allow for the exercise of all dilutive potential ordinary shares.

In the prior year, certain employee options were not included in the calculation of diluted EPS because their exercise was contingent on the satisfaction of certain criteria that had not been met at the end of the year. In addition, certain employee options were also excluded from the calculation of diluted EPS as their exercise price was greater than the weighted average share price during the year (i.e. they are out-of-the-money) and therefore it would not be advantageous for the holders to exercise the options.

The number of share options which have not been included in the calculation of the weighted average number of shares was nil (2011: 60,000).

4)   DIVIDENDS

	2012	2011
	£	£
Final dividend paid for the prior year of 4p per share (2011: 2p)	271,657	123,130
Interim dividend paid of 2.5p per share (2011: 2p)	169,786	123,130
	_______	_______
	441,443	246,260
	_______	_______
Final dividend proposed for the year 4.75p per share (2011: 4p)	322,593	271,657
	_______	_______

The proposed final dividend has not been accrued for as the dividend was declared after the statement of financial position date.

5)   SEGMENT INFORMATION

The Group's primary reporting format for segment information is business segments which reflect the management reporting structure in the Group.  The distribution division includes Solid State Supplies Limited and the manufacturing division includes Steatite Blazepoint Limited and Steatite Limited which incorporates RZ Pressure and Wordsworth Technology Limited.

            Year ended 31st March 2012                           

	Distribution	Manufacturing	Head
	division	division	office	Total
	£	£	£	£
Revenue
External	6,439,110	19,435,041	-	25,874,151
Intercompany	-	40,962	-	40,962
	________	________	________	_________
	6,439,110	19,476,003	-	25,915,113
	________	________	________	_________
Profit/(loss) before tax	493,518	1,709,874	(604,248)	1,599,144
Balance sheet
Assets	2,659,115	10,569,158	25,029	13,253,302
Liabilities	(3,081,480)	(4,416,212)	649,443	(8,147,135)
	_________	________	_______	________
Net assets/(liabilities)	(422,365)	6,152,946	(624,414)	5,106,167
	_________	________	_______	________
Other
Capital expenditure
-  Tangible fixed assets	159,664	319,123	-	478,787
-  Intangible fixed assets	-	85,114	-	85,114
Depreciation, amortisation and
other non cash expenses	57,119	147,843	34,064	239,026
Interest paid	17,706	26,222	23,680	67,608
	________	________	________	________

SEGMENT INFORMATION (continued)

            Year ended 31st March 2011

	Distribution	Manufacturing	Head
	division	division	office	Total
	£	£	£	£
Revenue
External	4,669,690	16,499,618	-	21,169,308
Intercompany	-	237,600	-	237,600
	________	________	________	_________
	4,669,690	16,737,218	-	21,406,908
	________	________	________	_________
Profit/(loss) before tax	244,745	1,495,172	(496,421)	1,243,496
	________	________	________	---------------
Balance sheet
Assets	2,480,900	7,560,842	-	10,041,742
Liabilities	(3,134,021)	(2,836,133)	(132,986)	(6,103,140)
	________	________	_______	________
Net assets/(liabilities)	(653,121)	4,724,709	(132,986)	3,938,602
	________	_________	_______	________
Other
Capital expenditure
-  Tangible fixed assets	172,870	318,522	-	491,392
-  Intangible fixed assets	-	367,752	-	367,752
Depreciation, amortisation and
other non cash expenses	54,666	74,428	-	129,094
Interest paid	32,091	21,059	-	53,150
	________	________	________	________

	External revenue by location of customer	External revenue by location of customer	Total assets by location of assets	Total assets by location of assets	Net tangible capital expenditure by location of assets	Net tangible capital expenditure by location of assets
	2012	2011	2012	2011	2012	2011
	£	£	£	£	£	£
United Kingdom	24,352,381	19,892,533	13,253,302	10,029,908	478,787	491,392
Ireland	172,762	154,736	-	-	-	-
Europe	1,069,359	846,851	-	11,834	-	-
North America	95,497	89,929	-	-	-	-
Asia	143,803	164,049	-	-	-	-
Africa	30,000	16,000	-	-	-	-
Australasia	10,089	4,646	-	-	-	-
South America	260	564	-	-	-	-
	_________	_________	_________	_________	_______	_______
	25,874,151	21,169,308	13,253,302	10,041,742	478,787	491,392
	_________	_________	_________	_________	_______	_______

All the above relate to continuing operations.

6)   TAX EXPENSE

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the UK applied to profits for the year are as follows:

	2012	2011
	£	£
Profit before tax	1,599,144	1,243,396
Expected tax charge based on the standard rate of
corporation tax in the UK of 26% (2011 - 28%)	415,777	348,151
Effect of:
Expenses not deductible for tax purposes	28,508	11,578
Deductible expenses not charged in Group accounts	(5,308)	(9,649)
Difference between depreciation for the year and capital allowances	(26)	1,065
Tax relief on exercise of share options at less than market value	(104,825)	-
Timing difference on recognition of gain on acquisition for tax purposes	(1,600)	-
Utilisation of tax losses	-	(46,495)
Marginal relief	(4,500)	(1,295)
Enhanced relief on research and development expenditure	(45,867)	(24,068)
Adjustment to enhanced relief on research and development
expenditure in prior year	-	(4,375)
	_______	_______
Total tax charge	282,159	274,912
	_______	_______

7)   The Annual Report will be sent to shareholders shortly and made available to the public at the registered office of the Company at Unit 2, Eastlands lane, Paddock Wood, Kent, TN12 6BU and will also be available to download on the Company's website www.solidstateplc.com.

 

END

 

 

FR EASKEAFPAEFF