Interim Results
Solid State Supplies PLC
28 December 2005
Solid State Supplies plc
Unaudited Interim Results for the six months ended 30 September 2005
Chairman's Statement
Results
The unaudited pre-tax profits for the Group for the six months ended 30
September 2005 was £131,000 (2004: £130,000) on a turnover of £5,010,000 (2004:
£4,472,000). The basic earnings per share amounted to 1.6p (2004: 1.3p). The
pre-tax profit is stated after goodwill amortisation of £22,000 (2004: £17,000).
Trading Review
Solid State Supplies
The component distribution market in the UK continues to be challenging. AFDEC,
our industry association, have recently announced that the Industrial
distribution market is expected to decline by 10.8% in 2005, with a forecasted
decline of 2.4% in 2006. Against this background we have recently taken steps
to reduce costs and will continue to keep this under active review.
Our compliance programme in relation to the Restriction of Hazardous Substances
continues and we remain focused on managing our non compliant stock to minimize
the impact of the directive due to come into force on 1 July 2006.
Despite difficult market conditions, bookings have improved in recent months and
as at 30 November our book to bill ration stood at 1.06 to 1.00. Our high
reliability and connectivity markets remain strong and we expect this to be
reflected in our results for the next financial year.
Steatite and Wordsworth
There has been an improvement in both turnover and profit as expected, due to
the shipment and growth of sales in the European Space Programme. Whilst the
market remains flat, additional sales and thus revenue are expected during the
second half of the year through focused sales, campaigns and margin enhancement.
With the re-organisation of Steatite and Wordsworth we will consolidate our
logistics, warehousing, manufacturing, back office and support functions, with
an associated reduction in headcount, to improve efficiency and effectiveness.
Although it is not expected that market conditions will improve in the short
term it is expected that a consolidated business will return a better
performance, during 2006.
Summary
The group will incur significant non-recurring costs in particular in relation
to staff redundancies during the second half year with the relocation of
Wordsworth to our Steatite premises at Redditch. However, following this
re-organisation the board believes we will be in a strong position which will be
reflected in the results for 2006/2007 and beyond.
Dividends
In anticipation of the significant non-recurring costs which will be incurred in
the next few months, the directors have decided to declare an interim dividend
of 0.5p per share, compared with 1.5p per share last year. The interim dividend
will be paid on 30 January 2006 to shareholders on the register at close of
business on 13 January 2006.
Conclusion
I would like to thank my fellow directors and all the staff of the group for
their support over the past six months.
Peter Haining
Chairman
28 December 2005
Interim consolidated profit and loss account
for the six months ended 30 September 2005
Unaudited Unaudited Audited
Six months to Six months to Year to
30 Sept 2005 30 Sept 2004 31 Mar 2005
£'000 £'000 £'000
Turnover 5,010 4,742 9,480
Cost of sales (3,525) (3,319) (6,698)
-------------- -------------- --------------
Gross profit 1,485 1,423 2,782
-------------- -------------- --------------
Selling expenses and distribution costs (619) (571) (1,181)
Administrative expenses (708) (687) (1,280)
-------------- -------------- --------------
(1,327) (1,258) (2,467)
-------------- -------------- --------------
Operating profit 158 165 315
Other income 1 - 2
Interest payable (28) (35) (2)
-------------- -------------- --------------
Profit on ordinary activities before taxation 131 130 315
Tax on profit on ordinary activities (33) (48) (79)
-------------- -------------- --------------
PROFIT FOR THE FINANCIAL PERIOD 98 82 236
-------------- -------------- --------------
RECONCILIATION OF MOVEMENT IN SHARHOLDERS' FUNDS
Opening shareholders funds as previously 2,076 2,089 2,089
reported
Prior year adjustments re proposed dividends 123 124 124
-------------- -------------- --------------
Opening shareholders' funds as restated
2,199 2,213 2,213
Profit for the financial period 98 82 236
Dividends Paid (123) (124) (218)
Purchase of own shares - - (33)
-------------- -------------- --------------
Closing shareholders' funds 2,174 2,171 2,198
-------------- -------------- --------------
Earnings per share
Basic 1.6p 1.3p 3.8p
Diluted 1.5p 1.3p 3.8p
All amounts relate to continuing operations.
Consolidated Balance Sheet
as at 30 September 2005
Unaudited Unaudited Audited
As at As at As at
30 Sept 2005 30 Sept 2004 31 Mar 2005
£'000 £'000 £'000
FIXED ASSETS
Intangible assets 1,623 615 596
Tangible assets 471 492 415
-------------- -------------- --------------
2,094 1,107 1,011
-------------- -------------- --------------
CURRENT ASSETS
Stock 1,483 1,383 1,091
Debtors 1,982 1,700 1,941
Cash at bank and in hand 117 199 109
-------------- -------------- --------------
3,582 3,282 3,141
-------------- -------------- --------------
CREDITORS
Amounts falling due within one year (2,780) (1,815) (1,600)
-------------- -------------- --------------
NET CURRENT ASSETS 802 1,467 1,541
-------------- -------------- --------------
TOTAL ASSETS LESS CURRENT LIABILITIES
2,896 2,574 2,552
-------------- -------------- --------------
CREDITORS
Amounts falling due after more than one year (722) (403) (354)
-------------- -------------- --------------
2,174 2,171 2,198
-------------- -------------- --------------
CAPTIAL AND RESERVES
Share capital 308 311 308
Capital redemption reserve 5 1 5
Share premium account 757 757 757
Profit and loss account 1,104 1,102 1,128
-------------- -------------- --------------
SHAREHOLDERS' FUNDS - EQUITY 2,174 2,171 2,198
-------------- -------------- --------------
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30 September 2005
Unaudited Unaudited Audited
Six months to Six months to Year to
30 Sept 2005 30 Sept 2004 31 Mar 2005
£'000 £'000 £'000
Net cash inflow from operating activities 907 580 674
Return on investments and servicing of finance:
Interest received 1 - 2
Interest paid (28) (35) (2)
-------------- -------------- --------------
Net cash (outflow) (27) (35) -
-------------- -------------- --------------
Taxation:
Corporation tax paid - - (72)
-------------- -------------- --------------
Net cash (outflow) - - (72)
-------------- -------------- --------------
Capital expenditure and financial investment:
Payments to acquire tangible fixed asset (54) (49) (80)
Receipts from sales of tangible fixed assets
7 12 26
-------------- -------------- --------------
Net cash (outflow) (47) (37) (54)
-------------- -------------- --------------
Acquisitions and disposals
Purchase of business operation (1,833) - -
-------------- -------------- --------------
Net cash (outflow) (1,833) - (3)
-------------- -------------- --------------
Equity dividend paid (123) (124) (218)
-------------- -------------- --------------
Net cash inflow/(outflow) before financing (1,123) 384 330
-------------- -------------- --------------
Financing:
Medium term loan received 500 - -
Repayments of medium term loan (56) (60) (108)
Hire purchase finance repaid: capital element
- (2) (32)
Invoice discounting finance received (net
movement)
308 (192) (123)
Purchase of own shares - - (34)
-------------- -------------- --------------
Net cash inflow/(outflow) 752 (254) (297)
-------------- -------------- --------------
Increase/(decrease) in cash (371) 130 33
-------------- -------------- --------------
NOTES TO THE INTERIM REPORT
1. Basis of preparation of interim financial information
The interim financial statements have been prepared on the basis of accounting
policies expected to be adopted in the Financial Statements for the year ending
31 March 2006. Following implementation of Financial Reporting Standard 21
dividends are only recognised in the period in which a binding obligation for
payment arises. The effects of this change are set out in the Reconciliation of
Movement in Shareholders' Funds on page 3. The unaudited financial statements do
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985. Statutory accounts for year ended 31 March 2005 have been
filed with the Registrar of Companies. The Auditors' Report on these accounts
was unqualified.
2. Earnings per share
The earnings per share figures are based on the profit on ordinary activities
after taxation as stated in the unaudited profit and loss account and the
weighted average number of shares in issue during each period. The weighted
average number of shares in issue during the period was 6,156,511 for the six
months ended 30 September 2005, 6,207,342 for the year ended 31 March 2005 and
6,225,000 for the six months ended 30 September 2004. The calculation of diluted
earnings per share was based on 6,476,511 for the six months ended 30 September
2005, 6,207,342 for the year ended 31 March 2005 and 6,225,000 for the six
months ended 30 September 2004.
3. Reconciliation of operating profits to net cash inflow from operating
activities
Unaudited Unaudited Audited
Six months to Six months to Year to
30 Sept 2005 30 Sept 2004 31 Mar 2005
£'000 £'000 £'000
Operating profit 158 165 315
Amortisation of intangible fixed assets 22 17 35
Depreciation charges 68 86 177
Loss on disposal of fixed assets 5 5 8
Decrease/(Increase) in stocks (142) (126) 166
Decrease in debtors 648 327 86
Increase/(decrease) in creditors 148 106 (113)
---------------- ---------------- ----------------
Net cash inflowfrom operating activities 907 580 674
---------------- ---------------- ----------------
4. Analysis and reconciliation of net cash
Audited Acquisition Unaudited
31 Mar 2005 £ Cash flow 30 Sept 2005
£'000 £'000 £'000 £'000
Cash at bank and in hand 109 235 (227) 117
Bank overdrafts (6) - (144) (150)
---------------- ---------------- ---------------- ----------------
103 235 (371) (33)
---------------- ---------------- ---------------- ----------------
5. Acquisition
On 10 August 2005, the Group acquired the entire share capital of
Wordsworth Technology Limited. The acquisition was for a consideration of
£1,832,567 paid by cash and financed from existing cash reserves and borrowings
from the bank in the form of a loan for £500,000 repayable over three years. In
calculating the goodwill arising on the acquisition, the fair value of the net
assets has been assessed and adjustments from book value have been made where
necessary. These adjustments are summarised in the following table:
Book Value Adjustment Fair Value
£,000 £'000 £'000
Tangible fixed assets 82 82
Stock 250 250
Debtors 689 689
Cash at bank 235 235
Trade creditors (319) 319
Corporation tax (135) (11) (146)
---------------- ---------------- ----------------
802 (11) 791
---------------- ---------------- ----------------
The adjustments in respect of corporation tax arise as a result of a higher
corporation tax rate applying to the company's pre-acquisition profits as a
result of it joining the Group.
Cash consideration (including expenses of £52k) 1,833,000
Net assets acquired 791,000
-----------------
Goodwill arising on acquisition £1,042,000
-----------------
6. Further copies of this document are available both at the registered
office of the Company and from the offices of Charles Stanley & Company Limited,
25 Luke Street, London, EC2A 4AR.
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