Interim Results

RNS Number : 0056T

Solid State PLC

10 December 2012

 



10 December 2012

Solid State plc

("Solid State", the "Company" or the "Group")

Unaudited Interim results for the six months ended 30 September 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 Interim results for the six months ended 30 September 2012.

Highlights in the period include:

Financial:

	2012	2011	Change
Turnover	£15.772m	£11.361m	+39%
Profit before tax*	£813k	£704k	+16%
Earnings per share (basic)	8.5p	7.6p	+12%
Gross profit margin	24.4%	26.5%	-210bps
Operating margin*	5.2%	6.5%	-130bps
Dividend	2.75p	2.5p	+10%

* Before exceptional items of £81k

Operational:

·      Order backlog at 31/10/2012 - £13.2m

·      £3.5m in-vehicle rugged electronics contract for export secured in May 2012

·      Supply of circa £1m goods for London 2012 Olympic games

·      Organic growth in all divisions of Group

·      Successful relocation of Head Office and Solid State Supplies Ltd from Paddock Wood to new purpose built facilities in Redditch, building capacity and further improving efficiency 

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

"The 2012/2013 year has started very positively with a pleasing set of first half results.  Our niche in bespoke and specialist electronics has proved resilient in challenging times and gives the Board confidence in the prospects for Solid State."

For further information please contact:

Solid State plc	01527 830630
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 Redditch, Solid State employs over 100 staff across three 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

Results

I am very pleased to report that the Group has continued to perform strongly in the six months to 30 September 2012.  

Revenues show a healthy increase of 39% to £15.772m (2011: £11.361m) with profit before tax rising by 4% to £732k (2011: £704k) after charging exceptional costs of £81k during this period; comprising relocation costs of £66k and abortive acquisition costs of £15k.

The revenues for the first half benefitted from the contract valued at £3.5m won in May to supply in-vehicle rugged electronics for an export client.  This contract delivered above average revenue for the period albeit at a lower than average margin.  The Group typically experiences margin variation due to order size and product mix.  The influence of this contract has resulted in a reduced Group profit margin for the period of 24.4% however, this is uncharacteristically low and we do not expect this to be repeated in the second half of the year.  It will have the effect of reducing the profit margin for the year as a whole, relative to our long run average margin, although not to the extent seen in this first half year.

We are continuing to experience margin pressures resulting from broader economic conditions and competition in our specialist electronic components division.  Steps have been taken to improve margins including the introduction of added value services.

Earnings per share have increased by 12% to 8.5p (2011: 7.6p) with the balance sheet continuing to strengthen.  Total net assets have increased by 23% to £5.42m (2011: £4.42m).  Net debt levels have benefited from cash receipts relating to a number of large contracts resulting in net gearing level of 33% at 30 September 2012 (31 March 2012: 54%).

Dividends

The Directors are declaring an Interim dividend of 2.75p per share.  The Interim dividend will be paid on Monday 28 January 2012 to shareholders on the register at the close of business on 4 January 2012.  The shares will go ex-dividend on 2 January 2012.

Group Strategy

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 Group is focussed on the supply and support of specialist electronics equipment which includes high tolerance and tailor made battery packs, specialist electronic components and industrial/ruggedised 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, gross profit margins and order backlog. 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 period to 30 September 2012 saw very strong trading, with key franchises added in the last 12 months starting to make a significant contribution to the increased turnover. In addition, the company successfully relocated its business to bespoke premises in Redditch. This gives the company an excellent platform for growth and has enabled the company to move into value added services. These services are expected to positively impact revenues in the second half of the year. The company continues to look for new franchise opportunities and is optimistic that current discussions will result in new franchises being added in the next financial year. 

The relocation of Solid State Supplies has resulted in one-off relocation costs of £66k.  Further moderate one-off costs associated with the relocation and additional efficiency initiatives are expected in H2.

Competitive pressures on the components industry have seen some erosion of gross margin.  Steps have already been put in place to affect a recovery in margin over the next 12 months through the addition of value added services which will positively enhance gross margin.

Steatite 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.

The business of Steatite has benefited from a strong order book as reported in our year-end review along with a substantial order from a blue chip offshore communications company that was shipped during the second quarter.

All Steatite's product groups are performing well with bookings up by 18% and billings up 31% on a like for like basis compared to the same period in 2011. 

The current strong order book and a healthy pipeline of prospects in transportation and secure communications puts Steatite on course for a solid second half performance and another year of double digit growth.

Outlook

Activity levels across the Group are encouraging.  We are witnessing promising activity with public sector clients increasingly looking to further outsource specialist services in line with their cost saving agenda.  Enquiry levels remain high, coupled with a good prospect to bookings conversion rate.

The order backlog shows revenue visibility as at 31 October 2012 of £13.2m (31 October 2011: £9.9m) having entered the new financial year with a strong order book which at 31 March 2012 stood at £10.6m.

The Group will continue its stated strategy of both organic and acquisitive growth.  We will continue to seek further acquisitions that complement our growth strategy and benefit shareholders.

Despite the current economic environment we remain confident of the Group's prospects and meeting current market forecasts for the full year.  This confidence is reflected in the Board's decision to declare a 10% increase in our interim dividend to 2.75p (2011: 2.5p). 

Finally, I would like to thank my fellow Directors and all the staff for their continued support in what has been a very positive start to this financial year.

Gordon Comben

Chairman

10 December 2012

INTERIM CONSOLIDATED INCOME STATEMENT

for the six months ended 30th September 2012

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	30th September 12	30th September 11	31st March 12
	£'000	£'000	£'000
Revenue	15,772	11,361	25,874
Cost of sales	(11,931)	(8,352)	(18,677)
	_____	_____	_____
Gross profit	3,841	3,009	7,197
	_____	_____	_____
Distribution costs	(1,344)	(1,055)	(2,319)
Administrative expenses	(1,730)	(1,221)	(3,372)
Gain on acquisition	-	-	160
	_____	_____	_____
	(3,074)	(2,276)	(5,531)
	_____	_____	_____
Profit from operations	767	733	1,666
Finance costs	(35)	(29)	(67)
	___	___	_____
Profit before taxation	732	704	1,599
Tax expense	(154)	(196)	(282)
	___	___	_____
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT	578	508	1,317
Other comprehensive income	-	-	-
	___	___	____
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD	578	508	1,317
	___	___	_____
Earnings per share (see below)
Basic	8.5p	7.6p	19.5p
Diluted	8.2p	7.5p	19.2p

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30th September 2012

(unaudited)

		Share	Capital	Foreign
	Share	premium	redemption	exchange	Retained
	capital	reserve	reserve	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31st March 2011	308	757	5	60	2,809	3,939
Issue of new shares	32	168	-	-	-	200
Total comprehensive income for the period	-	-	-	-	508	508
Dividends	-	-		-	(272)	(272)
Share based payment expense	-	-	-	-	43	43
Reallocation on winding up of subsidiary	-	-	-	(60)	60	-
	___	___	___	___	_____	_____
Balance at 30th September 2011	340	925	5	-	3,148	4,418
Total comprehensive income for the period	-	-	-	-	809	809
Dividends	-	-	-	-	(169)	(169)
Share based payment expense	-	-	-	-	48	48
	___	___	___	___	_____	_____
Balance at 31st March 2012	340	925	5	-	3,836	5,106
Total comprehensive income for the period	-	-	-	-	578	578
Issue of new shares	3	34	-	-	-	37
Dividends	-	-	-	-	(325)	(325)
Share based payment expense	-	-	-	-	22	22
	___	___	___	___	_____	_____
Balance at 30th September 2012	343	959	5	-	4,111	5,418
	___	___	___	___	_____	_____

CONSOLIDATED BALANCE SHEET

as at 30th September 2012

	Unaudited	Unaudited	Audited
	as at	as at	as at
	30th September 12	30th September 11	31st March 12
	£'000	£'000	£'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment	938	713	851
Intangible assets	2,409	2,362	2,426
	_____	_____	____
TOTAL NON-CURRENT ASSETS	3,347	3,075	3,277
	_____	_____	_____
CURRENT ASSETS
Inventories	4,318	3,146	3,062
Trade and other receivables	4,216	4,236	6,873
Cash and cash equivalents	276	50	42
	_____	_____	_____
TOTAL CURRENT ASSETS	8,810	7,432	9,977
	______	_____	______
TOTAL ASSETS	12,157	10,507	13,254
	______	_____	______
LIABILITIES
CURRENT LIABILITIES
Bank overdraft	(2,027)	(1,052)	(1,368)
Trade and other payables	(4,166)	(3,560)	(5,366)
Bank borrowings	(43)	(956)	(1,065)
Corporation tax liabilities	(261)	(258)	(261)
	_____	_____	_____
TOTAL CURRENT LIABILITIES	(6,497)	(5,826)	(8,060)
	_____	_____	_____
NON-CURRENT LIABILITIES
Corporation tax liabilities	(186)	(185)	-
Deferred tax liability	(56)	(78)	(88)
	_____	_____	_____
TOTAL NON-CURRENT LIABILITIES	(242)	(263)	(88)
	_____	_____	_____
TOTAL LIABILITIES	(6,739)	(6,089)	(8,148)
	_____	_____	_____
TOTAL NET ASSETS	5,418	4,418	5,106
	_____	_____	_____
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE PARENT
Share capital	343	340	340
Share premium reserve	959	925	925
Capital redemption reserve	5	5	5
Foreign exchange reserve	-	-	-
Retained earnings	4,111	3,148	3,836
	_____	_____	_____
TOTAL EQUITY	5,418	4,418	5,106
	_____	_____	_____

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30th September 2012

	Unaudited	Unaudited	Audited
	Six months to	Six months to	Year to
	30th September 12	30th September 11	31st March 12
	£'000	£'000	£'000
OPERATING ACTIVITIES
Net profit from ordinary activities before taxation	732	704	1,599
Adjustments for:
Depreciation	130	79	197
Amortisation	22	12	34
Loss on disposal of property, plant and equipment	2	5	8
Share based payment expense	22	43	92
Finance costs	35	29	68
Gain on acquisition	-	-	(160)
	___	___	_____
Operating profit before changes in working capital and provisions	943	872	1,838
(Increase) in inventories	(1,256)	(381)	(96)
Decrease/(increase) in trade and other receivables	2,657	(21)	(2,658)
(Decrease)/increase in trade and other payables	(1,200)	(551)	1,147
	_____	___	_____
Cash generated from/(absorbed by) operations	1,144	(81)	231
Income taxes paid	-	-	(259)
	_____	___	___
Cash flows from operating activities	1,144	(81)	(28)
	_____	___	___
INVESTING ACTIVITIES
Purchase of property, plant and equipment	(223)	(215)	(289)
Purchase of computer software	(5)	-	(8)
Proceeds from sale of property, plant and equipment	5	32	36
Consideration paid on acquisition of business	-	-	(200)
	___	___	___
	(223)	(183)	(461)
	___	___	___
FINANCING ACTIVITIES
Issue of ordinary shares	37	200	200
Invoice discounting finance (net movement)	(1,023)	(229)	(121)
Interest paid	(35)	(29)	(67)
Dividends paid to equity shareholders	(325)	(272)	(441)
	_____	___	___
	(1,346)	(330)	(429)
	_____	___	___
(DECREASE) IN CASH AND CASH EQUIVALENTS	(425)	(594)	(918)
Cash and cash equivalents brought forward	(1,326)	(408)	(408)
	_____	_____	_____
CASH AND CASH EQUIVALENTS CARRIED FORWARD	(1,751)	(1,002)	(1,326)
	_____	_____	_____
Represented by:
Cash at bank and in hand	276	50	42
Bank overdrafts	(2,027)	(1,052)	(1,368)
	_____	_____	_____
	(1,751)	(1,002)	(1,326)
	_____	_____	_____

NOTES TO THE INTERIM REPORT

for the six months ended 30th September 2012

1.     Basis of preparation of interim financial information

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 31st March 2013. The accounting policies are unchanged from the financial statements for the year ended 31st March 2012.

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 31st March 2012, 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.

2.     The earnings per share

The earnings per share figures are based on the profit on ordinary activities after taxation as stated in the unaudited income statement and the weighted average number of shares in issue during each period. The weighted average number of shares in issue during the period was 6,813,726 for the six months ended 30th September 2012, 6,770,613 for the year ended 31st March 2012 and 6,656,120 for the six months ended 30th September 2011.  The calculation of diluted earnings per share was based on 7,038,369 for the six months ended 30th September 2012, 6,870,252 for the year ended 31st March 2012 and 6,790,499 for the six months ended 30th September 2011.

3.     Dividends

Dividends paid during the period from 1st April 2011 to 30th September 2012 were as follows:

9th September 2011	Final dividend year ended 31st March 2011	4.00p per share
27th January 2012	Interim dividend year ended 31st March 2012	2.50p per share
31st August 2012	Final dividend year ended 31st March 2012	4.75p per share

The directors are intending to pay an interim dividend for the year ended 31st March 2013 in January 2013 of 2.75p per share.  This dividend has not been accrued at 30th September 2012.

4.     Further copies of this document are available both at the registered office of the Company and from the offices of W H Ireland Limited, 4 Colston Avenue, Bristol, BS1 4ST. The statement will also be available to download on the Company's website: www.sssplc.com

 

END

 

 

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