Solid State Regulatory News (SOLI)

RNS Number : 0270Q

Solid State PLC

28 July 2010

 

SOLID STATE PLC

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MARCH 2010

 

CHAIRMAN'S STATEMENT

 

Key Results

 

- Turnover	£13.5m	(2009: £12.5m)
- Profit before tax	£530k	(2009: £615k)
- Earnings per share	6.6p	(2009: 7.9p)
- Cash generated from operations	£425k	(2009: £632k)

 

 

Dividends

The Directors recommend that a final dividend of 2p per share be paid. An interim dividend of 1p per share was paid in January 2010 giving a total dividend in respect of the year of 3p per share (2009: 3p per share). The final dividend will be paid on 6th September 2010 to shareholders on the register at the close of business on 20th August 2010.

 

Trading Review

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

 

Solid State Supplies

Although sales from our component distribution business declined by 3.4% in FY09/10, the effects of the economic downturn were not as great as those felt by the market in general. Our industry association AFDEC reported a contraction in the DTAM (Distributor's Total Available Market) for the UK of 11.3% in 2009. We believe our strategy of focusing on specialist electronic components and the continued programme of new product introductions helped to insulate us from the worst of the recession. We are pleased to report gross margins improved in the second half of the year and closed at 27.3% (2009: 27.4%).

 

In the light of the contraction of the overall market we implemented a restructuring programme which we completed in the first quarter of the new financial year. We began to see an upturn in the market during the final quarter and our bookings at the close of this financial year were 5.4% up on the previous year. We start the new financial year with an increased order book 11.2% up on this time last year. Whilst the economic outlook remains uncertain these results coupled with the newly restructured business give us grounds for optimism as we start the new financial year.

 

Steatite

As a result of new product developments we achieved a very strong performance during the second half of the year and are very pleased to report sales for a whole of FY09/10 increased by 11.8%. Both the battery and industrial computer divisions performed well. Gross margins remained under pressure owing to the weakness of Sterling, with overall margins slipping by 0.9% compared to FY08/09. The strong bookings performance throughout the year has meant the open order book going into FY10/11 is some 76% up on the previous year. Our robust order book and potential for a number of significant new contracts together place us in a strong position as we enter the new fiscal year.

 

Summary

Despite the fall in profit before tax of 13.8%, the increase achieved in turnover of 7.9% and in gross profit of 3.7%, reflect a strong result in what has been a very difficult economic climate.

 

We completed our fourth acquisition with the purchase of Rugged Systems Limited at the beginning of April 2010. The addition of this company will strengthen significantly our computer business as we seek to become the UK's leading supplier of industrial computers.

 

Steatite has had a strong start to the new financial year and we believe that the restructuring undertaken at Solid State Supplies will return that division to profitability.

 

We believe that the Group is well placed to benefit from the current economic recovery and to achieve increases in turnover and profitability in the new financial year.

 

Renewal of authority to purchase the Company's shares

Last year, a resolution was passed at the Annual General Meeting to give the Company the authority to purchase its own Ordinary shares on the Stock Exchange. This authority would expire after a period of eighteen months from the passing of the resolution. In order to avoid this authority expiring during the next year and the need to call an extraordinary general meeting to renew the authority, a resolution to renew the authority is set out in the notice of the Annual General Meeting on page 50 of this document.

 

Under the terms of the resolution to be proposed at the Annual General Meeting, the maximum number of shares which may be purchased is 923,476 shares representing 15% of the issued Ordinary share capital of the Company. The minimum price payable by the Company for its Ordinary shares will be 5p and the maximum price will be £1. The authority will automatically expire after a period of eighteen months from the passing of the resolution unless renewed.

 

It is not the Directors' current intention to exercise the power to purchase the Company's Ordinary shares but they believe that under certain circumstances it would be in the Company's best interests to do so.

 

Your Directors consider that the resolution to be proposed at the meeting is in the best interests of the Company and its shareholders. They unanimously recommend that all Ordinary shareholders vote in favour of the resolution at the Annual General Meeting as they intend to do in respect of their beneficial holdings amounting to 4,525,113 Ordinary shares, representing 73.5% of the Company's issued Ordinary share capital.

 

Conclusion

I would like to thank my fellow Directors and all the staff of the Group for their continued support.

 

 

Peter Haining

Chairman 

28th July 2010

 

 

Enquiries:

 

Solid State plc

 

Peter Haining 01435 865 353

Chairman

 

Gary Marsh 01892 836 836

Managing Director

 

Charles Stanley Securities

 

Nominated Adviser

Russell Cook / Carl Holmes 020 7149 6000

 

CONSOLIDATED INCOME STATEMENT

For the year ended 31 March 2010

 

 

	2010	2009
	£	£
Revenue	13,509,123	12,521,786
Cost of sales	(9,865,137)	(9,007,486)
	_________	_________
GROSS PROFIT	3,643,986	3,514,300
Distribution costs	(1,331,452)	(1,204,574)
Administrative expenses	(1,760,052)	(1,634,967)
	_________	_________
PROFIT FROM OPERATIONS	552,482	674,759
Finance income	-	67
Finance costs	(22,697)	(60,325)
	_________	_________
PROFIT BEFORE TAXATION	529,785	614,501
Tax expense	(124,150)	(128,670)
	_________	_________
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT	405,635	485,831
	_________	_________
OTHER COMPREHENSIVE (EXPENSES)/INCOME
Translation differences on overseas operations	(3,000)	5,262
	_________	_________
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	402,635	491,093
	_________	_________
EARNINGS PER SHARE
Basic	6.6p	7.9p
Diluted	6.6p	7.9p

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 March 2010

 

 

	Share Capital	Share Premium Reserve	Capital Redemption Reserve	Foreign Exchange Reserve	Retained Earnings	Total
Balance at 31 March 2008	307,826	756,980	4,674	52,864	1,477,535	2,599,879
Total comprehensive income
For the year ended 31 March 2009	-	-	-	5,262	485,831	491,093
Share based payment expense	-	-	-	-	12,546	12,546
Dividends	-	-	-	-	(138,522)	(138,522)
	--------------	--------------	--------------	--------------	--------------	--------------
Balance at 31 March 2009	307,826	756,980	4,674	58,126	1,837,390	2,964,996
Total comprehensive income
For the year ended 31 March 2010	-	-	-	(3,000)	405,635	402,635
Share based payment expense	-	-	-	-	12,546	12,546
Dividends	-	-	-	-	(184,695)	(184,695)
	--------------	--------------	--------------	--------------	--------------	--------------
Balance at 31 March 2010	307,826	756,980	4,674	55,126	2,070,876	3,195,482
	--------------	--------------	--------------	--------------	--------------	--------------

 

 

CONSOLIDATED BALANCE SHEET

at 31 March 2010

 

		2010		2009
	£	£	£	£
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		299,844		289,248
Intangible assets		2,028,946		2,032,806
		________		________
TOTAL NON-CURRENT ASSETS		2,328,790		2,322,054
CURRENT ASSETS
Inventories	1,787,520		1,554,029
Trade and other receivables	2,562,387		2,219,874
Cash and cash equivalents	343,835		216,796
	________		________
TOTAL CURRENT ASSETS		4,693,742		3,990,699
		________		________
TOTAL ASSETS		7,022,532		6,312,753
		________		________
LIABILITIES
CURRENT LIABILITIES
Bank overdraft	461,627		668,280
Trade and other payables	2,172,882		1,838,768
Bank borrowings	1,063,703		712,039
Corporation tax liabilities	118,814		128,670
	________		________
TOTAL CURRENT LIABILITIES		3,817,026		3,347,757
		________		________
NON CURRENT LIABILITIES
Deferred tax liability	10,024		-
	________		________
TOTAL NON-CURRENT LIABILITIES		10,024		-
		________		________
TOTAL LIABILITIES		3,827,050		3,347,757
		________		________
TOTAL NET ASSETS		3,195,482		2,964,996
		________		________
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital		307,826		307,826
Share premium reserve		756,980		756,980
Capital redemption reserve		4,674		4,674
Foreign exchange reserve		55,126		58,126
Retained earnings		2,070,876		1,837,390
		________		________
TOTAL EQUITY		3,195,482		2,964,996
		________		________

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

For the year ended 31 March 2010

 

		2010		2009
	£	£	£	£
OPERATING ACTIVITIES
Profit before taxation		529,785		614,501
Adjustments for:
Depreciation		88,929		89,235
Amortisation		7,695		7,567
Loss on disposal of property, plant and equipment		4,928		3,346
Share based payment expense		12,546		12,546
Finance income		-		(67)
Finance costs		22,697		60,325
		________		________
Profit from operations before changes in working
capital and provisions		666,580		787,453
		________		________
(Increase)/decrease in inventories	(233,491)		8,803
(Increase) in trade and other receivables	(342,513)		(176,005)
Increase in trade and other payables	334,117		12,334
	________		________
		(241,887)		(154,868)
		________		________
Cash generated from operations		424,693		632,585
		________		________
Income taxes paid	(123,982)		(106,871)
	________		________
		(123,982)		(106,871)
		________		________
Cash flow from operating activities		300,711		525,714
INVESTING ACTIVITES
Purchase of property, plant and equipment	(158,014)		(101,795)
Purchase of computer software	(3,835)		-
Proceeds of sales from property, plant and equipment	53,558		8,500
Interest received	-		67
	________		________
		(108,291)		(93,228)
		________		________
		192,420		432,486
FINANCING ACTIVITIES
Repayment of bank borrowings	-		(216,337)
Invoice discounting finance (net movement)	351,664		(10,517)
Interest paid	(22,697)		(60,325)
Dividend paid to equity shareholders	(184,695)		(138,522)
	________		________
		144,272		(425,701)
		________		________
INCREASE IN CASH AND CASH EQUIVALENTS		336,692		6,785
		________		________

 

 

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st March 2010

 

1. The financial information in the preliminary announcement does not constitute the company's statutory accounts for the years ended 31st March 2010 or 31st March 2009. The financial information for the year ended 31st March 2009 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 1985, s 237(2) or (3). The financial information for the year ended 31 March 2010 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 2010 and are unchanged from those disclosed in the group's Report and Financial Statements for the year ended 31 March 2009.

 

3. EARNINGS PER SHARE

The earnings per share is based on the following:

 

	2010	2009
	£	£
Earnings	405,635	485,831
	_______	_______
Weighted average number of shares	6,156,511	6,156,511
Diluted number of shares	6,156,511	6,156,511
Earnings per share	6.6p	7.9p
Diluted earnings per share	6.6p	7.9p

 

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 6,156,511 (2009: 6,156,511).

 

The Diluted earnings per share is based on 6,156,511 (2009: 6,156,511) ordinary shares which allow for the exercise of all dilutive potential ordinary shares.

 

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

 

The number of shares included in the option agreement which have not been included in the calculation of the weighted average number of shares was 634,920 (2009: 634,920).

 

4. DIVIDENDS

	2010	2009
	£	£
Final dividend paid for the prior year of 2p per share (2009: 1.25p)	123,130	76,957
Interim dividend paid of 1p per share (2009: 1p)	61,565	61,565
	_______	_______
	184,695	138,522
	_______	_______
Final dividend proposed for the year 2p per share (2009: 2p)	123,130	123,130
	_______	_______

 

The proposed final dividend has not been accrued for as the dividend was declared after the balance sheet 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 Wordsworth Technology Limited and Steatite Limited which incorporates RZ Pressure.

 

Year ended 31 March 2009

	Distribution division	Manufacturing division	Head office	Total
	£	£	£	£
Revenue
External	3,642,911	8,878,875	-	12,521,786
Intercompany	-	96,789	-	96,789
	________	________	________	________
	3,642,911	8,975,664	-	12,618,575
	________	________	________	________
Profit/(loss) before tax	38,827	782,674	(207,000)	614,501
Balance sheet
Assets	1,719,736	4,593,017	-	6,312,753
Liabilities	(2,111,952)	(1,217,921)	(17,884)	(3,347,757)
	________	________	________	________
Net assets/(liabilities)	(392,216)	3,375,096	(17,884)	2,964,996
	________	________	________	________
Other
Capital expenditure
- Tangible fixed assets	44,812	56,983	-	101,795
- Intangible fixed assets	-	-	-	-
Depreciation, amortisation and other non cash expenses	48,108	80,040	-	128,148
Interest paid	12,000	12,639	35,686	60,325
	________	________	________	________

 

 

Year ended 31 March 2010

	Distribution division	Manufacturing division	Head office	Total
	£	£	£	£
Revenue
External	3,544,437	9,964,686	-	13,509,123
Intercompany	-	6,125	-	6,125
	________	________	________	________
	3,544,437	9,970,811	-	13,515,248
	________	________	________	________
Profit/(loss) before tax	(40,748)	779,533	(209,000)	529,785
	________	________	________	________
Balance sheet
Assets	1,650,165	5,372,367	-	7,022,532
Liabilities	(2,059,313)	(1,708,268)	(49,445)	(3,817,026)
	________	________	________	________
Net assets/(liabilities)	(409,148)	3,664,099	(49,445)	3,205,506
	________	________	________	________
Other
Capital expenditure
- Tangible fixed assets	69,929	88,082	-	158,011
- Intangible fixed assets	3,835	-	-	3,835
Depreciation, amortisation and other non cash expenses	53,956	67,596	-	121,552
Interest paid	11,565	10,474	658	22,697
	________	________	________	________

 

Included within the manufacturing division is £1,864,461 (2009: £0) relating to income from a major customer which accounts for greater than 10% of the Group's turnover.

 

	External revenue by		Total assets by		Net tangible capital expenditure by
	location of customer		location of assets		of assets
	2010	2009	2010	2009	2010	2009
	£	£	£	£	£	£
United Kingdom	12,351,720	11,397,659	7,007,211	6,195,887	104,456	93,295
Ireland	109,893	-	-	-	-	-
Europe	763,260	747,966	15,321	116,866	-	-
North America	95,930	119,234	-	-	-	-
Asia	159,643	148,332	-	-	-	-
Africa	15,894	92,076	-	-	-	-
Australasia	12,442	14,302	-	-	-	-
South America	341	2,217	-	-	-	-
	_________	_________	_________	_________	_________	_________
	13,509,123	12,521,786	7,022,532	6,312,753	104,456	93,295
	_________	_________	_________	_________	_________	_________

 

All the above relate to continuing operations.

 

6. 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.sssplc.com.

 

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