Solid State Regulatory News (SOLI)

12 Jul 2007 07:00

Solid State PLC12 July 2007 SOLID STATE PLC PRELIMINARY ANNOUNCEMENT FOR THE YEAR ENDED 31 MARCH 2007 CHAIRMAN'S STATEMENT Results The audited profit before tax of the Group was £465,000 (2006: loss of £79,000)on a turnover of £12,370,000 (2006: £10,452,000). The basic earning per shareamounted to 6.0p (2006: a loss of 0.7p). Dividends The Directors recommend that a final dividend of 2p per share be paid. Aninterim dividend of 1p per share was paid in January 2007 giving a totaldividend in respect of the year of 3p per share (2006: 0.5p per share). Thefinal dividend will be paid on 6 August 2007 to shareholders on the register atthe close of business on 20 July 2007. Trading Review The key performance indicators measured by management are sales and bookings. Solid State Supplies The continuing difficulties in the distribution market and the need to overcomethe loss of three significant lines as reported previously are reflected in afall in turnover from £3.999m (05/06) to £3.720m (06/07), a fall of 7.0%.However bookings rose from £3.599m (05/06) to £3.902m (06/07) a rise of 8.4%.Further franchises were added in the second half of our financial year as wework to strengthen our product offering in our key Aerospace and Defence,Connectivity and Industrial markets. We will continue our programme of reducingcosts where considered appropriate. Steatite and Wordsworth Sales in Steatite were up 5.2% over the previous year while Wordsworth recordeda 26.4% increase in sales giving a combined increase of 14.8%. Bookings inSteatite were up 1.5% over the previous year. Bookings for Wordsworth are notavailable before January 2006 and therefore no year on year comparison can bemade. Bookings in the period 1st January to 31st March 2007 amounted to £1.306mcompared with £818,000 for the corresponding period in 2006. The focus remains to follow the business strategy of demand creation for valueadded products, whilst introducing new products and franchises in BatteryTechnologies and Industrial Computing Platforms Summary The results for the year, which for the first time include a full year of theresults of Wordsworth Technology Limited which was acquired in August 2005, showa considerable improvement in the Group's trading position compared with theprevious year. However trading conditions remain difficult particularly ingeneral electronic component distribution where business is lost throughmanufacturers moving their operations offshore to secure lower operating costsand a less oppressive regulatory regime. Renewal of authority to purchase the Company's shares Last year, resolutions were passed at the Annual General Meeting to give theCompany the authority to purchase its own Ordinary shares on the Stock Exchange.This authority would expire after a period of eighteen months from the passingof the resolution. In order to avoid this authority expiring during the nextyear and the need to call an extraordinary general meeting to renew theauthority, a resolution to renew the authority will be proposed at the AnnualGeneral Meeting. 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 sharesrepresenting 15% of the issued Ordinary share capital of the Company. Theminimum price payable by the Company for its Ordinary shares will be 35p and themaximum price will be 150p. The authority will automatically expire after aperiod of eighteen months from the passing of the resolution unless renewed. It is not the Directors' current intention to exercise the power to purchase theCompany's Ordinary shares but they believe that under certain circumstances itwould be in the Company's best interests to do so. Your Directors consider that the resolution to be proposed at the meeting is inthe best interests of the Company and its shareholders. They unanimouslyrecommend that all Ordinary shareholders vote in favour of the resolution at theAnnual General Meeting as they intend to do in respect of their beneficialholdings amounting to 1,796,177 Ordinary shares, representing 29.18% of theCompany's issued Ordinary share capital. Conclusion I would like to thank my fellow Directors and the staff in general for theircontinued support. Peter HainingChairman11 July 2007 MANAGING DIRECTOR'S REVIEW In April 2006, the electronic components business was transferred from theholding company to a newly formed subsidiary company, Solid State SuppliesLimited. At the same time the holding company was re-named Solid State PLCgiving a more balanced structure with the holding company being non trading andwith three active trading subsidiaries. The directors regard the profit before tax of £465,000 as being a very pleasingresult after the difficulties of the previous year and in particular the fourthquarter of the year under review was a very successful one. The difficulties experienced in the electronic component distribution businessto which reference was made last year continued to be a factor in the UK marketduring the year under review. The action taken to promote this part of theGroup's activities has met with some success, with a 2% increase in turnover and9% increase in bookings. Several new franchises and lines have been added andJohn MacMichael, who joined as a business development manager during last year,has now been appointed as a director of Solid State Supplies Limited withresponsibility for commercial development of the distribution business. Actionis being taken to reduce overheads at Solid State Supplies and the directors areconfident that this division will return to profitability during the newfinancial year. At Redditch, Steatite and Wordsworth Technology have had a successful yearoperating in the jointly run premises and contributed 73% of Group turnovercompared with just over 60% in the previous year. The introduction of the Restriction of Hazardous Substances regulations in July2006 was handled smoothly at both locations and without any significant impactin the Group's results. The Group invested £89,000 in research and development activities at Redditch todesign new systems based products. The Group holds or issues financial instruments to finance its operations.Operations are financed by a mixture of retained profits, bank borrowings,invoice discounting facilities and long term loans. Working capital requirementsare met principally out of floating rate overdraft and retained profits. Inaddition, various financial instruments such as trade debtors and tradecreditors arise directly from the Group's operations. The Group is mainly exposed to credit risk from credit sales. It is Group policyto assess the credit risk of new customers and to factor the information fromthese credit ratings into future dealings with the customers. At the balancesheet date there were no significant concentrations of credit risk. The maximumexposure to credit risk is represented by the carrying amount of each financialasset in the balance sheet. The directors monitor the liquidity and cash flowrisk of the Group carefully. The Group has an agreed overdraft limit with theGroup's bankers to help manage fluctuations in cash flow. Cash flow is monitoredby the directors on a regular basis and appropriate action is taken whereadditional funds are required. There has been a net investment of £139,000 in tangible fixed assets in theyear. Net borrowing, including invoice discounting, at the balance sheet datewas approximately £130,000 higher than at the same time last year mainly due toan enhanced working capital requirement following a busy trading period in thelast weeks of the year: trade debtors at the balance sheet date were over£500,000 higher than at the end of the previous year. At all times during theyear the Group has been able to work comfortably within its borrowing limits andthe credit control function at both locations continues to operate efficiently. The start of the new year has seen a relatively quiet period of trading afterthe busy fourth quarter of the previous year. However several significantcontracts are expected to be awarded and after taking the necessary action toreduce overheads at Solid State Supplies the directors are confident of theGroup's prospects for the current year. The directors continue to look forsuitable acquisitions to further strengthen the operations of the Group. Gary MarshManaging Director11 July 2007 Enquiries: Solid State plc Peter Haining 01892 667 466Chairman Gary Marsh 01892 836 836Managing Director Charles Stanley SecuritiesNominated AdviserPhilip Davies 020 7149 6000Carl Holmes CONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31st March 2007 2007 2006 £ £Turnover 12,369,904 10,451,967Cost of sales (8,784,024) (7,543,395) GROSS PROFIT 3,585,880 2,908,572Selling expenses and distribution costs (1,356,520) (1,215,522)Administrative expenses (1,653,936) (1,694,956) OPERATING PROFIT/(LOSS) 575,424 (1,906)Other interest receivable and similar income 2,326 3,639Interest payable (113,133) (80,897) PROFIT/(LOSS) ON ORDINARYACTIVITIES BEFORE TAXATION 464,617 (79,164)Tax on profit/(loss) on ordinary activities (94,865) 34,893 PROFIT/(LOSS) ON ORDINARYACTIVITIES AFTER TAXATION 369,752 (44,271) EARNINGS PER SHAREBasic 6.0p (0.7p)Diluted 6.0p (0.7p) All amounts relate to continuing activities. CONSOLIDATED BALANCE SHEETat 31 March 2007 2007 2006 £ £FIXED ASSETSIntangible assets 1,569,325 1,660,878Tangible assets 342,838 373,562 1,912,163 2,034,440 CURRENT ASSETSStocks 1,249,419 1,081,498Debtors 2,365,117 1,863,854Cash at bank and in hand 84,466 153,903 3,699,002 3,099,255 CREDITORS: Amounts falling due within one year 3,058,370 2,560,981 NET CURRENT ASSETS 640,632 538,274 TOTAL ASSETS LESS CURRENT LIABILITIES 2,552,795 2,572,714 CREDITORS: Amounts falling due after more than one year 217,998 553,737 2,334,797 2,018,977 CAPITAL AND RESERVESCalled up share capital 307,826 307,826Share premium account 756,980 756,980Capital redemption reserve 4,674 4,674Profit and loss account 1,265,317 949,497 SHAREHOLDERS' FUNDS 2,334,797 2,018,977 CONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 March 2007 2007 2006 £ £ Net cash inflow from operating activities 177,086 1,216,366 Return on investments and servicing of finance:Interest received 2,326 3,639Other interest paid (113,133) (80,897) Net cash (outflow)/inflow from return on investments and servicing offinance (110,807) (77,258) TaxationCorporation tax paid (39,955) (185,253)Corporation tax repaid 42,112 - Net cash inflow/(outflow) from corporation tax 2,157 (185,253) Capital expenditure and financial investmentPayments to acquire tangible fixed assets (188,808) (145,093)Receipts from sales of tangible fixed assets 49,444 43,957 Net cash outflow from capital expenditure and financialinvestment (139,364) (101,136) Acquisitions and disposalsPurchase of business operation - (1,833,167)Net cash acquired with subsidiary - 234,977 Net cash outflow from acquisitions and disposals - (1,598,190) Dividends paid (61,565) (153,912) Net cash outflow before financing (132,493) (899,383) FinancingMedium term loan received - 500,000Repayments of medium term loan: capital element (262,270) (138,429)Invoice discounting finance received/(paid) (net movement) (142,730) 501,566 Net cash inflow/(outflow) from financing (405,000) 863,137 Decrease in cash (537,493) (36,246) NOTES 1. The attached preliminary announcement is prepared on the same basis as set out in the previous year's annual accounts and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985; the statutory accounts for the year ended 31 March 2007 upon which an unqualified audit opinion has been given and which did not contain a statement under Section 235, 237(2) or 237(3) of the Companies Act 1985, will be delivered to the Registrar of Companies at a later date. A duly appointed and authorised committee of the Board of Directors approved the preliminary announcement. 2. CHANGES TO ACCOUNTING POLICIES The group has adopted FRS 20 'Share based payment'. FRS 20 'Share based payment'requires the recognition of share-based payments at fair value at the date ofgrant. Prior to the adoption of FRS20, the group recognised the financial effectof the share based payment in the following way: when shares and share optionswere awarded to employees a charge was made to the profit and loss account basedon the difference between the market value of the company's shares at the dateof grant and the option exercise price in accordance with UITF Abstract 17(revised 2003) 'Employee Share Schemes.' The credit entry for this charge wastaken to the profit and loss reserve and reported in the reconciliation ofmovements in shareholders' funds. In accordance with transitional provisions of FRS 20, the standard was appliedretrospectively to all grants of equity instruments after 7th November 2002 thatwere unvested as of 1st April 2006, and to liabilities for share-basedtransactions existing at 1st April 2006. For 2006 the change in accounting policy has resulted in a net increase in theloss for the year of £19,103. For 2007 the impact of share-based payments is anet charge to income of £7,633. The share-based payments expense has beenincluded in administrative expenses. There has been no impact on the net assetsof the Group or the Company. 3. OPERATING PROFIT The operating profit is stated after charging/(crediting): 2007 2006 £ £ Depreciation 152,240 150,860Loss on disposal of fixed assets 17,847 17,453Amortisation of goodwill 91,553 71,062Auditors' remuneration:Audit services 43,794 35,406Non-audit services 8,818 24,498Operating lease rentals:Plant and machinery 26,981 25,429Other 128,881 123,421Research & development 89,448 10,123Foreign exchange gains (72,824) (67,184)Employment termination costs 6,127 33,688Relocation expenses: Wordsworth Technology Limited - 89,918Ex gratia payment to former director - 30,000 Included in audit fees is an amount of £1,000 (2006: £15,349) in respect of theCompany. Additional non-audit services in relation to a corporate financetransaction for a proposed acquisition were £8,818 (2006: £24,498) and have beencarried forward and will be capitalised and added to the goodwill figure onconsolidation. The relocation expenses for Wordsworth Technology Limited of £89,918 representsthe costs, mainly staff termination costs, arising from the relocation of itsbusiness from Edenbridge in Kent to the Steatite Limited premises at Redditch inWorcestershire. 4. DIVIDENDS 2007 2006 £ £ Final dividend paid for the prior year of nil per share (2006: 2p) - 123,130Interim dividend paid of 1p per share (2006: 0.5p) 61,565 30,782 61,565 153,912 Final dividend proposed for the year 2p per share (2006: nil) 123,130 - 5. EARNINGS PER SHARE 2007 2006 (as restated) £ £The earnings per share is based on the following:Earnings 369,752 (44,271) Weighted average number of shares 6,156,511 6,156,511Diluted number of shares 6,156,511 6,156,511 Earnings per share 6.0p (0.7)pDiluted earnings per share 6.0p (0.7)p Earnings per ordinary share has been calculated using the weighted averagenumber of shares in issue during the year. The weighted average number of equityshares in issue was 6,156,511 (2006: 6,156,511). The Diluted earnings per share is based on 6,156,511 (2006: 6,156,511) ordinaryshares which allow for the exercise of all dilutive potential ordinary shares. 6. The Annual Report will be sent to shareholders on 16 July 2007 and made available to the public at the registered office of the Company at Unit 2, Eastlands Lane, Paddock Wood, Kent, TN12 6BU. This information is provided by RNS The company news service from the London Stock Exchange