Solid State PLC
27 December 2007
Solid State plc (the 'Group')
CHAIRMAN'S STATEMENT
Unaudited Interim Results for the six months ended 30th September 2007
Results
The unaudited pre-tax profit for the Group for the six months ended 30th
September 2007 was £160,000 (2006: £233,000) on a turnover of £5,087,000 (2006:
£6,337,000). The basic earnings per share for the six months period amounted to
2.0p (2006: 3.1p). Following adoption of International Financial Reporting
Standards no provision for amortisation has been made in these accounts and the
results for the prior year and the prior six months and the prior balance sheets
have been restated accordingly The pre-tax profit for the six months ended 30th
September 2007 is stated after charging non-recurring costs of re-organisation
at Paddock Wood of £58,000.
Trading Review
Solid State Supplies
Despite a significant broadening of our product range, sales in this period grew
only fractionally as trading conditions remained difficult. During the first
quarter of this financial year we restructured our operations at Paddock Wood
resulting in a non-recurring charge of £58,000. I am pleased to report that
Solid State Supplies then traded profitably in the second quarter. The outlook
for the distribution market for the second half of our fiscal year remains
challenging. However, we will continue our transition to higher value products,
better suited to our market, which will place us in a stronger position when the
market improves.
Steatite and Wordsworth Technology
Trading for the first period was disappointing in both companies, whilst the
strategy for margin enhancement has proved to be effective. The level of
turnover in both companies is significantly affected by the timing of contracts
with large customers. In the six months ended 30th September 2006 the turnover
included large contracts which had been secured in early 2006. In the six months
ended 30th September 2007 there were no such contracts but significant contracts
have now been secured which will result in enhanced turnover in the second half
of the current accounting year. Consequently both Steatite and Wordsworth
Technology look forward to a stronger second period, benefiting also from our
strategy of own brand and new products.
Summary
The decline in turnover compared with the same period last year reflects the
difficult trading conditions which have affected operations at both sites.
However the effects have been mitigated by continuing improvement in gross
margins in both the distribution and manufacturing sectors and following the
restructuring at Solid State Supplies earlier in the year all three operating
companies are now trading profitably. The recent acquisition of RZ Pressure
Instruments Supply SARL will enhance significantly the battery division of
Steatite Limited and the group continues to look for suitable acquisitions
within the electronics industry.
Dividends
A final dividend of 2p per share was paid in respect of the year ended 31st
March 2007 meaning that the total dividend paid in respect of the year was 3p
per share. The directors are pleased to announce that in the light of the
result for the first half year, an interim dividend of 0.75p per share will be
paid. The payment date will be 30th January 2008 to shareholders on the
register at the close of business on 11th January 2008.
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
27th December 2007
INTERIM CONSOLIDATED INCOME STATEMENT
for the six months ended 30th September 2007
Unaudited Unaudited Unaudited
Six months to Six months to Year to
30 September 07 30 September 06 31 March 07
£'000 £'000 £'000
Revenue 5,087 6,337 12,370
Cost of sales (3,507) (4,669) (8,784)
_________ _________ _________
Gross profit 1,580 1,668 3,586
_________ _________ _________
Distribution costs (647) (794) (1,356)
Administrative expenses (722) (591) (1,563)
_________ _________ _________
(1,369) (1,385) (2,919)
_________ _________ _________
Profit from operations 211 283 667
Finance income - 1 2
Finance costs (51) (51) (113)
_________ _________ _________
Profit before taxation 160 233 556
Tax expense (36) (41) (95)
_________ _________ _________
PROFIT FOR THE FINANCIAL PERIOD 124 192 461
_________ _________ _________
Earnings per share (see below)
Basic 2.0p 3.1p 7.4p
Diluted 2.0p 3.1p 7.4p
All amounts relate to continuing operations.
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30th September 2007
(unaudited)
Share Capital
Share premium redemption Retained
capital reserve reserve earnings Total
Balance at 31 March 2006 308 757 5 949 2,019
Profit for six months to 30 September 2006 - - - 192 192
_____ _____ _____ _____ _____
308 757 5 1,141 2,211
Share based payment expense - - - 4 4
_____ _____ _____ _____ _____
Balance at 30 September 2006 308 757 5 1,145 2,211
Profit for six months to 31 March 2007 - - - 269 269
_____ _____ _____ _____ _____
308 757 5 1,414 2,484
Dividends (61) (61)
Share based payment expense 4 4
_____ _____ _____ _____ _____
Balance at 31 March 2007 308 757 5 1,357 2,427
Profit for six months to 30 September 2007 - - - 124 124
_____ _____ _____ _____ _____
308 757 5 1,481 2,551
Dividends - - - (123) (123)
Share based payment expense _ - - 4 4
_____ _____ _____ _____ _____
Balance at 30th September 2007 308 757 5 1,362 2,432
_____ _____ _____ _____ _____
CONSOLIDATED BALANCE SHEET
as at 30th September 2007
Unaudited Unaudited Unaudited
as at as to as at
30 September 07 30 September 06 31 March 07
£'000 £'000 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 302 368 343
Goodwill 1,661 1,661 1,661
_________ _________ _________
TOTAL NON-CURRENT ASSETS 1,963 2,029 2,004
CURRENT ASSETS _________ _________ _________
Inventories 1,249 1,188 1,249
Trade and other receivables 1,530 2,341 2,365
Cash and cash equivalents 67 117 85
_________ _________ _________
TOTAL CURRENT ASSETS 2,846 3,646 3,699
_________ _________ _________
TOTAL ASSETS 4,809 5,675 5,703
_________ _________ _________
LIABILITIES
CURRENT LIABILITIES
Bank overdraft (474) (330) (556)
Trade and other payables (1,137) (1,712) (1,644)
Bank borrowings (566) (925) (763)
Corporation tax liabilities (95) (40) (95)
_________ _________ _________
TOTAL CURRENT LIABILITIES (2,272) (3,007) (3,058)
_________ _________ _________
NON-CURRENT LIABILITIES
Bank borrowings (69) (412) (218)
Corporation tax liabilities (36) (41) -
_________ _________ _________
TOTAL NON-CURRENT LIABILITIES (105) (453) (218)
_________ _________ _________
TOTAL LIABILITIES (2,377) (3,460) (3,276)
_________ _________ _________
TOTAL NET ASSETS 2,432 2,215 2,427
_________ _________ _________
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY HOLDERS OF THE COMPANY
Share capital 308 308 308
Share premium reserve 757 757 757
Capital redemption reserve 5 5 5
Retained earnings 1,362 1,145 1,357
_________ _________ _________
TOTAL EQUITY 2,432 2,215 2,427
_________ _________ _________
CONSOLIDATED CASH FLOW STATEMENT
for the six months ended 30th September 2007
Unaudited Unaudited Unaudited
Six months to Six months to Year to
30 September 07 30 September 06 31 March 07
£'000 £'000 £'000
OPERATING ACTIVITIES
Net profit from ordinary activities before 160 233 556
taxation
Adjustments for:
Depreciation 54 72 152
Loss on sale of non-current assets 2 6 17
Share based payment expense 4 4 8
Investment income - (1) (2)
Finance costs 51 51 113
_________ _________ _________
Operating profit before changes in
working capital and provisions 271 365 844
Decrease/(increase) in inventories - (107) (168)
Decrease/(increase) in trade and other receivables 835 (477) (543)
Increase/(decrease) in trade and other payables (509) 107 44
_________ _________ _________
Cash generated from operations 597 (112) 177
Income taxes paid - - (40)
Income taxes repaid - - 42
_________ _________ _________
Cash flows from operating activities 597 (112) 179
_________ _________ _________
INVESTING ACTIVITIES
Purchase of property, plant and equipment (19) (114) (188)
Proceeds from sale of property, plant and 6 43 50
equipment
Interest received - 1 2
_________ _________ _________
(13) (70) (136)
_________ _________ _________
FINANCING ACTIVITIES
Repayment of bank borrowings (167) (82) (262)
Income discounting finance (net movement) (179) 36 (143)
Interest paid (51) (51) (113)
Dividends paid to equity shareholders (123) - (62)
_________ _________ _________
(520) (97) (580)
_________ _________ _________
INCREASE/(DECREASE)
IN CASH AND CASH EQUIVALENTS 64 (279) (537)
_________ _________ _________
NOTES TO THE INTERIM REPORT
for the six months ended 30th September 2007
1. Basis of preparation of interim financial information
The consolidated interim financial statements have been prepared in
accordance with the recognition and measurement principals of International
Financial Reporting Standards as endorsed by the European Union ('IFRS')
and expected to be effective at the year end of 31st March 2008, which are
mandatory for accounting periods beginning on or after 1st January 2007.
Comparative information for the six months ended 30th September 2006 and
31st March 2007 has been restated on an IFRS basis.
As allowed by IFRS 1, we have elected not to apply IFRS retrospectively for
business combinations computed prior to 1st April 2006 and have used the
carrying value of goodwill resulting from business combinations occurring
before the date of transition as deemed costs, subjecting this to
impairment reviews at the date of transition (1st April 2006) and at the
end of each financial year thereafter.
The only effect of the transition on the reported results has been the
elimination of the amortisation of goodwill as a result of the prohibition
of this charge imposed by IFRS 3. Consequently the goodwill on
consolidation is now carried in the balance sheet at its book value at 31st
March 2006 of £1,660,878, and the amortisation charge of £91,553 in the
accounts for the year ended 31st March 2007 has been eliminated, as has the
charge of £45,777 in the accounts for the six months ended 30th |September
2006 and the charge of £45,777 which would have been made in the accounts
for the six months ended 30th September 2007. The effect has been to reduce
administrative expenses and to increase net profit and retained earnings by
these amounts.
The interim financial statements are unaudited and do not constitute
statutory accounts within the meaning of Section 240 of the Companies Act
1985. Statutory accounts for the year ended 31st March 2007, prepared in
accordance with UK GAAP, 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
237 of the Companies Act 1985.
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 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 30th September 2007, 6,156,511 for
the year ended 31st March 2007 and 6,156,511 for the six months ended 30th
September 2006. The calculation of diluted earnings per share was based on
6,156,511 for the six months ended 30th September 2007, 6,156,511 for the
year ended 31st March 2007 and 6,156,511 for the six months ended
30th September 2006.
3. Analysis and reconciliation of cash and cash equivalents
Unaudited Cash Unaudited Cash Unaudited Cash Unaudited
31.03.06 Flow 30.09.06 Flow 31.03.07 Flow 30.09.07
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank and
in hand 154 (37) 117 (32) 85 (18) 67
Bank overdrafts (88) (242) (330) (226) (556) 82 (474)
_________ _________ _________ _________ _________ _________ _________
66 (279) (213) (258) (471) 64 (407)
_________ _________ _________ _________ _________ _________ _________
NOTES TO THE INTERIM REPORT
for the six months ended 30th September 2007 (continued)
4 Dividends
Dividends paid during the period from 1st April 2006 to 30th September 2007
were as follows:
30th January 2007 Interim dividend year ended 31st March 2007 1p per share
6th August 2007 Final dividend year ended 31st March 2007 2p per share
The directors are intending to pay an interim dividend for the year ended
31st March 2008 in January 2008 of 0.75p per share. This dividend has not
been accrued at 30th September 2007.
5. Further copies of this document are available both at the registered office
of the Company and from the offices of Charles Stanley Securities, 25 Luke
Street, London, EC2A 4AR
Further enquiries:
Gary Marsh
Group Managing Director
Solid State plc
01892 836 836
Philip Davies
Charles Stanley Securities
Nominated Adviser
020 7739 8200
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