TIDMSOLI
RNS Number : 8290H
Solid State PLC
08 December 2020
Solid State plc
("Solid State", the "Group" or the "Company")
Interim Results for six months to 30 September 2020
Analyst Briefing
& Investor Presentation
Solid State plc (AIM: SOLI), the AIM listed manufacturer of
computing, power and communications products, and value added
supplier of electronic and opto-electronic components , announces
its Interim Results for the six months to 30 September 2020.
Highlights in the period include:
H1 2020/21 H1 2019/20 Change
Reported revenue GBP33.1m GBP33.6m (1.5%)
Reported operating profit margin (note 5) 7.3% 7.1% +20bps
Adjusted profit before tax (note 5) GBP2.55m GBP2.67m (4.5%)
Adjusted diluted earnings per share (note
6) 25.6p 27.8p (7.9%)
Interim dividend 5.25p 5.25p -
Net cash flow from operations GBP1.91m GBP3.55m (46%)
Open orderbook GBP34.3m GBP36.5m (6%)
Financial highlights:
-- Comparable revenues and profits to record prior period in spite of COVID-19
-- Value Added Supplies division ("VAS") revenue maintained at
GBP19.5m against a market which reported 10.5% decline in the
period
-- Strong operating cash generation of GBP1.9m despite working
capital outflow as we unwound the prudent cash conservation actions
taken at 31 March 2020
-- Net cash on 30 September 2020 increased to GBP4.0m (31 March
2020: GBP 3.2m ) after payment of the prior year final dividend in
the period
-- The Group's GBP7.5m banking facility remains undrawn which,
combined with the strong balance sheet, puts the Group in a
position to fund organic and acquisitive growth
Operational highlights:
-- As a result of the COVID-19 safe protocols and home working,
our production and warehouse facilities have remained operational
throughout the pandemic
-- Successful award of Innovate UK grant funding in our
Manufacturing division to support and accelerate the development of
our 48v battery modules - targeting fossil fuel replacement
powertrain applications
-- Previously announced $4.7 million contract for our VAS
division with a major UK medical equipment manufacturer
-- Significant progress on our R&D programmes in respect of
own brand computing, security and antenna products as well as our
BMS (Battery Management Systems) solutions
-- Increased cross Group collaboration - improving understanding
and awareness of the enlarged Group's capabilities
Post period end highlights:
-- Commenced a significant capital investment of c.GBP0.75m in
EMC (Electromagnetic Compatibility) test capabilities and
opto-electronic assembly tools differentiating the Group and
supporting the drive for continued margin improvement
-- 3 month rolling order intake has strengthened 8% post period end
-- Re-engaged with pipeline of M&A targets
-- Appointment of Nigel Rogers to the post of Non-Executive
Chairman and Pete Magowan as independent Non-Executive Director
from 1 January 2021
Commenting on the results and prospects, Nigel Rogers, Chairman
of Solid State, said:
"This is my first set of results as Chairman of Solid State and
I am very pleased to be announcing a performance that suitably
demonstrates the resilience of the business given the disruptions
faced this year . The half year position compares favorably to our
previous record year as a business, which is a great reflection on
everyone who has contributed to delivering this outcome.
"We enter the second half with a strong balance sheet to pursue
our growth initiatives and a solid order book to underpin our
targets for the full year.
"We are very pleased to welcome Pete Magowan to the Board in the
New Year and look forward to his contribution as we deliver on
Solid State's potential."
Analyst Briefing: 9.30am on Tuesday 8 December 2020
An online briefing for Analysts will be hosted by Gary Marsh,
Chief Executive, Peter James, Group Finance Director and John
Macmichael, Managing Director VAS division at 9.30am on Tuesday 8
December 2020 to review the results and prospects. Analysts wishing
to attend should contact Walbrook PR on solidstate@walbrookpr,com
or on 020 7933 8780.
Investor Results Presentation: 4.00pm on Wednesday 9 December
2020
Gary Marsh, Chief Executive, Peter James, Group Finance Director
and Matthew Richards, Managing Director, Manufacturing division
will hold a presentation to cover the results and prospects at
4.00pm on Wednesday 9 December 2020. The presentation will be
hosted through the digital platform Investor Meet Company.
Investors can sign up to Investor Meet Company for free and add to
meet Solid State plc via the following link
https://www.investormeetcompany.com/solid-state-plc/register-investor
. Investors who have already registered and added to meet the
Company will automatically be invited.
Questions can be submitted pre-event to
solidstate@walbrookpr.com , or in real time during the presentation
via the "Ask a Question" function.
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information please contact:
Solid State plc Via Walbrook
Gary Marsh - Chief Executive
Peter James - Group Finance Director
WH Ireland (Nominated Adviser & Joint
Broker) 0207 220 1666
Mike Coe / Chris Savidge (Corporate
Finance)
Jasper Berry / David Kilbourn (Corporate
Broking / Sales)
finnCap (Joint Broker)
Ed Frisby / Kate Bannatyne (Corporate
Finance)
Rhys Williams / Tim Redfern (Sales
/ ECM) 020 7220 0500
Walbrook PR (Financial PR) 020 7933 8780
Tom Cooper / Paul Vann 0797 122 1972
solidstate@walbrookpr.com
Analyst Research Reports: For further analyst information and
research see the Solid State plc website:
https://solidstateplc.com/research/
Notes to Editors:
Solid State plc (SOLI) is a value added electronics group
supplying industrial and military markets with ruggedised/durable
components, assemblies and manufactured units for use in harsh
environments. The Group's mantra is - 'Trusted technology for
demanding applications'. To see an introductory video on the Group
- https://bit.ly/3kzddx7
Operating through two main divisions: Manufacturing (Steatite)
and Value Added Supplies (Solid State Supplies & Pacer); the
Group specialises in complex engineering challenges often requiring
design-in support and component sourcing for computing, power,
communications, electronic and optoelectronic products.
Headquartered in Redditch, Solid State employs over 200 staff
across the UK with a branch office in the USA, serving specialist
markets in oil & gas production, transportation, medical,
construction, security, military and field maintenance.
Solid State was established in 1971 and admitted to AIM in June
1996. The Group has grown organically and by acquisition - having
made 10 acquisitions since 2002.
Chief Executive's Review
The economic backdrop to this reporting period was undoubtedly
one of the most challenging in the Group's near 50 year history and
I am very pleased to report results comparable with the prior year'
s record trading period , with Group revenue of GBP 33.1m (H1
2019/20: GBP33.6m). Furthermore, in spite of the pandemic the Group
has continued to make progress in delivering its growth
strategy.
Our sector diversity across the Group has enabled us to
substantially mitigate the challenges faced in the oil and gas and
commercial aerospace sectors through revenue growth in security and
defence, medical and transportation. The scale and broader
portfolio of products now offered by our Value Added Supplies ("
VAS " ) division , following the acquisition of Pacer Technologies
in 2018 , has enabled VAS revenues to be maintained year on year ,
significantly outperforming a market which saw a decline of 10.5%.
The slight reduction in revenues from our Manufacturing Division
was mitigated by improved margins and lower operating costs.
In the period the gross margin of the Group was stable at 29.9%
(H1 2019/20: 30.1%). Pleasingly, underlying product margins in both
divisions are also stable or show a slight improvement.
This strong trading performance in a period impacted by COVID-19
resulted in adjusted diluted earnings per share of 25.6p (H1
2019/20: 27.8p) which, while down on the prior year, we believe
sets the business up well to deliver a full year result broadly
similar to last year. Based on the trading in the first half and
prospects for the full year, the Board has proposed maintaining the
interim dividend at 5.25p (H1 2019/20: 5.25p).
The macro-economic environment remains challenging, which is
resulting in customers placing shorter order schedules . As a
result , there is reduced mid / long term order book visibility.
Current orders and trading since the period end have continued
in-line with management expectations.
Prospects for the remainder of the financial year are
underpinned by the near term open order book and the resilience and
diversity of the Group, resulting from its broad base of products
and clients across a range of market sectors. Whilst there is still
some uncertainty as to potential impacts of COVID-19 and Brexit for
the remainder of our financial year, the Board is confident of
meeting its pre-COVID profit expectations for the year ending 31
March 2021 with profits expected to be similar to the prior
year.
Business Overview
The Solid State Group supplies electronics solutions to its
customers as a value added supplier of electronic and
opto-electronic components and displays, and as a manufacturer of
high specification bespoke products and assemblies. These
manufactured products are provided across three core business areas
of Computing, Power and Communications.
The Group operates through two operating divisions; Value Added
Supplies (VAS) and Manufacturing. These divisions have distinct
characteristics in their respective market places; however, they
have a common mission, a clear delivery strategy, and consistent
business values.
The VAS division is focusing its activities into three business
units; Electronics, Opto-electronics , and Sourcing &
Obsolescence. The VAS division is a specialist in delivering
innovative, valuable, technical solutions for customers seeking
cutting edge, electronic and opto-electronic components and
displays with market leading value added capabilities.
The Manufacturing division has market leading capabilities in
the design, development and supply of high specification industrial
computers, custom battery packs providing portable power and energy
storage solutions and advanced communication systems, encompassing
wideband antennas and high performance video transmission
products.
Across the Group our depth of understanding and a collaborative
approach to client relationships have always promoted an integrated
process of product design and supply. This co-operation and
collaboration is valued by our clients and we believe it is of
significant commercial value both to us and our customers. The
Group will continue to pursue this approach and extend it into new
relationships.
The market for the Group's products and services is driven by
the need for bespoke electronic solutions to address complex needs,
typically in harsh environments where enhanced durability and
resistance to extreme and volatile humidity, temperature, pressure
and wind is vital. The drivers of value in our markets include
safety, technical performance, efficiency improvements, cost
savings, and environmental monitoring.
Our stated strategy is to supplement organic growth with
selective acquisitions within the electronics industry which
complement our existing Group companies and facilitate the
internationalisation of the Group and, or provide additional
products / technology / IP and knowhow which accelerates our
progress in our target growth markets.
Divisional Review
Value Added Supplies (VAS) Division
The VAS division continues to trade well and to outperform all
metrics published by the industry association body ECSN (Electronic
Components Supply Network). Revenue has been maintained at GBP
19.5m (H1 2019/20: GBP19.5m) compared to a market which has seen
10.5% decline. Product margins are stable and holding up well
albeit the sales mix is slightly less rich in the period.
Inventory has reduced in the period and stock turns continue to
outperform industry averages. Post period end we have seen lead
times extending significantly on many products such as memory,
bluetooth, wireless and cellular devices. Our ability to invest in
buffer stocks to mitigate extending lead times and potential risks
associated with Brexit will put the business in a strong position
to avoid any business interruption, support our key customers, and
to be competitive in the market.
We are continuing to make progress on implementing our strategy
of broadening our product offering for our target growth markets,
through either M&A (such as Pacer) or organically through the
signing of new franchises. During the period and as a direct result
of the innovative approaches taken to ensure that trading continues
and customers remain engaged throughout the pandemic, the business
has been successful in securing new franchises including Redpine (a
subsidiary of Silicon Labs). Redpine expands our product offering
with an advanced portfolio of low power, secure, Wi-Fi and
bluetooth communications products that are key for both industrial
and commercial IoT and smart home applications.
The integration of the Pacer business into the VAS division is
now complete. Post period end capital projects have restarted with
investments in a new wire bonder and a new semi automated die
bonder for the cleanroom. This enhances the capabilities of the
business to deliver premium opto-electronic assemblies and
differentiates us in the marketplace . These tools have already
secured new value added work delivering an opto-electronic
assembly.
As reported previously COVID-19 has made demands on the business
accelerating innovation in finding new ways to engage with
customers. This has been done successfully with several of the
initiatives now here to stay. Despite the difficulties of the first
lockdown, the business found a way of delivering hands-on training
to engineers over a web based platform. These initiatives have
allowed the VAS division to drive much higher customer engagement
than would otherwise have been possible. These events have
delivered tangible benefits for the design-in pipeline and
prospects, and will continue beyond the pandemic.
Across the Group order periods have shortened , reducing forward
visibility towards the end of the period and as we entered the
second half , however, order intake has begun to improve supported
primarily by m edical and m ilitary markets. Furthermore, our
design-in pipeline is building giving the team confidence for the
second half .
Manufacturing Division
Trading has been broadly comparable to the prior period with
revenue of GBP13.5m (H1 2019/20: GBP 14.1m). Our focus on margin
improvement combined with appropriate cost management ha s
substantially mitigated the adverse volume impact at a divisional
profit level.
Power revenues into the c ommercial a erospace and oil and gas
sectors have seen a significant downturn due to COVID-19. While
these sectors remain important and will see some recovery in
future, we continue the transition to higher growth markets
including medical, autonomy and renewables which have generated
increased revenues in the period.
We continue to seek and exploit opportunities to add value to
our engineering and manufacturing capabilities through increasing
focus on in-house design and development activities, creating
products and technologies that differentiate us from other
electronic manufacturers.
The successful grant application to Innovate UK under the
Sustainable Innovation Fund initiative has accelerated development
of our modular battery packs, principally for niche fossil fuel
engine replacement opportunities. There has also been cross over to
exciting, emerging sectors including drones, robotics and maritime
applications.
Following the strategic decision made last year to develop our
Battery Management System (BMS) capabilities in house, substantial
progress has been made in developing a flexible BMS offering which
is appropriate for broader applications complementing the Innovate
programme.
Increased demand in our computing business has benefitted from
government backed infrastructure programmes in transport and
defence. " Edge computing " frequently , and necessarily in harsh
environments , often requiring image capture and processing , is
driving the market today which plays to our strengths. Artificial
Intelligence of things ( " AIoT" ) and 5G are the additional macro
factors that will generate future growth opportunities.
Within our Computing team we have developed a number of new
products for cyber security applications including novel TEMPEST
enclosures to facilitate remote secure home working . These
innovations are timely , given the recent UK Government
announcement of additional funding for the MOD which will see an
increasing focus on investment in cybersecurity as a strategic
objective . A new modular range of servers ha s been launched,
providing very high performance in small space s and optimis ation
for processing intensive applications, big data handling, video
analysis and AI.
Sales of our Radio communications and antenna products ha ve
been healthy in the period, largely driven by robust domestic and
international government and military procurement, and we remain
confident for the full year. The development of a portfolio of semi
standard antenna design s has established a scalable base business,
as we target longer term higher volume, " design-in"
programmes.
Our radio team ha s been developing our training and service
offering to complement our own designed products which work
alongside the core wave relay radio adding value to our customers.
In addition, they have continued establishing a network of " resale
partners " across Europe.
In October we recommenced a capital investment project in
respect of establishing an in-house EMC testing capability. The
Group will then have the full suite of test and measurement
capabilities which will differentiate us from our competition.
We have been developing out the commercial and technical team
and we are looking to make further investments in both commercial
and technical resources and capital equipment to support the growth
opportunities.
Financial Review
Group revenue is broadly comparable with the record performance
in H1 2019/20 at GBP 33.1m (H1 2019/20: GBP33.6m). Against the
challenging macro economic back drop this is very pleasing.
Manufacturing revenues of GBP 13.6m (H1 2019/20: GBP14.1m)
reflect a small decline on the prior period. The o il and g as and
c ommercial aerospace sectors have seen significant reductions in
demand due to COVID-19 which has adversely impacted our Power b
usiness u nit, however, our sector diversity gives the M
anufacturing division some resilience and enables us to
substantially mitigate this shortfall with stronger trading in the
Computing and Communications b usiness u nits .
Revenue in our VAS division was flat year on year at GBP 19.5m
(H1 2019/20: GBP19.5m) which is a notable achievement given the VAS
market in the UK has seen a decline of 10.5 % year on y ear
according to the industry association. We have benefitted from the
strong demand in government funded sectors such as security and
defence, transport, and medical.
Group margins were stable at 29.9% (H1 2019/20: 30. 1 %).
Product margins within our VAS division have been stable however
the mix of customer sales has resulted in slight reduction in the
gross margin in the period to 23.9% (H1 2019/20: 24. 3 %).
Conversely Manufacturing margins have continued to improve to 38.6%
(H1 2019/20: 38. 1 %) reflecting a stronger margin mix of customer
sales. This provides some mitigation for the small reduction in
revenue.
Reported overheads have decreased to GBP 7.5m (H1 2019/20:
GBP7.7m) principally due to a reduction in the share based payment
charges and amortisation of acquisition intangibles meaning
underlying overheads are GBP7.3m in both years. During the period
the C ompany has taken appropriate cost reduction actions as a
result of the COVID-19 downturn in addition to utilising the
Coronavirus Job Retention Scheme. We have recognised GBP0.3m of
grant income within other income in respect of furloughed staff
avoiding redundancies where we anticipated the business would
recover. The cost management offsets the impact of increased bad
debt provisioning and the full year overhead investments made in
the prior year.
Adjusted operating margin, an increasingly important measure of
Group performance, is stable at 7.8% (H1 2019/20: 8.1%) and 60bps
ahead of the full year FY20 adjusted operating margin of 7.2%. The
improvement in operating margin in the Manufacturing division has
largely offset the expected dilution of the increased scale of the
VAS division.
Adjusted profit before tax for the first half is broadly
consistent at GBP 2.55m (H1 2019/20: GBP2.67m). Reported profit
before tax was marginally up at GBP 2.37m (H1 2019/20: GBP2.32m).
This is reported after a share based payments charge of GBP nil (H1
2019/20: GBP0.15m), and amortisation of acquisition intangibles of
GBP 0.18m (H1 2019/20: GBP 0.19m).
Following the approval at the AGM of new CSOP and LTIP schemes,
and as announced previously an initial grant of share options has
been made under these plans. Going forward it is anticipated that
the annual share based payment charge for these awards will be
comparable to the charges recognised in prior years.
Adjusted profit after tax was comparable in spite of the
COVID-19 disruption at GBP 2.22m (H1 2019/20: GBP2.40m). Reported
profit after tax was GBP 2.08m (H1 2019/20: GBP 2.12m).
Adjusted diluted earnings per share was 25.6p (H1 2019/20:
27.8p) with basic EPS of 24.3p (H1 2019/20: 25.0p).
The inflow of cash from operating activities was GBP1.9m (H1
2019/20 inflow GBP3.5m). The reduction in cash generation is
primarily due to the unwind of COVID-19 working capital inflows
seen at 31 March 2020 as we have repaid VAT, PAYE and returned to
normal terms with suppliers where short term extensions were
agreed.
The Group has continued to grow our cash reserves which stand at
GBP 4.0m on 30 September 2020 ( GBP3.2m on 31 March 2020) following
positive cash generation in the first half. Our cash reserves in
addition to our GBP7.5m of unutilised bank facilities place the
Group in a strong financial position to fund future capital
investment and acquisitions opportunities as they arise.
Dividends
The Board typically declares an interim dividend which is 30% -
40% of the anticipated full year dividend . The Board is pleased to
be able to continue to adopt this approach in the current period in
the face of a less certain trading environment.
Based on the strong trading performance in the first half of the
year and prospects for the full year, the Board has decided to
declare that it is holding the interim dividend at 5.25p per share
(H1 2019/20: 5.25p).
The interim dividend will be paid on 19 February 2021 to
shareholders on the register at the close of business on 29 January
2021. The shares will go ex-dividend on 28 January 2021 .
Board structure
We have continued to implement planned changes to the structure
and composition of the Board during the period, and recently
announced that Nigel Rogers, who joined the Board as a
Non-Executive Director last year, agreed to take over as
Non-Executive Chairman of the Board from 17 November 2020. He
replaces Peter Haining, who has served as Interim Chairman since 1
April 2020 and remains on the Board as a Non-Executive Director and
Chair of the Audit Committee.
We also announced that Peter Magowan has agreed to join the
Board on 1 January 2021 as a Non Executive Director. He has also
agreed to Chair the Remuneration Committee and join the Audit
Committee.
Peter brings extensive sales and marketing experience to this
role, generated from his executive career as an early employee and
main board member of ARM Holdings PLC, and as an Executive at
Fidelity International Ltd and General Partner at Alta Berkeley
Venture Partners. He holds a Bachelor of Science degree in
Electrical and Electronic Engineering from the University of
Manchester Institute of Science and Technology and a Diploma in
Marketing from the University of Bristol Business School. Peter is
also a Non-Executive Director at Filtronic PLC.
We welcome Peter to the Board and look forward to his
contribution to the development and implementation of the Group's
ambitious growth strategy.
Forward-looking statements
Certain statements in this half year report are forward-looking.
Although the Group believes that the expectations reflected in
these forward-looking statements are reasonable, we can give no
assurance that these expectations will prove to have been correct.
Because these statements involve risks and uncertainties, actual
results may differ materially from those expressed or implied by
these forward-looking statements.
We undertake no obligation to update any forward-looking
statements whether as a result of new information, future events or
otherwise.
Outlook
The first half has seen trading which is broadly comparable with
the record prior period, against an extremely challenging market
backdrop. This validates the Group's strategy and focus on ensuring
we have sector, product and customer diversity , so providing a
resilient business model.
Across the Group all our facilities have been able to remain
open and operate with appropriate COVID-19 safe protocols. We have
utilised the furlough CVJR grants through the period which ha ve
enabled us to minimise job losses and retain our skilled staff
bringing them back from furlough as demand recovers.
The Group continues to work to ensure that we are fully prepared
for a "no deal" Brexit. Our preparations through the cross
collaboration of each division's Brexit task force are well
advanced, and we believe that we are ready to manage the additional
administrative burden that this would present.
The development in capabilities which the Group now has to offer
(including opto-electronics, cleanroom production, enhanced test
and measurement) positions the Group to be able to engage with its
tier one customers on opportunities which we would not have been
able to target previously. Our cross-division collaboration
offering the full range of Group capabilities and products means
the Group is now well placed to deliver organic growth, developing
own brand products and solutions for the Group's target growth
markets.
Complementing the organic growth ambitions , the Group has
focused its near-term M&A strategy in two areas: facilitation
of the internationalisation of the Group and acquisition of
additional products / technology / IP and knowhow which accelerates
our progress in our target growth markets beyond in house
development to deliver additional shareholder value. We have a
strong pipeline of potential acquisition targets which are at the
early stages of discussion and evaluation. As ever, the Board will
continue to apply its rigorous due diligence processes in
implementing its acquisition strategy.
The open order book stood at GBP33.6m as at 30 November 2020.
The current shift towards shortening order schedules is evident
with the 0-3 month order book up 3% as at 30 November 2020 compared
to 30 September 2020. Pleasingly we are seeing a positive trend in
order intake, the 3 month rolling average order intake is showing
an 8% increase compared to September. Trading since the end of the
first half of the year has continued in-line with management
expectations.
Whilst there is still some uncertainty as to potential impacts
of COVID-19 and Brexit for the remainder of our financial year, the
Board is confident of meeting its pre-COVID profit expectations for
the year ending 31 March 2021 with profits expected to be similar
to the prior year.
Finally, on behalf of the Board, I would like to acknowledge the
significant contribution of our staff across the Group to Solid
State' s continued progress.
Gary Marsh
Chief Executive Officer
INTERIM CONSOLIDATED INCOME STATEMENT
for the six months ended 30 September 2020
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
20 19 GBP'000
GBP'000 GBP'000
Continuing Operations
Revenue 33,073 33,587 67,417
Cost of sales (23,184) (23,476) (46,614)
_______ _______ _______
Gross profit 9,889 10,111 20,803
Sales, general and administration
expenses (7,477) (7,719) (16,681)
_______ _______ _______
Profit from operations 2,412 2,392 4,122
Finance costs (39) (67) (120)
_______ _______ _______
Profit before taxation 2,373 2,325 4,002
Tax expense (296) (203) (588)
_______ _______ _______
Adjusted profit after tax 2,219 2,401 (4,002)
Adjustments to profit (142) (279) (588)
Profit after taxation 2,077 2,122 3,414
_______ _______ _______
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT 2,077 2,122 3,414
_______ _______ _______
Other comprehensive income - - -
_______ _______ _______
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD 2,077 2,122 3,414
_______ _______ _______
Earnings per share (see below)
Basic EPS from profit for the period 24.3p 25.0p 40.1p
Diluted EPS from profit for the period 24.0p 24.6p 39.5p
INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 September 2020 (unaudited)
Share Share Foreign Capital Shares
Capital Premium Exchange Redemption Retained held
Reserve Reserve Reserve Earnings in Total
Treasury
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2019 427 3,627 (5) 5 16,021 (172) 19,903
IFRS16 Leases adjustment
on adoption - - - - (14) - (14)
Total comprehensive
income for the period - - - - 2,122 - 2,122
Foreign exchange - - 2 - - - 2
Dividends - - - - (706) - (706)
Share based payment
expense - - - - 150 - 150
_______ _______ ______ _______ _______ _______ ______
Balance at 30 September
2019 427 3,627 (3) 5 17,573 (172) 21,457
Total comprehensive
income for the period - - - - 1,292 - 1,292
Rounding (1) - - - 1 - -
Foreign exchange - - (4) - - - (4)
Transfer of treasury
shares to AESP - - - - (129) 129 -
Share issue 1 (1) - - - - -
Dividends - - - - (447) - (447)
Share based payment
expense - - - - 231 - 231
_______ _______ ______ _______ _______ _______ ______
Balance at 31 March
2020 427 3,626 (7) 5 18,521 (43) 22,529
Total comprehensive
income for the period - - - - 2,077 - 2,077
Foreign exchange - - (2) - - - (2)
Dividends - - - - (620) - (620)
Share issue 1 (1) - - - - -
_______ _______ ______ _______ _______ _______ ______
Balance at 30 September
2020 428 3,625 (9) 5 19,978 (43) 23,984
_______ _______ ______ _______ _______ _______ ______
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
on 30 September 2020
Unaudited Unaudited Audited
as at as at as at
30 Sept 20 30 Sept 19 31 Mar 20
ASSETS GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Property, plant and equipment 2,553 2,259 2,286
Right of use lease assets 1,924 870 1,055
Intangible assets 8,018 8,668 8,213
_______ _______ _______
TOTAL NON-CURRENT ASSETS 12,495 11,797 11,554
CURRENT ASSETS
Inventories 8,762 9,404 9,662
Trade and other receivables 12,091 11,674 13,859
Deferred tax asset 86 103 86
Cash and cash equivalents 3,952 1,267 3,517
_______ _______ _______
TOTAL CURRENT ASSETS 24,891 22,448 27,124
_______ _______ _______
TOTAL ASSETS 37,386 34,245 38,678
LIABILITIES
CURRENT LIABILITIES
Trade and other payables (6,388) (7,570) (10,597)
Contract liabilities (2,642) (1,811) (2,486)
Current borrowings - (666) (333)
Corporation tax liabilities (1,118) (750) (774)
Right of use lease liabilities (518) (332) (471)
_______ _______ _______
TOTAL CURRENT LIABILITIES (10,666) (11,129) (14,661)
NON-CURRENT LIABILITIES
Non current borrowings - (334) -
Provisions (697) (250) (304)
Deferred tax liability (507) (528) (507)
Right of use lease liabilities (1,532) (547) (677)
_______ _______ _______
TOTAL NON-CURRENT LIABILITIES (2,736) (1,659) (1,488)
_______ _______ _______
TOTAL LIABILITIES (13,402) (12,788) (16,149)
_______ _______ _______
TOTAL NET ASSETS 23,984 21,457 22,529
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
Share capital 428 427 427
Share premium reserve 3,625 3,627 3,627
Capital redemption reserve 5 5 5
Foreign exchange reserve (9) (3) (5)
Retained earnings 19,978 17,573 16,021
Shares held in treasury (43) (172) (172)
_______ _______ _______
TOTAL EQUITY 23,984 21,457 19,903
_______ _______ _______
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2020
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar 20
30 Sept 30 Sept
20 19
GBP'000 GBP'000 GBP'000
OPERATING ACTIVITIES
Profit before taxation 2,373 2,325 4,002
Adjustments for:
Depreciation 474 530 1,114
Amortisation 348 403 960
Impairment of right of use asset - - 84
(Profit) / loss on disposal of
property, plant and equipment (4) (9) (31)
Share based payment expense - 150 381
Finance costs 39 67 120
_______ _______ _______
Profit from operations before changes
in working capital and provisions 3,230 3,466 6,630
Decrease / (increase) in inventories 886 263 1
Decrease / (increase) in trade
and other receivables 1,735 1,747 (444)
(Decrease) / increase in trade
and other payables (3,988) (1,910) 1,801
(Decrease) / increase in provisions (7) - 54
_______ _______ _______
Cash generated from operations 1,856 3,566 8,042
Income taxes received / (paid) 51 (20) (385)
_______ _______ _______
51 (20) (385)
Net cash flows from operating activities 1,907 3,546 7,657
INVESTING ACTIVITIES
Purchase of property, plant and
equipment (98) (183) (579)
Purchase of intangible assets (153) (180) (281)
Proceeds from sale of property,
plant and equipment 14 35 103
Consideration paid on acquisition - - -
of subsidiaries
_______ _______ _______
Net cash flow from investing activities (237) (328) (757)
FINANCING ACTIVITIES
Issue of ordinary shares - - -
Borrowings drawn - - -
Borrowings repaid (333) (4,667) (5,334)
Payment obligations for right of
use assets (239) (224) (513)
Interest paid (22) (52) (80)
Dividends paid to equity shareholders (620) (706) (1,153)
_______ _______ _______
Net cash flow from financing activities (1,214) (5,649) (7,080)
_______ _______ _______
INCREASE / (DECREASE) IN CASH AND
CASH EQUIVALENTS 456 (2,431) (180)
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 September 2020 (continued)
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
20 19 20
GBP'000 GBP'000 GBP'000
Translational foreign exchange on opening
cash (21) 6 5
Net (decrease) / increase in cash and
cash equivalents 456 (2,431) (180)
Cash and cash equivalents brought forward 3,517 3,692 3,692
_______ _______ _______
Cash and cash equivalents carried forward 3,952 1,267 3,517
_______ _______ _______
Unaudited Unaudited Audited
as at as at as at
30 Sept 30 Sept 31 Mar
20 19 20
GBP'000 GBP'000 GBP'000
Represented by:
Cash available on demand 3,952 1,267 3,517
_______ _______ _______
NOTES TO THE INTERIM REPORT
for the six months ended 30 September 2020
1. Basis of preparation of interim financial information
General information
Solid State PLC ( "the Company") is a public company
incorporated, domiciled and registered in England and Wales in the
United Kingdom. The registered number is 00771335 and the
registered address is: 2 Ravensbank Business Park, Hedera Road,
Redditch, B98 9EY.
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 31
March 2020, 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.
Basis of preparation
These condensed interim financial statements for the six months
ended 30 September 2020 have been prepared in accordance with IAS
34, 'Interim financial reporting', as adopted by the European
Union. The condensed interim financial statements should be read in
conjunction with the annual financial statements for the year ended
31 March 2020, which have been prepared in accordance with IFRSs as
adopted by the European Union.
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 31 March 2021.
As a result of the COVID-19 crisis and additional cashflow
modelling of potential downside scenarios has been implemented in
order to provide early warning of any liquidity risk.
The Group's severe but plausible downside financial forecasts
and projections model the impact of an extended downside scenario
associated with COVID-19 disruption and demand risks, together with
the other principal risks identified by the Group for an 18-month
period to 31 March 2022.
The severe but plausible downside scenario, applied to the
Group's current financial forecasts, which take account of current
solid trading and customer demand. The modelling reflects a 30%
reduction in FY22 revenue with no margin improvement partially
offset by limited mitigations within the control of the company,
including deferred investment in employee related costs and certain
capital expenditure mitigations.
The modelling shows that the Group would have sufficient funding
available to withstand this plausible downside scenario, and
therefore the financial statements have been prepared on a going
concern basis.
2. Accounting policies
The accounting policies are unchanged from the financial
statements for the year ended 31 March 2020 other than as noted
below.
Financial Instruments
The carrying value of cash, trade and other receivables, other
equity instruments, trade and other payables and borrowings also
represent their estimated fair values. There are no material
differences between carrying value and fair value at 30 September
2020.
Additional disclosure of the basis of measurement and policies
in respect of financial instruments are described on pages [103] to
[109] of our 31 March 2020 Annual Report and remain unchanged at 30
September 2020.
Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 March 2020.
Impairment
No Impairment charges have been recognised in the period to 30
September 2020.
Recent accounting developments
The accounting policies adopted are consistent with those of the
previous financial year except as described below:
In preparing the interim financial statements, the Group has
adopted the following Standards, amendments and interpretations,
which are effective for 2020/21 and will be adopted in the
financial statements for the year ended 31 March 2021:
-- Amendments to IFRS 3, 'Business combinations', - Definition of a business
-- Amendments to IAS 1, 'Presentation of financial statements',
and IAS 8, 'Accounting policies, changes in accounting estimates
and errors' - Definition of material.
-- Amendments to IFRS 9, IAS 39 and IFRS 17: - Interest rate benchmark reform.
-- Amendments to the Conceptual framework.
The adoption of these standards and amendments has not had a
material impact on the interim financial statements.
3. Principal risks and uncertainties
The principal risks and uncertainties impacting the Group are
described on pages 8 to 11 of our 31 March 2020 Annual Report and
remain unchanged at 30 September 2020.
They include: Acquisition, product / technology change, supply
chain interruption, retention of key employees, competition,
financial liquidity, legislative environment and compliance,
failure or malicious damage to IT systems and natural
disasters.
4. Segmental information
Unaudited Unaudited Audited
Six months Six months Year
to to to
30 Sept 30 Sept 31 Mar
19 19 20
GBP'000 GBP'000 GBP'000
Revenue
Manufacturing 13,546 14,088 28,170
Value Added Supplies 19,527 19,499 39,247
_______ _______ _______
Group revenue 33,073 33,587 67,417
_______ _______ _______
5. Adjusted profit measures
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
20 19 GBP'000
GBP'000 GBP'000
Non recurring profit from sale of
fully written down stock -- - (160)
Amortisation of acquisition intangibles 176 195 505
Share based payments - 150 381
Taxation effect (34) (66) (138)
_______ _______ _______
Total adjustments to profit 142 279 588
_______ _______ _______
Reported gross profit 9,889 10,111 20,803
Adjusted gross profit 9,889 10,111 20,643
Reported operated profit 2,412 2,392 4,122
Adjusted operated profit 2,588 2,737 4,848
Reported operating margin percentage 7.3% 7.1% 6.1%
Adjusted operating margin percentage 7.8% 8.1% 7.2%
Reported profit before tax 2,373 2,325 4,002
Adjusted profit before tax 2,549 2,670 4,728
Reported profit after tax 2,077 2,122 3,414
Adjusted profit after tax 2,219 2,401 4,002
6. Earnings per share
The earnings per share is based on the following:
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
19 19 GBP'000
GBP'000 GBP'000
Adjusted continuing earnings post
tax 2,219 2,401 4,002
Reported continuing earnings post
tax 2,077 2,122 3,414
_______ _______ _______
Weighted average number of shares 8,556,193 8,497,977 8,510,074
Diluted weighted average number of
shares 8,668,786 8,625,945 8,635,331
_______ _______ _______
Reported EPS
Basic EPS from profit for the period 24.3p 25.0p 40.1p
Diluted EPS from profit for the period 24.0p 24.6p 39.5p
Adjusted EPS
Adjusted basic EPS from profit for
the period 25.9p 28.3p 47.0p
Adjusted d iluted EPS from profit
for the period 25.6p 27.8p 46.3p
7. Dividends
Dividends paid during the period from 1 April 2019 to 30
September 2020 were as follows:
19 September 2019 Final dividend year ended 31 March 2019 8.30p
per share
15 February 2019 Interim dividend year ended 31 March 2020 5.25p per share
23 September 2020 Final dividend year ended 31 March 2020 7.25p
per share
The Directors are intending to pay an interim dividend for the
year ending 31 March 2021 on [19] February 2021 of 5.25p per share.
This dividend has not been accrued at 30 September 2020.
8. Share capital
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
20 19 GBP'000
GBP'000 GBP'000
Allotted issued and fully paid
Number of ordinary 5p shares 8,564,878 8,532,878 8,548,878
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
20 19 GBP'000
GBP'000 GBP'000
Allotted issued and fully paid
Ordinary 5p shares 428 427 427
9. Related party transactions
Consistent with the year ended 31 March 2020 the only related
party transactions in the period were those with the trading
companies which are used by the non-executive directors for their
consultancy services. These transactions are disclosed in
remuneration report in the annual report to the 31 March 2020 and
will be updated in the full year report to the 31 March 2021. There
are no other related party transactions.
10. Non-current assets
Unaudited Unaudited Audited
Six months Six months Year to
to to 31 Mar
30 Sept 30 Sept 20
20 19 GBP'000
GBP'000 GBP'000
Goodwill 6,300 6,300 6,300
Acquisition intangibles 1,537 2,023 1,713
Research and development 100 184 100
Software 81 161 100
_______ _______ _______
Intangible assets 8,018 8,668 8,213
Property plant and equipment 2,553 2,259 2,286
Right of use asset 1,924 870 1,055
_______ _______ _______
Total Non Current Assets 12,495 11,797 11,554
_______ _______ _______
The statement will be available to download on the Company' s
website: www.solidstateplc.com.
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END
IR FLFIDFRLDIII
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