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SOLI Solid State Plc

1,345.00
20.00 (1.51%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Solid State Plc LSE:SOLI London Ordinary Share GB0008237132 ORD 5P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  20.00 1.51% 1,345.00 1,330.00 1,360.00 1,345.00 1,325.00 1,325.00 31,622 15:49:07
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Electronic Parts,eq-whsl,nec 126.5M 6.69M 0.5899 22.80 152.61M

Solid State PLC Half-year Report (0258X)

21/11/2017 7:00am

UK Regulatory


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TIDMSOLI

RNS Number : 0258X

Solid State PLC

21 November 2017

Solid State plc

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

Interim Results for six months ended 30 September 2017

Solid State plc (AIM: SOLI), the AIM listed supplier of specialist industrial/ruggedised computers, electronic components, advanced antenna products, communications systems and battery power solutions to the electronics market, is pleased to announce its interim results for the six months ended 30 September 2017.

Highlights in the period include:

Financial: underlying continuing operations shown to reflect the exclusion of the discontinued activities of MoJ and SEMS business unit

 
                                     2017       2016      Change 
 Revenue                         GBP22.5m   GBP20.1m     GBP2.4m       +12% 
 Adjusted profit before 
  tax                             GBP1.6m    GBP2.0m   (GBP0.4m)      (20%) 
 Adjusted diluted earnings 
  per share (note 6)                16.1p      20.1p      (4.0p)      (20%) 
 Adjusted gross profit margin       28.4%      31.2%      (2.8%)   (280bps) 
 Dividend                            4.0p       4.0p           -          - 
 Dividend cover                      3.3x       4.8x      (1.5x)      (31%) 
 

Operational:

   --      Organic growth in distribution division of nearly 20%. 

-- Reported manufacturing revenues are 7% up on the prior year despite over GBP2.5m of rail printer revenue in the comparative period which did not occur in this period.

-- Completion of the re-organisation of the manufacturing division - consolidation of the power business unit in Crewkerne, Somerset, and re-location of the communications business unit to the new Leominster facility, Herefordshire - that will deliver tangible operational improvements in H2.

   --      Installation of the environmental testing capabilities into Leominster facility. 

-- Investment in the commercial and engineering teams in the communications business unit and production resources in the power business unit.

   --      Increase in field sales force headcount by 7 (circa 50%). 
   --      Further development in own brand products. 
   --      Group open order book as at 31/10/17 GBP20.1m (31/10/16: GBP14.6m). 
   --      Acquisition focus is on larger businesses in the turnover range of GBP10m - GBP20m. 

Commenting on the results and prospects, Tony Frere, Chairman of Solid State said:

"I am pleased to report on a period which demonstrates further progress in our strategy for delivering sustainable growth.

"The success of the growth strategy in action is amply demonstrated by the 9% organic growth in the computer business unit and near 20% growth in the distribution division in the period. The Board expects the strategy to deliver across other business units in a similar fashion.

"The open order book at 31 October 2017 was GBP20.1m which is 38% up on the prior year of GBP14.6m. Order intake in October was at a record level, with the largest individual order representing 10% of the month's total and demonstrating a good spread of customers. The Directors are pleased with the new business pipeline and level of new contract awards across the Group.

"This gives the Board confidence that despite the reduction in the margin as a result of the mix of product sales, the markets that the Company services are resilient and that the Group can deliver a strong second half performance and continue to deliver growth for the Company and its shareholders.

"On behalf of the Board, I would like to acknowledge the significant contribution of our staff to Solid State's continued progress."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information please contact:

 
 Solid State plc                     01527 830 630 
 Gary Marsh - Chief Executive        investor.information@solidstateplc.com 
  Peter James - Group Finance 
  Director 
 
 WH Ireland (Nominated Adviser 
  & Joint Broker)                    0117 945 3470 
 Mike Coe / Ed Allsopp (Corporate 
  Finance) 
  Jasper Berry / David Kilbourn 
  (Corporate Broking / Sales) 
 finnCap (Joint Broker) 
  Ed Frisby / Kate Bannatyne 
  (Corporate Finance) 
  Emily Morris / Rhys Williams 
  (Corporate Broking / Sales)        020 7220 0500 
 
 Walbrook PR (Financial PR)          020 7933 8780 
 Tom Cooper / Paul Vann              0797 122 1972 
                                     tom.cooper@walbrookpr.com 
 

Notes to Editors:

Solid State plc (SOLI) is a leading value added group of companies providing specialist design-in and manufacturing services to those acquiring industrial/rugged computing products, battery power solutions, communications systems, advanced antenna products 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 200 staff across five 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.

Our Vision

We are well placed to exploit the significant opportunities that exist in all of our target markets; we aspire to double the size of the business over the next five years. We will deliver this through a combination of organic growth and strategic acquisitions.

Our Mission

"To remain at the forefront of electronics technology, delivering reliable, high quality products and services. Adding value at every opportunity, from enquiry to order fulfilment; consistently meeting customer and partner expectations."

Our Strategy

Our strategy has three key elements:

1) Investment in our people, our technical knowledge and our capabilities, to ensure we remain at the forefront of electronics technology and be the 'go to' technical solutions provider of choice, enabling us to develop and maintain long term client relationships as a trusted adviser with the sector 'know how'.

2) Continue to develop our strategic partnerships with customers and suppliers within the electronics industry, building our portfolio of value added services.

3) Targeting strategic acquisitions which are aligned with our core capabilities which provide access to new markets or deepen our knowledge, ability and enhance the value we can add to our customers.

CHAIRMAN'S STATEMENT

Unaudited Interim Results of the six months ended 30 September 2017

I am pleased to report on a period which demonstrates further progress in our strategy for delivering sustainable growth.

Group revenue for the period has increased by 12% to GBP22.5m (2016: GBP20.1m), reflecting strong organic growth in the distribution division of close to 20% and a 7% increase in the manufacturing division reported revenues. However, as we have experienced in previous years, changes in product mix affect overall Group gross margin. In this period, as previously announced in the Group's October trading update, the combination of the increased proportion of distribution sales and a change in mix of sales within the manufacturing business resulted in a 2.8% reduction in the Group gross margin to 28.4% (2016: 31.2%). Nevertheless, the Board remains confident about the prospects across the Group and expects a strong performance in the second half. This expectation is supported by the strong open order book and the resilience of the Group which is a result of its broad base of products and clients in a range of market sectors.

Our review of business below sets out the progress we have made within our divisions in implementing our strategy.

Financial Review

Group revenue for the period increased to GBP22.5m (H1 2016: GBP20.1m). The distribution division delivered close to 20% organic growth with a revenue increase of GBP1.6m, whilst manufacturing revenues increased by GBP0.8m, primarily driven by the full year impact of the Creasefield acquisition revenues. Within the manufacturing division over GBP2.5m of rail printer revenue in the comparative period, which did not occur in this period, has been replaced by new power and computing revenues.

At an individual business unit level, product line margins within both divisions have been maintained. However, as we have experienced in previous years, changes in product mix affect overall Group gross margin as we have seen in this reporting period. The combination of the increased proportion of distribution sales and change in mix of sales within the manufacturing business, excluding the benefit of the rail printers supplied in the first half of 2016, in addition to slight foreign exchange headwinds, has resulted in a reduction in the Group gross margin to 28.4% (H1 2016: 31.2%).

The investment in and restructuring of the communications business unit and Leominster operations, as outlined in the Final Results announcement, is now complete and has positioned the business for future growth. Despite an improvement in revenues relative to the comparative period, the lead time to win and deliver some of the complex antenna programmes has taken longer than expected, as previously announced, resulting in a performance below management's expectations. The prospect pipeline remains encouraging, positioning the communications business unit for a stronger 2018/19. Post the period end, an important order for mesh radios was secured from a Government customer, establishing Steatite's position as a key provider of mesh communications systems.

The planned investment in sales and marketing to drive long term organic growth and margin enhancement across the Group and the full year impact of the Creasefield acquisition resulted in continuing adjusted overheads increasing to GBP4.8m (H1 2016: GBP4.2m). This reflects additional overhead investment in the first half of GBP0.6m (primarily field sales resource where we have increased the headcount by 3 in manufacturing and 4 in distribution; an overall increase of circa 50%) and GBP0.2m in relation to the full period impact of the Creasefield overhead. The benefits of these sales initiatives are starting to be realised as evidenced by the organic growth rates achieved in the distribution division and the growth in manufacturing sales, even after having to replace the significant reduction in rail printer revenues which did not feature in the reported period.

Good progress is being made in implementing the Group's margin enhancement strategy through additional added value services and operational efficiencies; this is particularly aimed at addressing certain low margin battery business inherited from the Creasefield acquisition. The benefits of this activity should start to be seen in the last quarter of this financial year and into the next financial year.

Adjusted profit before tax for the first half of GBP1.6m (H1 2016: GBP2.0m) is reported before a share based payments charge of GBP0.1m (H1 2016: nil), amortisation of acquisition intangibles GBP0.1m (H1 2016: GBP0.1m) and acquisition and re-organisation costs GBP0.1m (H1 2016: nil).

Adjusted profit after tax was GBP1.4m (2016: GBP1.7m) and reported profit after tax was GBP1.1m (2016: GBP1.6m).

Adjusted diluted earnings per share from continuing operations was 16.1p (2016: 20.1p).

In the comparative period there was a GBP0.3m loss from discontinued operations in respect of the closure of the Steatite Electronic Monitoring Systems (SEMS) business unit which was closed in the prior year.

Total comprehensive income for the period was GBP1.1m (2016: GBP1.4m).

Group order intake in the period increased by 31% to GBP23.9m (2016: GBP18.2m) and as at 31 October 2017 the open order book amounted to GBP20.1m (31 October 2016: GBP14.6m), the majority of which is expected to be delivered in the next 12 months.

Cash flow from operations

Cash flows from operating activities of GBP1.2m outflow is down from GBP6.1m inflow in 2016 primarily due to a cash outflow of GBP3.0m (H1 2016: inflow GBP4.1m) from working capital, with underlying cash profit from operations before working capital being broadly stable at circa GBP1.8m (H1 2016: GBP2.0m).

The working capital outflow is primarily driven by inventory which has risen in the period (in common with this point in prior years), however the increase in the first half of the current year is more significant as a result of a number of significant strategic investments which include risk mitigation for potential component shortages:

-- Within our distribution division we have taken circa GBP0.4m of a new product line into inventory (with full return rights to the component manufacturer) to support a multiyear space customer in an obsolescence management programme. In addition, we have invested circa GBP0.5m in inventory for a customer specific product to secure supply and pricing for committed orders.

-- Within our manufacturing division we have invested circa GBP0.9m in to WIP in relation to on-going projects which are currently scheduled to ship in the second half.

In addition to the above, we have made strategic investments to secure supply and pricing as lead times are increasing in a number of areas such as battery cells, memory and component assemblies (modules) in the distribution division.

Dividends

The Directors are declaring an interim dividend of 4.0p per share (H1 2016: 4.0p) which is covered 3.3 times by earnings (H1 2016: 4.8).

The interim dividend will be paid on 16 February 2018 to shareholders on the register at the close of business on 25 January 2018. The shares will go ex-dividend on 26 January 2018.

Business Overview

The Group is focussed on the supply and support of specialist electronics equipment which include high tolerance battery packs and energy storage solutions, specialist electronic components, advanced antennas, secure communications systems and industrial/rugged 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 resilience to extreme and volatile temperatures, humidity or pressures is vital. Drivers in our markets include efficiency improvement, cost saving, environmental monitoring and, above all, safety.

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 Board remains active in pursuing acquisition opportunities; however we have refined our focus where we are now concentrating on finding larger acquisition targets which will be earnings enhancing and deliver additional shareholder value. The Board has, and will continue to, apply its rigorous due diligence processes in implementing its acquisition strategy; in the period we pulled out of certain negotiations due to strategic fit, market risk and vendor price expectations.

Divisional Review

Manufacturing Division

Trading under the Steatite brand, our manufacturing division is a leading UK supplier of specialist electronic equipment. Key to its strategy is the ability to design, manufacture and test to customer requirements, and against the most stringent of standards and qualifications, products for use in some of the most difficult and harsh environments.

Our Group and manufacturing division's strength and resilience over an extended period has come in large part from its market diversity. In the current period sales have been split approximately 25% from oil and gas markets, 25% from defence and security, 25% from a broad industrial customer base and the balance from other sectors including transport, aerospace, and utilities. As well as market sector diversity, we benefit from a wide mix of products and services which further enhances the Group's resilience.

The business addresses these markets with discrete business units in the following sectors; Computing, Power and Communications.

In our computing business unit we offer simple motherboard and memory products for commercial applications at one end of the scale to complex military-certified and classified integrated bespoke computer solutions at the other end.

The power proposition ranges from the sale of a simple battery cell through complex industrial battery packs to integrated energy storage solutions for use in defence applications.

Communications encompass the resale of third party radio products and advanced antenna solutions for the likes of the Met Office that are conceived, designed, manufactured and tested in an in house dedicated facility.

As such we experience and manage varying product margins to reflect the technical complexity, the level of value added service and build times applied.

What frequently ties the business solutions together across all markets and product offerings is the need to address "size weight and power (SWaP)", likewise the need for a safety first approach and domain experience combined with the agility of a British supplier. These are key decision factors for Steatite customers.

The manufacturing division has delivered a 7% increase in reported revenues at GBP12.9m (H1 2016: GBP12.1m) reflecting that the substantially reduced rail printer revenues (which in the prior year were in excess of GBP2.5m) have been replaced with additional revenues within the power and computing business units.

Margins within the manufacturing division have been maintained at individual business unit product level, however, compared to the prior year there has been a shift in customer and product mix which has resulted in a reduction in the overall gross margin.

We have continued to implement the planned investments in personnel to deliver the growth and margin initiatives to drive improved performance in future years.

Power

The power business is responding to strong levels of enquiries in varied applications. We are seeing firm and demonstrable evidence that the oil and gas sector is showing sustained recovery, beyond just a restocking "spike" evidenced by a new battery pack project for use in a brand new well development in Africa. The harsh environment robotics project referenced in the FY16/17 full year results continues to progress well through the engineering phases, with the aim to complete the product development in first half of 2018 and then move to review production opportunities.

In evaluating the attractions of, and following the acquisition of the Creasefield business, we identified a number of areas for improvement in both value added and operational efficiency; in implementing these initiatives we have invested in additional production resources to facilitate the growth in the power business unit. We have made good progress in both these areas however expect the benefits to be more fully reflected in the 2018/2019 financial year and beyond.

Computing

The computing business unit had a strong performance in the first half with bookings and billings being ahead of plan and product margins being maintained. This trend, which reflects a 9% improvement in billings on 2016, is the result of the investment in sales initiatives and demonstrates the growth strategy in action.

Traditional customers remain loyal to the business, valuing technical knowhow, speed of delivery and naturally a quality solution above a "low bidder" alone choice.

We are actively targeting a number of new opportunities and programmes in the rail sector which we hope will be an exciting new market for our computing business unit.

Communications

The investment and restructuring of the communications business unit and Leominster operations has positioned the business for future growth, however, as previously reported the performance has fallen short of management expectations as the lead time to win and deliver some of the complex antenna programmes has been longer than expected.

None of the significant opportunities have been lost therefore management believes the business unit is well positioned for a stronger 2018/19. Post the period end saw the award of a second contract from a Government customer for advanced Radio products. We are now achieving a tipping point that will see increased opportunity as the end customer standardises on the Steatite supplied solution. The business is now looking to add additional value to our advanced Radio product offering through the design and provision of an in-house antenna solution.

The business is well known in the industry for the one-off solutions and technically complex sophisticated systems. These are world class offerings commanding strong margins. We are now looking to augment these complex short run solutions with less complex offerings that complement our radio solutions to achieve a more balanced profile delivering increased level of revenue and improved margins.

Distribution Division

The distribution division distributes specialist components to the UK OEM community; selling semiconductors, related components and modules for embedded processing, IoT, control and communications switches, power management units and LED lighting.

The first half of FY 2017 has seen the investments made to increase organic growth come to fruition. The distribution division has delivered close to a 20% increase in reported revenues at GBP9.5m (H1 2016: GBP7.9m) reflecting strong organic growth across its product range. Order intake in the first half of 2017 is up by 39% over the same period in the previous year whilst billings have increased by close to 20% over the same period.

The annualised ratio of order intake to sales out (book:bill) is now at 1.2:1.0 against an industry figure of 1.04:1.0 (Source ECSN Sept 2017) and the total open order book is at record levels. This presents a sound base for the second half.

The market remains margin sensitive, however the Group reviews this on a regular basis and takes steps where practical to maintain or improve margin.

The business continues to improve its offering in the growth markets of wireless, cellular and Internet of Things (IoT) whilst maintaining a strong offering in the highly specialist areas of Military and Aerospace. Investments in engineering support in these areas have led to significantly increased business levels in, for example, the Global Systems for Mobile communications (GSM) arena.

Investments that have been made in the sourcing and obsolescence services operation are expected to start to bear fruit in the second half of the year and investment continues in this area to provide secure storage areas within the existing warehouse.

Efficiency improvements are now well underway with a wireless warehouse project to speed productivity expected to complete before the year end. Investment continues in personnel and the working environment with continuous training and infrastructure improvements including the conversion of all lighting to LED luminaires.

The division expects to hit its second half organic growth targets, meet its revenue targets and exceed its order input targets, positioning the business well for the 2018/19 financial year.

Outlook

The Group has a broad base of clients, products and markets which give a high degree of confidence in the stability and resilience of the Group.

The success of the growth strategy in action is amply demonstrated by the 9% organic growth in the computer business unit and near 20% growth in the distribution division in the period. The Board expects the strategy to deliver across other business units in a similar fashion.

The open order book at 31 October 2017 was GBP20.1m which is 38% up on the prior year of GBP14.6m. Order intake in October was at a record level, with the largest individual order representing 10% of the month's total and demonstrating a good spread of customers. The Directors are pleased with the new business pipeline and level of new contract awards across the Group.

This gives the Board confidence that despite the reduction in the margin as a result of the mix of product sales, the markets that the Company services are resilient and that the Group can deliver a strong second half performance and continue to deliver growth for the Company and its shareholders.

Finally, on behalf of the Board, I would like to acknowledge the significant contribution of our staff to Solid State's continued progress.

Tony Frere

Non-Executive Chairman

INTERIM CONSOLIDATED INCOME STATEMENT

for the six months ended 30 September 2017

 
                                           Unaudited   Unaudited 
                                                 Six         Six     Audited 
                                              months      months        Year 
                                                  to          to          to 
                                             30 Sept     30 Sept      31 Mar 
                                                  17          16          17 
                                             GBP'000     GBP'000     GBP'000 
                                          ----------  ----------  ---------- 
 Continuing Operations 
 Revenue                                      22,455      20,086      40,021 
 Cost of sales                              (16,076)    (13,826)    (27,994) 
                                          ----------  ----------  ---------- 
 
 Gross profit                                  6,379       6,260      12,027 
 Sales, general and administration 
  expenses                                   (5,106)     (4,287)     (9,291) 
 
 
 Profit from operations                        1,273       1,973       2,736 
 Finance costs                                   (7)        (41)        (42) 
 
 
 Profit before taxation                        1,266       1,932       2,694 
 Tax expense                                   (161)       (302)       (405) 
 
 
 Adjusted profit after tax                     1,370       1,703       2,693 
 Adjustments to profit                         (265)        (73)       (404) 
----------------------------------------  ----------  ----------  ---------- 
 
 Profit after taxation                         1,105       1,630       2,289 
 
 
 Loss from discontinued operations                 -       (233)       (438) 
 
 PROFIT ATTRIBUTABLE TO EQUITY 
  HOLDERS 
  OF THE PARENT                                1,105       1,397       1,851 
 
 Other comprehensive income                        -           -           - 
 
 
 TOTAL COMPREHENSIVE INCOME FOR 
  THE PERIOD                                   1,105       1,397       1,851 
 
 
 
 Earnings per share (see below) 
 Basic EPS from continuing operations          13.1p       19.4p       27.2p 
 Basic EPS from discontinued operations            -      (2.8p)      (5.2p) 
 Basic EPS from profit for the 
  year                                         13.1p       16.6p       22.0p 
 
 Diluted EPS from continuing operations        13.0p       19.2p       27.1p 
 Diluted EPS from discontinued 
  operations                                       -      (2.7p)      (5.2p) 
 Diluted EPS from profit for the 
  year                                         13.0p       16.5p       21.9p 
                                          ----------  ----------  ---------- 
 

INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 30 September 2017

(unaudited)

 
                               Share      Share       Capital                   Shares 
                             Capital    premium    Redemption     Retained        held 
                                        reserve       Reserve     Earnings          in     Total 
                                                                              Treasury 
                             GBP'000    GBP'000       GBP'000      GBP'000     GBP'000   GBP'000 
                           ---------  ---------  ------------  -----------  ----------  -------- 
 
 Balance at 31 March 
  2016                           421      3,629             5       11,991       (281)    15,765 
 
 Total comprehensive 
  income for the period            -          -             -        1,397           -     1,397 
 
 Issue of new shares               4          -             -            -           -         4 
 
 Dividends                         -          -             -        (677)           -     (677) 
 
 Share based payment               -          -             -            -           -         - 
  expense 
 
 
 
 Balance at 30 September 
  2016                           425      3,629             5       12,711       (281)    16,489 
 
 Total comprehensive 
  income for the period            -          -             -          454           -       454 
 
 Issue of new shares               -          -             -            -           -         - 
 
 Dividends                         -                                 (339)           -     (339) 
 
 Share based payment               -          -             -            -           -         - 
  expense 
 
 Transfer of shares 
  into All Employee 
  Ownership Plan                   -          -             -            -          38        38 
 
 
 Balance at 31 March 
  2017                           425      3,629             5       12,826       (243)    16,642 
 
 Total comprehensive 
  income for the period            -          -             -        1,105           -     1,105 
 
 Issue of new shares               -          -             -            -           -         - 
 
 Dividends                         -          -             -        (677)           -     (677) 
 
 Share based payment 
  expense                          -          -             -           75           -        75 
 
 
 Balance at 30 September 
  2017                           425      3,629             5       13,329       (243)    17,145 
 
 

CONSOLIDATED BALANCE SHEET

as at 30 September 2017

 
                                      Unaudited   Unaudited   Audited 
                                          as at       as at     as at 
                                        30 Sept     30 Sept    31 Mar 
                                             17          16        17 
                                        GBP'000     GBP'000   GBP'000 
                                     ----------  ----------  -------- 
 ASSETS 
 NON-CURRENT ASSETS 
 Property, plant and equipment            2,386       1,501     2,406 
 Intangible assets                        6,190       6,021     6,224 
                                     ----------  ----------  -------- 
 
 TOTAL NON-CURRENT ASSETS                 8,576       7,522     8,630 
 
 
 CURRENT ASSETS 
 Inventories                              8,013       6,421     5,577 
 Trade and other receivables              9,247       9,083     8,085 
 Corporation tax recoverable                  -           -         - 
 Cash and cash equivalents                    -         232       909 
                                     ----------  ----------  -------- 
 
 TOTAL CURRENT ASSETS                    17,260      15,736    14,571 
 
 
 TOTAL ASSETS                            25,836      23,258    23,201 
 
 
 LIABILITIES 
 CURRENT LIABILITIES 
 Bank overdraft                         (1,336)       (435)         - 
 Trade and other payables               (6,544)     (5,500)   (5,908) 
 Corporation tax liabilities                  -       (173)     (324) 
                                     ----------  ----------  -------- 
 
 TOTAL CURRENT LIABILITIES              (7,880)     (6,108)   (6,232) 
 
 
 NON-CURRENT LIABILITIES 
 Trade and other payables                     -         (8)         - 
 Corporation tax liabilities              (470)       (254)         - 
 Deferred tax liability                   (341)       (399)     (327) 
                                     ----------  ----------  -------- 
 
 TOTAL NON-CURRENT LIABILITIES            (811)       (661)     (327) 
 
 
 TOTAL LIABILITIES                      (8,691)     (6,769)   (6,559) 
 
 
 TOTAL NET ASSETS                        17,145      16,489    16,642 
 
 
 CAPITAL AND RESERVES ATTRIBUTABLE 
 TO EQUITY HOLDERS OF THE PARENT 
 Share capital                              425         425       425 
 Share premium reserve                    3,629       3,629     3,629 
 Capital redemption reserve                   5           5         5 
 Retained earnings                       13,329      12,711    12,826 
 Shares held in treasury                  (243)       (281)     (243) 
                                     ----------  ----------  -------- 
 
 TOTAL EQUITY                            17,145      16,489    16,642 
 
 
 

CONSOLIDATED CASH FLOW STATEMENT

for the six months ended 30 September 2017

 
                                                                Unaudited   Unaudited   Audited 
                                                                    as at       as at     as at 
                                                                  30 Sept     30 Sept    31 Mar 
                                                                       17          16        17 
                                                                  GBP'000     GBP'000   GBP'000 
                                                               ----------  ----------  -------- 
 
 OPERATING ACTIVIES 
 Net profit from ordinary activities 
  before taxation                                                   1,266       1,641     2,155 
 
 Adjustments for: Depreciation                                        238         205       447 
                             Amortisation                             192         119       387 
                             Profit on disposal of property, 
                              plant and equipment                     (2)         (9)      (17) 
                             Loss on disposal of intangible 
                              fixed assets                              -           -        28 
                             Share based payment expense               75           -         - 
                             Finance costs                              7          41        42 
                             Other                                      -           -        38 
 
 Operating profit before changes 
  to working capital and provisions                                 1,776       1,997     3,080 
 
 (Increase)/decrease in inventories                               (2,436)       (185)       626 
 (Increase)/Decrease in trade and 
  other receivables                                               (1,161)       5,209     6,179 
 Increase/(Decrease) in trade and 
  other payables                                                      635       (915)     (548) 
 
 
 Cash (absorbed by)/ generated from 
  operations                                                      (1,186)       6,106     9,337 
 Income taxes paid                                                      -           -     (185) 
 Income taxes recovered                                                 -           -         - 
 
 
 Cash flows from operating activities                             (1,186)       6,106     9,152 
 
 INVESTING ACTIVITIES 
 Purchase of property, plant and 
  equipment                                                         (247)       (232)   (1,477) 
 Purchase of intangible assets                                      (158)        (11)     (426) 
 Proceeds from sale of property, 
  plant and equipment                                                  30         107       183 
 Consideration paid on acquisition 
  of subsidiaries                                                       -     (1,941)   (1,941) 
 Cash with subsidiaries over which 
  control has been obtained                                             -       (114)     (114) 
 
 
                                                                    (375)     (2,191)   (3,775) 
 
 FINANCING ACTIVITIES 
 Issue of ordinary shares                                               -           4         4 
 Interest paid                                                        (7)        (41)      (42) 
 Dividends paid to equity shareholders                              (677)       (677)   (1,026) 
 
 
                                                                    (684)       (714)   (1,064) 
 
 
 (DECREASE)/INCREASE IN CASH AND 
  CASH EQUIVALENTS                                                (2,245)       3,201     4,313 
 Cash and cash equivalents brought 
  forward                                                             909     (3,404)   (3,404) 
 
 
 CASH AND CASH EQUIVALENTS CARRIED 
  FORWARD                                                         (1,336)       (203)       909 
 
 Represented by: 
 Cash at bank and in hand                                               -         232       909 
 Bank overdrafts                                                  (1,336)       (435)         - 
 
 
                                                                  (1,336)       (203)       909 
 
 

NOTES TO THE INTERIM REPORT

for the six months ended 30 September 2017

   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 2017, 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 2017 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 2017, 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 2018.

Going concern

The Directors, after making enquiries, and considering the available resources, the financial forecast together with available cash and committed borrowing facilities, have formed a judgement that there is a reasonable expectation that the Company and the Group have adequate resources to continue operating for the foreseeable future and therefore the going concern basis has been adopted in preparing these financial statements.

In reaching this conclusion, the Board has considered the magnitude of potential impacts resulting from uncertain future events or changes in conditions, the likelihood of their occurrence and the likely effectiveness of mitigating actions that the Directors would consider undertaking.

   2.     Accounting policies 

The accounting policies are unchanged from the financial statements for the year ended 31 March 2017.

Recent accounting developments

During the current reporting period there were no new standards or amendments which had a material impact on the net assets of the Group. In addition, standards or amendments issued but not yet effective are not expected to have a material impact on the net assets of the Group. However, the Group is closely monitoring the IASB projects on Contract Revenue recognition and the Lease accounting overhaul as they could potentially have a material impact on the Group's results.

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 2017.

Additional disclosure of the basis of measurement and policies in respect of financial instruments are described on pages 56 to 62 of our 2017 Annual Report and remain unchanged at 30 September 2017.

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 2017.

Impairment

No Impairment charges have been recognised in the period to 30 September 2017.

   3.     Principal risks and uncertainties 

The principal risks and uncertainties impacting the Group are described on pages 8 to 11 of our 31 March 2017 Annual Report and remain unchanged at 30 September 2017.

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 
                        Six         Six     Audited 
                     months      months        Year 
                         to          to          to 
                    30 Sept     30 Sept      31 Mar 
                         17          16          17 
                    GBP'000     GBP'000     GBP'000 
                 ----------  ----------  ---------- 
 Revenue 
 Manufacturing       12,930      12,119      23,542 
 Distribution         9,525       7,967      16,479 
                 ----------  ----------  ---------- 
 
 Group revenue       22,455      20,086      40,021 
 
 
 
   5.    Adjusted profit measures 
 
                                                Unaudited   Unaudited 
                                                      Six         Six     Audited 
                                                   months      months        Year 
                                                       to          to          to 
                                                  30 Sept     30 Sept      31 Mar 
                                                       17          16          17 
                                                  GBP'000     GBP'000     GBP'000 
                                               ----------  ----------  ---------- 
 Continuing operations 
 
 Acquisition and re-organisation 
  costs in cost of sales                                -           -         175 
 Acquisition and re-organisation 
  costs in sales, general and administration          100           -          61 
---------------------------------------------  ----------  ----------  ---------- 
 Total acquisition and re-organisation 
  costs                                               100           -         236 
 Amortisation of acquisition intangibles              110          91         203 
 Share based payments                                  75           -           - 
 Taxation effect                                     (20)        (18)        (35) 
                                               ----------  ----------  ---------- 
 
 Total adjustments to profit                          265          73         404 
 
 
 Reported gross profit from continuing 
  operations                                        6,379       6,260      12,027 
 Adjusted gross profit from continuing 
  operations                                        6,379       6,260      12,202 
 
 Reported gross margin percentage 
  from continuing operations                        28.4%       31.2%       30.1% 
 Adjusted gross margin percentage 
  from continuing operations                        28.4%       31.2%       30.5% 
 
 Reported operated profit from 
  continuing operations                             1,273       1,973       2,736 
 Adjusted operated profit from 
  continuing operations                             1,558       2,064       3,175 
 
 Reported operating margin percentage 
  from continuing operations                         5.7%        9.8%        6.8% 
 Adjusted operating margin percentage 
  from continuing operations                         6.9%       10.3%        7.9% 
 
 Reported profit before tax from 
  continuing operations                             1,266       1,932       2,694 
 Adjusted profit before tax from 
  continuing operations                             1,551       2,023       3,133 
 
 Reported profit after tax from 
  continuing operations                             1,105       1,630       2,289 
 Adjusted profit after tax from 
  continuing operations                             1,370       1,703       2,693 
 
 
   6.     The earnings per share 

The earnings per share is based on the following:

 
                                           Unaudited   Unaudited 
                                                 Six         Six     Audited 
                                              months      months        Year 
                                                  to          to          to 
                                             30 Sept     30 Sept      31 Mar 
                                                  17          16          17 
                                             GBP'000     GBP'000     GBP'000 
                                          ----------  ----------  ---------- 
 
 Adjusted continuing earnings 
  post tax                                     1,370       1,703       2,693 
 Reported continuing earnings 
  post tax                                     1,105       1,630       2,289 
 Discontinued earnings post 
  tax                                              -       (233)       (438) 
 Adjusted total earnings post 
  tax                                          1,370       1,488       2,255 
 Reported total earnings post 
  tax                                          1,105       1,397       1,851 
 
 
 Weighted average number of 
  shares                                   8,464,582   8,391,742   8,426,418 
 Diluted weighted average number 
  of shares                                8,528,217   8,475,740   8,474,578 
 
 Reported EPS 
 Basic EPS from continuing operations          13.1p       19.4p       27.2p 
 Basic EPS from discontinued 
  operations                                       -      (2.8p)      (5.2p) 
 Basic EPS from profit for the 
  year                                         13.1p       16.6p       22.0p 
 
 Diluted EPS from continuing 
  operations                                   13.0p       19.2p       27.1p 
 Diluted EPS from discontinued 
  operations                                       -      (2.7p)      (5.2p) 
 Diluted EPS from profit for 
  the year                                     13.0p       16.5p       21.9p 
 
 
 Adjusted EPS 
 Adjusted basic EPS from continuing 
  operations                                   16.2p       20.3p        32.0 
 Adjusted basic EPS from discontinued 
  operations                                       -      (2.8p)      (5.2p) 
 Adjusted basic EPS from profit 
  for the year                                 16.2p       17.5p       26.8p 
 
 Adjusted diluted EPS from continuing 
  operations                                   16.1p       20.1p       31.8p 
 Adjusted diluted EPS from discontinued 
  operations                                       -      (2.7p)      (5.2p) 
 Adjusted diluted EPS from profit 
  for the year                                 16.1p       17.4p       26.6p 
 
 
   7.     Dividends 

Dividends paid during the period from 1 April 2016 to 30 September 2017 were as follows:

23 September 2016 Final dividend year ended 31 March 2016 8.00p per share

20 January 2017 Interim dividend year ended 31 March 2017 4.00p per share

22 September 2017 Final dividend year ended 31 March 2017 8.00p per share

The directors are intending to pay an interim dividend for the year ended 31 March 2018 on 16 February 2018 of 4.00p per share. This dividend has not been accrued at 30 September 2017.

   8.     Share capital 
 
                                   Unaudited   Unaudited 
                                         Six         Six     Audited 
                                      months      months        Year 
                                          to          to          to 
                                     30 Sept     30 Sept      31 Mar 
                                          17          16          17 
                                         No.         No.         No. 
                                  ----------  ----------  ---------- 
 Allotted issued and fully paid 
 Number of ordinary 5p shares      8,496,512   8,496,512   8,496,512 
 
 
 
                                   Unaudited   Unaudited 
                                         Six         Six     Audited 
                                      months      months        Year 
                                          to          to          to 
                                     30 Sept     30 Sept      31 Mar 
                                          17          16          17 
                                     GBP'000     GBP'000     GBP'000 
                                  ----------  ----------  ---------- 
 Allotted issued and fully paid 
 Ordinary 5p shares                      425         425         425 
                                  ----------  ----------  ---------- 
 
   9.     Related party transactions 

Consistent with the year ended 31 March 2017 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 note 5 in the annual report to the 31 March 2017 and will be updated in the full year report to the 31 March 2018. There are no other related party transactions.

The statement will be available to download on the Company's website: www.solidstateplc.com

This information is provided by RNS

The company news service from the London Stock Exchange

END

IR URABRBOAAUAA

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