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| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 55.00 | 3.89% | 1,470.00 | 1,450.00 | 1,490.00 | 1,485.00 | 1,415.00 | 1,415.00 | 18,324 | 16:15:35 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Electronic Parts,eq-whsl,nec | 126.5M | 6.69M | 0.5899 | 24.92 | 166.79M |
From May 2019 to May 2024
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:
Hot Features
Premium
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
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