TIDMSOLI
RNS Number : 4425R
Solid State PLC
30 June 2020
Solid State plc
("Solid State", the "Group" or the "Company")
Final Results for 12 months to 31 March 2020
Solid State plc (AIM: SOLI), the AIM listed manufacturer of
computing, power and communications products, and value added
distributor of electronic components , announces its Final Results
for the 12 months to 31 March 2020.
Highlights include:
Financial overview:
Set out below are financial key performance indicators which
reflect the record year and a very pleasing result:
KPI 2020 2019 Change
========= ==========
Reported Revenue GBP67.4m GBP56.3m +19.7%
========= ========== =======
Proforma Revenue** GBP67.4m GBP64.7m +4.2%
========= ========== =======
Reported operating profit margin 6.1% 5.2% +90bps
========= ========== =======
Adjusted operating profit margin* 7.2% 6.5% +70bps
========= ========== =======
Reported profit before taxation GBP4.0m GBP2.8m +42.9%
========= ========== =======
Adjusted profit before taxation* GBP4.7m GBP3.5m +34.3%
========= ========== =======
Adjusted diluted EPS 46.3p 35.9p +29.0%
========= ========== =======
Underlying cash flow GBP8.0m GBP4.0m +103%
========= ========== =======
Net cash/(net debt) GBP3.2m (GBP2.0m) +260%
========= ========== =======
Dividend 12.5p 12.5p -
========= ========== =======
Open order book @ 31 May 2020 GBP37.9m GBP35.9m +5.6%
========= ========== =======
* Adjusted performance metrics are reconciled in note 7.
**Proforma revenue restates the prior year on a like for like
basis to include the GBP9.4m pre-acquisition Pacer revenue for
2018/19 and excludes GBP1.0m non-recurring electronics revenue as
reported in prior year.
The Group has delivered:
-- 4% organic sales growth in proforma Group revenue, driven by
8.8% organic growth in Manufacturing and 1% growth in VAD against
an electronic component distribution market that experienced a 7%
decline
-- Record profitability reflected in adjusted operating margins
increasing 70bps to 7.2%, based on margin improvement in both
divisions and the operational gearing
-- Record operating cash generation of GBP8.0m with reported
cash conversion of 197% (2019: 168%)
-- Adjusted fully diluted EPS up 29% to 46.3p (2019: 35.9p)
-- 5.6% organic growth in the open orderbook at the 31 May 2020
-- Dividend maintained - testament to the resilience of the Group's business model
Notable achievements in 2019/20 to advance our strategy included
:
-- Investment in technology across the Group including our
battery pack designs, own brand computing products and enhanced
production capabilities in the Weymouth value added facility
-- Investment in business development resource to target new
customers and markets for our technical solutions
-- Integration of Pacer's Opto-electronics business into VAD to
enable the division to leverage the benefits of scale and reach
-- Investment in ERP systems across the Group
Commenting on the results and prospects, Gary Marsh, Chief
Executive of Solid State, said:
"I am very pleased to be presenting a set of results that
demonstrates a resilient performance, enhanced by the Group's
structural characteristics. Our diversity in technology, markets
and territory has offered some protection against the global
headwinds in the period and enabled Solid State to deliver record
results.
" The Board is confident that the achievements of the last year
and the growth in the open order book demonstrate that Solid State
is making good progress towards achieving its goals and that the
prospects for the Group remain very positive in spite of the
disruption that COVID-19 is causing."
Investor Results Presentation:
Gary Marsh, Chief Executive, and Peter James, Finance Director,
will hold a presentation to cover the results and prospects at
4.30pm on 30 June 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://investormeetcompany.com/solid-state-plc/register-investor?arc=d9e8ece0-bac5-4100-ab1b-fdf0f9178636
. For those investors who have already registered and added to meet
the Company, they 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 01527 830 630
Gary Marsh - Chief Executive investor.information@solidstateplc.com
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://youtu.be/bp4WfLCEc5Y
Operating through two main divisions: Manufacturing (Steatite)
and Value Added Distribution (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.
CHAIRMAN'S STATEMENT
Overview of the year
The financial year ended 31 March 2020 has seen the Group
deliver a record performance in terms of revenue and profit, having
made significant progress against its strategic objectives. The
Group's strategy is to deliver growth both organically and through
acquisition. These results illustrate our continued commitment to
delivering on this strategy.
During our first full year of ownership of Pacer Technologies,
acquired in November 2018, the Value Added Distribution (VAD)
division has successfully completed the integration of Pacer's
Opto-electronics business, which will enable the division to
harness effectively the benefits of enlarged scale and customer
reach.
The Group has continued to invest in its R&D activities in
the Computing, Power and Opto-electronics business units to support
sustainable margin improvement. There has been significant progress
in developing own brand computing products that will enable the
business development team to target Artificial Intelligence (AI)
architecture opportunities. Our investment in enhanced battery pack
designs provide power for autonomous craft in addition to providing
solutions which fulfil the growing demand to replace fossil fuel
motors with an electric power train.
The Group has invested in business development resource to
target new customers and markets across both divisions. This will
enable the Group to maintain a diversified customer base and
maintain the resilience that we have established while allowing us
to exploit bigger opportunities with our Tier 1 customers.
Senior management and corporate governance
During 2020 Solid State made significant progress in refreshing
the Board to take the business through the next phase of its
development.
I would like to acknowledge the contribution of both Mr A B
Frere and Mr J M Lavery who both retired from the Board during the
financial year.
Mr J M Lavery served as both an Executive and Non-Executive
Director over his 36 years' service with Steatite, the last 17
years with the Group after Steatite was acquired by Solid State in
2002.
Mr A B Frere served as Chairman for the last six years and
nearly 10 years as a Board member. Under his chairmanship, Solid
State PLC achieved a great deal, making seven acquisitions,
considerably broadening its product offering, and building a
trusted brand whilst developing the business and the governance
structures to put the business in a strong position looking
forward.
Mr N F Rogers joined the Board on the 1 July 2019 bringing a
wealth of business experience. He has made a significant
contribution during his first year and will be a valuable member of
the team as we take the Group forward.
The recruitment process for the new Non-Executive Director and
the appointment of a full time Chairman is not yet concluded and is
now being hindered by COVID-19 distancing protocols. As a result, I
have assumed the role of Interim Chairman until such time as a
permanent appointment can been made.
Acquisitions
Our stated strategy to further the Group's development through a
combination of organic and acquisitive growth is unchanged. Whilst
progress on our near-term acquisitions is currently paused, the
Group remains acquisitive and is at the early stage of evaluating
several opportunities.
Pipeline development continues both on UK bolt-on targets and
larger businesses that will expand our international sales. The
Board will look to be opportunistic should an acquisition target
arise as we exit the COVID-19 pandemic and we plan to resume these
activities as soon as possible.
Having now repaid the final instalment of our term loan for the
acquisition of Pacer Technologies, Solid State is now debt free.
With cash at bank of GBP4.5m as at 31 May 2020 and a recently
renewed and unutilised Revolving Credit Facility of GBP7.5m we are
well placed to support our acquisition strategy when activities
resume.
Dividend
The resilience of the Group's business model and the strong cash
position gives the Board confidence in recommending a final
dividend despite the current challenging environment. Solid State
plc has paid a dividend every year since joining AIM in 1996. The
Group's stated dividend cover range is between 2.5 and 3.0 times.
However, given the current exceptional circumstances the Board
considered it prudent when recommending a final dividend to
temporarily increase cover this year to 3.75 times. Next year,
depending on the market backdrop, we will aim to return to our
targeted dividend cover range. The Board is proposing to maintain
last year's dividend meaning a final dividend of 7.25p (2019:
8.3p), giving a full year dividend of 12.5p (2019: 12.5p).
Subject to approval of the final dividend by shareholders at the
AGM on 9 September 2020, the final dividend will be paid on 23
September 2020 to shareholders on the register at the close of
business on the 4 September 2020. The shares will be marked
ex-dividend on 3 September 2020.
Opportunities and prospects for 2020/2021
Whilst the forthcoming period will no doubt be dominated by the
effects of COVID-19, the Group is well placed to weather the
current crisis and emerge in a stronger position than many of its
competitors. Although the Group is seeing and expecting some
slowdown in order intake during this financial year, its diverse
sector exposure and strong open order book will provide some
resilience.
The Group's business model now serves a wide customer base of
over 1500 clients, operating across multiple sectors, offering a
broad product range with decentralised production across the UK.
This diversification provides the Group with a resilience when
markets are challenging. The Group's most recent acquisition of
Pacer Technologies further diversified the Group and greatly
improved its access and offering to the medical sector, which has
been relatively strong during the COVID-19 pandemic.
We expect sectors such as oil & gas and commercial aviation
will continue to be impacted in addition to the softness in demand
for computing products for certain niche applications. That said,
the Board believes demand for image capture, processing, and
transmission post COVID-19 will see significant growth in the
medium term, driven by increased adoption of industrial AI and the
roll out of 5G. The Group is equally seeing other sectors, notably
medical and food retail, delivering strong sustained demand
providing some mitigation to the adversely impacted market
sectors.
While risks outside COVID-19 remain, the Group continues to
benefit from opportunities in its core markets as noted above. The
Group has traditional strength in serving the security and defence
sector, furthermore it is well placed to benefit from any shift by
Prime Contractors away from a globalised supply chain to buying
more of their vital electronics and services closer to home.
The Group continues to drive cross selling initiatives. The VAD
division is seeking opportunities requiring higher levels of
technical integration, that can be fulfilled though collaboration
with the Manufacturing division. Two notable programmes are
expected to start in 2020 leveraging the full capabilities of the
Group, bringing new and previously unattainable opportunities to
the business.
The focus for future growth remains on high reliability, harsh
environment applications where we can add value. New applications
in robotics solutions and fossil fuel replacement are being
targeted in varied market sectors including land based, sea and
subsea. The Group is taking care to select markets for its products
and solutions that have not been commoditised.
We have found new ways to engage with clients including virtual
"hands-on" design and specification meetings and more of our
marketing budget will be re-deployed to continue these
innovations.
Entering the year with the strong open order book has meant
trading in the first quarter has been broadly in-line with prior
year and ahead of management expectations. While we have been able
to maintain a good open order book the Q1 order intake is down just
under 15% compared to prior year, as a result of COVID-19.
The outlook remains difficult to predict, however the Board is
confident that given its niches in sectors currently in demand and
those likely to be in receipt of government stimulus packages, for
example in transportation and medical, it is well placed to
navigate these exceptional trading conditions.
P Haining
Interim Chairman
CHIEF EXECUTIVE'S STRATEGIC REPORT
Introduction to Solid State PLC
Comprised of two divisions but with a shared mission, strategy
and consistent business values, Solid State thrives on a trusted
advisor relationship with its customers. Solid State provides
technology solutions, primarily designed for demanding
applications, safely, reliably, and swiftly freeing customers to
focus on their core business with confidence.
Solid State's mission and strategy to deliver growth
The Group's mission is "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."
The stated strategy is to supplement organic growth with
selective acquisitions within the electronics industry which will
complement our existing Group companies and over time deliver
improved operating margins through the delivery of operational
efficiencies, scale and distribution.
The strategy to deliver this has three key elements:
1) Investment in people, technical knowledge, and resources to
ensure Solid State remains at the forefront of electronics
technology. To constantly seek opportunity to add value meeting our
customers' unmet needs and establishing long term relationships as
a trusted advisor and subject matter experts;
2) Targeting strategic acquisitions which are aligned with Solid
State's core capabilities and provide access to new markets or
deepen the Group's knowledge and ability, whilst enhancing the
value it can add for its customers; and,
3) Continue to develop strategic partnerships with customers and
suppliers within the electronics industry, building its portfolio
of value added services.
The Group is focused on the supply and support of specialist
electronics equipment through its Value Added Distribution ('VAD')
and Manufacturing divisions. The VAD division is a market leader in
delivering innovative, valuable, technical solutions for customers
seeking specialist, electronic and opto-electronic components and
displays.
The Manufacturing division is a market leader in the design,
development and supply of high specification rugged computers,
custom battery packs providing portable power and energy storage
solutions and advanced communication systems, encompassing wideband
antennas and high performance video transmission products.
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 its markets include
safety, technical performance, efficiency improvements, cost
savings, and environmental monitoring.
Value Added Distribution ('VAD') division
The Group's VAD division has two business units; electronics and
opto-electronics. The division focuses on serving the needs of the
original equipment manufacturing (OEM) and the contract electronics
manufacturing (CEM) communities in the UK, principally from its
operations in Redditch, Pangbourne and a USA sales office. The
division continues to invest in its value added services facility
in Weymouth which includes a Class 7 clean room giving the Group an
industry leading capability.
The division represents a select number of suppliers who
manufacture semiconductors, related electronic and opto-electronic
components, modules and displays. The division has an in depth
understanding of these products and as such can offer outstanding
levels of commercial and technical support to its customers.
The products offered are from globally recognised manufacturers
and include those for 5G and the Internet of Things (IoT), embedded
processing, control, wireless and wired communications, power
management, optical emitters and sensors, displays and LED
lighting. The division has expertise in high-reliability components
for military and aerospace applications. The division's quality
management system is accredited to the international aerospace
standard AS9100 and AS9120.
The VAD division understands the need to provide the highest
level of service to its customers and has a clear focus on
supporting the electronic and opto-electronic design community.
Wherever possible the VAD division offers services for customers
who require their programmes pre-loaded onto hardware or their
products prepared to go direct to the production line. All of these
services are carried out in a bespoke electrostatic discharge (ESD)
safe facility in line with the AS9100 certification. This is an
offering many competitors are unable to provide.
Manufacturing division - Computing, Power and Communications
business units
The division is a market leader in the design, development and
supply of portable power and energy storage solutions, rugged and
industrial computers, advanced communication systems, including
high-performance video transmission products and wideband antennas.
The facilities and personnel are cleared by the UK Government as
necessary to allow secure work. It is the technical knowhow,
product quality and team responsiveness that sets this business
apart from its competitors.
The division has three business units, each operating from a
centre of excellence. The Crewkerne facility is the Group's centre
of excellence for the design and manufacture of Power products; the
Redditch facility focuses primarily on the delivery of Computing
products; and the facility in Leominster primarily houses the
Communications business unit, which includes antenna design,
production, and test facilities.
The Group's environmental test chamber and vibration testing
capabilities, in addition to the near-field antenna test chamber
are located in Leominster, which supports in-house development and
is also made available to third parties looking to utilise the
state of the art chamber on a chargeable basis. These facilities
provide class leading test and measurement capabilities which are
utilised across the Group.
Computing business unit
The Computing business unit designs, manufactures and tests
rugged and industrial computing solutions, serving a wide range of
markets including industrial, military, transportation,
surveillance and broadcasting.
Success has been achieved through specialisation in industrial
computer design and integration, custom chassis builds, production,
test and certification and customisation of Microsoft Windows IoT
and related software products with emphasis on driving the level of
value added content. Partnerships with industry leaders including
Nvidia and Intel position the business unit to address the growing
opportunity in Artificial Intelligence (AI).
The business unit has strong and long standing commercial
relationships directly with key suppliers in Asia and the USA. The
capabilities extend from the provision of single board computer
modules to turnkey integrated systems with significant engineering
based value added content in the design, production, testing and
commissioning.
Power business unit
The business unit has over 30 years' experience supplying
batteries and mobile power solutions into some of the world's most
demanding environments. Its battery packs are used in a range of
sectors including medical, oil and gas, military and security,
aerospace, environmental and oceanographic, and industrial.
The products provide portable power and energy storage
solutions. This includes battery pack assembly, power control,
electronic and mechanical design, and testing. The Group is
agnostic of cell chemistries, enabling the business unit to be the
subject matter expert for its customers, selecting the most
appropriate chemistry and battery management system for the
customers' requirements.
Working from initial design through qualification and United
Nations (UN) testing, production, support and disposal at end of
life, the business unit is well positioned to respond to an
increasing demand for mobile and static power solutions where there
is a specific requirement for high reliability, harsh environment
and, above all else, safe systems.
The operation has the latest ISO 9001-2015 standard that is
complemented by the ISO18001 health and safety accreditation and
approval to build equipment intended for use in potentially
explosive atmospheres under the ATEX directive. These are all key
considerations for our business to business customers.
Communications business unit
This business unit provides custom solutions that include
bespoke antenna design and manufacture, advanced high bandwidth
radios including related peripheral technology and domain knowledge
from the in-house product support team that has direct end user
experience.
The radios provide situational awareness solutions and are in
service primarily with Special Forces users for ground based and,
increasingly, unmanned platforms both aerial and maritime. The team
seeks opportunities to enhance the base line radio product with
customised packaging for harsh environments, switching and routing
hardware and software add-ons as well as leveraging in house
antenna capabilities.
With over 40 years of experience, the business unit is at the
forefront of antenna design and manufacture. It provides advanced
ultra-wide band systems addressing international customer demand.
Its antennas are utilised in a range of applications including
electronic warfare, meteorological sensors and test and measurement
applications.
The Group's purpose built 18,000 sq. ft facility in Leominster,
Herefordshire, includes environmental and vibration testing
capabilities and a world class near-field test chamber that sets
the business apart from competitors and allows the business unit to
remain as a pre-eminent provider of ultra-wideband/high power
antenna solutions.
Group trading overview
The Solid State Group has delivered organic growth in revenues
and record growth in profitability in spite of the very challenging
market conditions in 2019/20 which saw a significant destocking in
Q1 post the original Brexit date, a cyclical downturn in VAD and,
at the end of the year, significant challenges as a result of
COVID-19. The strategic progress combined with the focus on value
added solutions, has resulted in the Group delivering organic
revenue growth and record profits significantly surpassing last
year's result.
The completion of the integration of the Pacer business has
strengthened the VAD division offering. The enhanced scale,
capabilities, market reach and penetration places the Group in a
position to target growth opportunities which would not have been
previously attainable.
The Manufacturing division's technical centres of excellence
have enabled it to service its core sectors of computing, power and
communications more effectively in 2019/20. It continues to focus
efforts where its expertise and product offerings will add real
value to customers. This has resulted in high single digit organic
revenue growth which has also enabled the division to continue to
improve operating returns year on year.
The Group continues to recognise the value of, and to invest in,
its staff with various ongoing professional development
initiatives. The Group continues to attract exceptionally high
calibre staff giving it a significant competitive advantage in the
market place and making it a more attractive partner to do business
with. Furthermore, the Group put in place staff welfare programmes
to provide both physical health and mental health benefits and
resources which are available to all employees.
As highlighted in the principal risk and uncertainties in the
annual report, business risks have been considered and, where
practical, mitigated. However, the macroeconomic and geopolitical
risks and headwinds including; COVID-19, Brexit uncertainty, fall
in global oil prices, US/China trading relations and the associated
impact on foreign exchange, means it is very difficult to predict
and therefore mitigate fully. Whilst the Group sells predominately
to the UK, its customers do sell into the global markets and some
have reported challenges on new project awards which makes it very
difficult to forecast demand.
As a result of the macro environment the Group has seen long
lead times and component shortages arising with limited warning for
certain critical components, in particular, battery cells, PCBs,
some embedded processing modules, semiconductors and computer
processors. The Group is also seeing and managing fluctuations in
freight costs and availability. The strength of the balance sheet
together with smart purchasing actions have enabled the business to
successfully mitigate lead times, shortages and transportation
impediments. However, this continues to be a challenge requiring
active management and necessitates significant buffer stocks being
held.
Diversity is a key strength, providing the Group with
resilience. The diversity in technology, markets and territory has
offered some protection against the global headwinds in the period
and enabled Solid State to deliver record results. This has carried
forward to the current year and strengthened the Group's ability to
weather the COVID-19 storm better than some in the industry.
Further details updating on the impact of COVID-19 on the business
are set out in the outlook section of this report.
Divisional business review
Value Added Distribution ('VAD') division
2019-20 proved to be a challenging year for the UK electronics
distribution and semiconductor industry with the market declining
circa 7% over the financial year (source ECSN). Despite this, the
VAD division significantly outperformed the market with
like-for-like proforma revenues slightly ahead of the prior year at
GBP39.2m (2019: GBP38.8m).
The key metrics of margin and stock turn continue to be well
controlled, with stock turns of more than five times. Divisional
margins have benefitted from the first full year contribution of
the Pacer business which has delivered particularly pleasing
results in the USA where the gross margin has been increased 6%, in
part because of the enhanced valued added offering. Underlying
margins (USA aside) have been maintained at prior year levels
despite the downward market pressure.
VAD ended the year delivering double digit organic growth in the
open order book at GBP24.2m (2019: GBP21.9m), however COVID-19 has
presented unprecedented challenges during Q4 and entering the new
financial year.
The integration of the Pacer Opto-electronics business into the
division was completed ahead of schedule. The operating margin
improvement and growth strategy was defined in this process and is
now being executed to good effect. Pleasingly the Opto-electronic
business unit operating margins improved more than 3% over the
prior year driven by a combination of operational efficiencies and
increased value added sales.
In addition, the integration has allowed the acceleration of the
Group cross selling initiatives. This has enabled the VAD division
to seek opportunities requiring higher levels of technical
integration that can be fulfilled though the Manufacturing
division. Two major programmes are expected to start in 2020
leveraging the full capabilities of the Group, bringing new and
previously unattainable opportunities to the business.
The introduction of new software to monitor and manage VAD's
pipeline of projects and design wins has facilitated an increasing
level of activity across both business units and has allowed for
tighter control and better targeting of human resource to
accelerate these programmes.
During the year the division continued to invest in its
marketing activity promoting the broader product offering of the
enlarged VAD division, supporting the need for an enlarged
design-in pipeline to feed the future sales growth. Post year end,
COVID-19 has required a re-focus on the ways in which the division
promotes, markets, and sells its products. There has been a greater
focus on on-line technical support, on-line events and webinars and
investment in search engine optimisation. It is expected that many
of these innovative and significant changes which have delivered
tangible benefits to both our customers and suppliers will remain
in place post COVID-19.
The diverse nature of the business continues to provide a level
of resilience against business disruption in any given sector as we
have seen at the end of the financial year with COVID-19. The
increased scale of the division has meant that it is now benefiting
from its involvement in the UK's medical manufacturing industry,
which historically would not have been the case.
The VAD business continues to invest in staff and capital
equipment at its Weymouth value added facility and indeed across
the Group. New ERP software is being tested to bring greater
efficiencies to the wider business. The investment in production
capability and capacity at Weymouth has been made to facilitate new
opportunities from both existing and new customers.
The VAD division's strategy remains largely unchanged in terms
of its growth ambitions and the means to achieve this growth. The
division continues to execute on its strategy, although some of the
tactical elements whilst still in place have necessarily slowed
during this COVID-19 pandemic.
Manufacturing division and business unit summaries
The focus for the Manufacturing division in 2019/20 has been to
win premium work, adding value when opportunity has allowed; to
drive improved operating performance, and put in place a foundation
for future sustainable profitable growth.
Pleasingly, in the year to 31 March 2020 it has been able to
deliver organic revenue growth of 8.8%, primarily driven from the
Power business unit. This has translated into record profit with
underlying divisional operating margins increasing to 15% (2019:
11%). This improvement reflects a strong sales mix in the year
combined with the benefits of operational gearing. The division
also benefitted from the sale of some legacy inventory which was
written down, the additional margin has been treated as exceptional
and is excluded from the underlying operating margins.
During the year, the division invested in enhancing the business
development and sales resource. It also re-focused its commercial
effort on key structural growth markets including medical,
autonomy, 5G, AI, and security where its expertise, technology and
solutions should enable it to deliver value and realise growth.
In the latter part of the year and as the Group entered the new
financial year, the COVID-19 measures have meant the deferral of a
planned capital investment in an EMC chamber and RF testing suite.
This has not caused any significant disruption as third party test
houses have continued to be utilised. Post the COVID-19 disruption
this investment is expected to be made which will further enhance
the in-house capabilities and provide flexibility and a competitive
advantage allowing the division to differentiate its value offering
to customers.
Pleasingly, the open order book at 31 March 2020 has increased
12% to GBP15.7m (2019: 14.0m), however approximately GBP2.75m
(2019: GBP0.1m) is billable in more than one year due to the
development cycles, which when combined with lower order intake in
Q1 2020/21 as a result of COVID-19, means the division expects near
term revenue and profit growth to be challenging. That said, the
Manufacturing division has had a good start to the year in spite of
these challenges.
Computing business unit
The Computing business unit remains well diversified across
market sectors and technologies. It has seen a continued increase
in the demand for Artificial Internet of Things (AIoT) solutions
that are image/video centric, which plays to its strengths. The
business unit is particularly well positioned to address the
growing trend for "Edge Computing" and related harsh environment
applications with a range of fanless high powered, long life
computing solutions.
A concerted effort to exploit the Manufacturing division's
engineering skills and security accreditations resulted in an
important development and production contract from a UK Government
organisation for a secure hardware solution for an IT environment,
which was designed, manufactured and delivered in the period.
The technology will counter a growing cyber threat that is
targeting key workers who are located out of their secure
environments. As a result, the business has put in place a product
road map to develop a standard compact solution during the coming
year, which is being designed for both sensitive Government
departments and broader commercial applications where there is a
need to operate securely from remote locations.
Demand for image capture, processing, and transmission is
growing significantly, driven by AI becoming a powerful solution
and the adoption of 5G. In continuing to enhance its offering in
this area a product strategy has been put in place to exploit the
existing strengths and knowledge in, graphic & video
processing. The business unit expertise in designing applied
solutions for long term, reliable operation in real world harsh
environments provides a competitive advantage and an opportunity to
command enhanced margins.
Power business unit
During 2019/20 the Power business unit has successfully
transitioned a number of designs for new markets including medical
and retail warehousing applications, which were in the development
phase in 2019, into production volumes in 2020. This delivered
strong organic revenue growth, with operating margins benefitting
from the operational gearing.
Good progress has been made in designing higher value added
solutions while diversifying the markets and customer base. The
business secured a development and production contract from the
same retail technology company for a next generation battery
solution to utilise state of the art cell chemistry and advanced
battery management technology. This development will extend into
2020/21 with production deliveries at the end of that period and
beyond.
The short term demand from some of the traditionally strong
markets of oil and gas and aerospace have seen significant
reductions as a result of the combination of macro-economic
factors, low oil prices and COVID-19. This validated the importance
of the strategy to diversify the market sectors which has been
implemented post the acquisition of Creasefield in 2016. While this
has not eliminated the impact, it has certainly reduced the adverse
impact of the down turn in these sectors, as we have been able to
benefit from stronger demand in other sectors such as retail
technology and medical. Against the backdrop of this challenging
market, billings growth in 2021 is expected to be difficult.
The focus for future growth remains on high reliability, harsh
environment applications where we can add value. New applications
in robotics solutions and fossil fuel replacement are being
targeted in varied market sectors including land based, sea and
subsea. The business unit is taking care to select markets for
portable power and energy storage solutions that have not been
commoditised.
Communications business unit
The Communications business unit encompasses antenna products
and advanced radio products and is split into the Antennas team and
the Radio team. The business unit's technology is world class with
two thirds of sales from the Leominster facility being exported
worldwide.
The teams have worked diligently to resolve and purge the final
legacy contracts and sell related inventories which were fully
provided, while maintaining our reputation and customer
relationships.
The Antennas strategic plan, which has been implemented, is to
focus on the design and development of smaller and lower risk
antenna solutions that can be combined into larger arrays to
provide overall performance. This strategy has begun to show
results and whilst sales were relatively flat year on year, the
improved quality of the orders and reduction of risk resulted in
strong margin contribution.
The Radio products are heavily project based, the securing of
two high value orders from the UK Government enabled the team to
meet bookings, billings and margin expectations for the year and
helped them to carry a solid open order book into the current
year.
The Radio team has targeted adding value to the offering through
selling engineering and training services as an adjunct to the
hardware equipment sales, further enhancing the value proposition.
In addition, we have started to have some success in securing
additional technology partners to complement the world class meshed
radio system. A partnership with a software provider who delivers
support on the routing and switching of data over the radio
networks has been established. This has increased the order values
and value add the team can provide as part of the solution.
The strategic priority has been to focus the Radio team on
domestic markets in preference to overseas defence programmes which
reduces the inherent risk and uncertainty on timing, currency, and
difficult commercial constraints. This notwithstanding, a network
of overseas partners is being established, simplifying the business
model, and providing customers with in-territory support to fulfil
these overseas requirements. This initiative is proving
successful.
This commercial focus has developed a better quality order book
that is more deliverable, building a platform for the year beyond.
We have seen stronger bookings in Q4 and into Q1 which provides an
order book that sets this business unit up well for FY
2020/2021.
Financial Review
In order to provide a fuller understanding of the Group's
ongoing underlying performance, a number of adjusted profit
measures as supplementary information are included, on a consistent
basis with that reported by the financial analysts that review our
business. As detailed in note 7, the adjusted measures eliminate
the impact of certain non-cash charges and non-recurring items.
Revenues
Group revenues from continuing operations of GBP67.4m were up
20% on the prior year (2019: GBP56.3m) as a result of a combination
of organic growth and the full year benefit of Pacer. Proforma
like-for-like revenues were up GBP2.7m or 4.2% from 2019 proforma
at GBP64.5m, which is adjusted for the full year benefit of Pacer
and excluding GBP1m of non-recurring VAD revenue reported in the
prior year.
As reported above, the UK electronics distribution and
semiconductor industry faced a declining market of circa 7% over
the financial year period (source ECSN). Despite this the VAD
division significantly outperformed the market and as a whole
performed well delivering 1% organic growth with like-for-like
proforma revenues slightly ahead of the prior year at GBP39.2m
(2019: GBP38.8m).
The Manufacturing division reported revenue of GBP28.2m (2019:
GBP25.9m) which reflects 8.8% organic growth while continuing to
improve margins. The current year's strong performance reflects the
successful scaling of output and delivery of production volumes of
the prior year development projects, which when combined with the
benefit of the operational gearing and strong sales mix has
delivered a record profit before tax.
Gross profit
Underlying gross profit for the year is up GBP4.2m to GBP20.6m
(2019: GBP16.4m), reflecting margins increasing to 30.6% (2019:
29.1%) driven by margin improvement in both divisions. Reported
margins of GBP20.8m include the benefit of the sale of some legacy
fully written down manufacturing inventories which has been
stripped out as exceptional.
VAD margins have improved by 1.3% to 24.8% (2019: 23.5%) largely
due to the full year benefit of the value added work within the
Opto-electronics business unit acquired in the prior year. When
combined with the significant improvement in the underlying
Manufacturing margins to 38.7% (2019: 35.6%), Group underlying
margins improved 1.5% in spite of the potentially dilutive impact
of the increased VAD in the mix of business.
VAD contributed gross margin of GBP9.7m (2019: GBP7.2m), up 36%
over the prior year, largely due to the full year impact of the
acquisition of Pacer, circa GBP1.9m, with the remaining GBP0.6m
delivered organically. The Manufacturing division contributed
GBP10.9m (2019: GBP9.2m) of underlying gross margin which is up 18%
organically on the prior year. The underlying gross margin
percentage has increased to 38.7% (2019: 35.6%) primarily
benefitting from the operational gearing and a favourable mix of
sales with higher sales of high value added product being
achieved.
Sales and general administration expenses
Sales and general administration (SG&A) expenses of GBP16.7m
(2019: GBP13.5m) increased by GBP3.2m. The increase is primarily
due to the full year impact of the Pacer operating costs of circa
GBP2.2m acquired in the prior year, additional investment in
employee related costs of circa GBP1.0m, overhead inflation of
circa GBP0.2m, increased depreciation & amortisation (D&A)
and share based payment charges of GBP0.7m and GBP0.1m
respectively. These increases have been partly offset by
integration efficiencies and cost savings of circa GBP1.0m.
Adjusted SG&A expenses from continuing operations increased by
GBP3.1m to GBP15.8m (2019: GBP12.7m).
The VAD division's expenses reflect the full year impact of the
acquisition of the Pacer overheads which has resulted in the
division's adjusted SG&A expenses increasing from GBP5.5m to
GBP7.5m. The Manufacturing division's adjusted SG&A expenses
have increased to GBP6.6m from GBP6.3m reflecting primarily
investment in staff costs and inflation. Adjusted head office
SG&A expenses have increased to GBP1.7m (2019: GBP0.9m)
primarily owing to an increase in corporate overheads and staff
costs.
Within SG&A expenses the reported depreciation and
amortisation (D&A) from continuing operations in the year was
GBP2.1m (2019: GBP1.4m) which is up GBP0.7m primarily due to the
adoption of IFRS16 (which resulted in GBP0.5m of rent being
reclassified as depreciation), the full year impact on D&A
arising from the Pacer acquisition, increased amortisation of
capitalised R&D. Adjusted D&A from continuing operations
(excludes the amortisation of acquisition intangibles) has
increased to GBP1.6m (2019: GBP1.2m).
Operating profit
Adjusted operating margins increased to 7.2% (2019: 6.5%) with
adjusted operating profit from continuing operations up 33% to
GBP4.9m (2019: GBP3.7m) reflecting the growth in revenue and the
improved margins. Reported operating profit was up 42% to GBP4.1m
(2019: GBP2.9m). The adjustments to operating profit are set out in
further detail in note 7.
We have recognised GBP0.02m (2019: nil) within operating profit
in respect of Research and Development Expenditure Credit (RDEC) in
addition to the tax credits recognised within the tax line, where
we are eligible for the SME R&D tax scheme. These development
programmes are a cornerstone of the Group's future high value add
revenue streams.
Profit before tax
Adjusted profit before tax was up 34% to GBP4.7m (2019:
GBP3.5m). Reported profit before tax was up 42% to GBP4.0m (2019:
GBP2.8m). This is reported after a share based payments charge of
GBP0.4m (2019: GBP0.3m), amortisation of acquisition intangibles of
GBP0.5m (2019: GBP0.3m) and exceptional items of GBP0.2m credit
(2019: GBP0.1m cost).
Profit after tax
The Group benefit from the R&D tax credit scheme which
reduces the effective tax rate for the year to 15% (2019: 12%) from
the standard rate of 19%. As the profitability grows the benefit of
R&D tax credits diminishes. Adjusted profit after tax was up
29% to GBP4.0m (2019: GBP3.1m). Reported profit after tax was up
28% to GBP3.4m (2019: GBP2.7m).
EPS
Adjusted fully diluted earnings per share from continuing
operations for the year ended 31 March 2020 is up 29% at 46.3p
(2019: 35.9p). Reported fully diluted earnings per share from
continuing operations is up 29% at 39.5p (2019: 30.7p).
Cash flow from operations
Cash inflow from continuing operations for the year of GBP8.0m
is up from GBP4.9m in 2019 primarily due to improved cash profits
combined with a GBP1.4m working capital inflow. Underlying cash
flow from operations was up GBP4.0m at GBP8.0m (2019: GBP4.0m)
after excluding the net cash benefit from advanced customer
payments. This delivers an underlying operating cash conversion
percentage of 165% (2019: 109%) and a reported operating cash
conversion percentage of 197% (2019: 168%).
There was a working capital cash inflow in the period of GBP1.4m
due to increased payables of GBP1.8m offset in part by increased
receivables GBP0.4m. Inventories have remained at a higher level
due to increased lead times on battery cells and various electronic
components and the positioning of inventory to mitigate the
potential supply chain disruption arising due to the COVID-19
pandemic.
Investing activities
During the year, the Group invested GBP0.6m (2019: GBP0.6m) in
property plant and equipment, and GBP0.3m (2019: GBP0.3m) in
software and research and development intangibles.
The capital expenditure reflects significant investment in IT
hardware across the Group of GBP0.2m and continued investment in
the new Opto-electronics business unit facilities in Pangbourne and
Weymouth amounting to circa GBP0.1m. This aside, the investment has
been maintained at the historical run rate level for capital
expenditure.
Financing activities
The Group has entered or extended leases during the year which
has resulted in the recognition of GBP0.3m of additional right of
use assets with a corresponding right of use liability, in
accordance with IFRS16. Cash payments were made in the period in
respect of lease liabilities of GBP0.5m.
The financing activities reflect the accelerated repayment of
the GBP6.0m of acquisition facilities put in place to fund the
acquisition of Pacer. The Group repaid all bar the last GBP0.3m
which was repaid post year end in May 2020. Solid State continues
to have a strong relationship with Lloyds Bank and, having repaid
the term loan early, Lloyds has extended the quantum and term of
revolving credit facility to GBP7.5m (2019: GBP3.5m) which is now
committed until the 30 November 2021. The facility is currently
undrawn.
Pleasingly, as a result of the strong cash generation the Group
has reported a year end net cash position of GBP3.2m (2019: net
debt GBP2.0m) which in conjunction with the unutilised bank
facilities provides significant funding headroom for 2021 and
beyond.
Statement of financial position
During the year, the Group has continued to see its balance
sheet position strengthen. The Group's net assets have increased to
GBP22.5m (2019: GBP19.9m) reflecting the retained profits in the
year. Furthermore, the Group has returned to a net cash position
with GBP3.2m at the year end (2019: GBP2.0m net debt). The adoption
of IFRS 16 has resulted in the recognition of GBP1.1m of right of
use lease assets and an offsetting right of use lease liability.
The impact on net assets is immaterial at both transition and as at
31 March 2020.
Dividend
The Board is proposing to maintain last year's dividend meaning
a final dividend of 7.25p (2019: 8.3p), giving a full year dividend
of 12.5p (2019: 12.5p). Subject to approval of the final dividend
by shareholders at the AGM on 9 September 2020, the final dividend
will be paid on 23 September 2020 to shareholders on the register
at the close of business on the 4 September 2020. The shares will
be marked ex-dividend on 3 September 2020.
COVID-19 update and Outlook
Post the year end, the direct impact on sales of COVID-19 has
been modest with a very low number of customers closing and a
minimal impact on the open order book. The business reacted early
to the pandemic with all staff who could work from home being
equipped to, and management having tested their capability to work
from home well before the government imposed lock down. The
business has not lost a single day's trading as a result of the
pandemic.
Several staff volunteered to cross train to ensure warehouse
operations and production operations can continue without
significant disruption. The Group operates across four independent
manufacturing sites in the UK. These sites have remained open and
operating effectively with minimal disruption while adhering to
best practice guidelines on social distancing and hygiene
protocols. Measures have been put in place to ensure that the risk
of cross-contamination within the business is minimised.
As the lock down eases, where possible staff are continuing to
work from home, however the Group has implemented the plans for a
gradual phased return to the offices. The key objective is to
maintain a safe working environment with a view to minimising the
risk to staff.
Commercially COVID-19 is affecting the business in contrasting
ways: The Group has been notified by numerous customers in both its
Manufacturing and VAD divisions that the Group has been designated
a critical supplier under the government's critical industries and
key workers guidance. Sectors highlighting this dependency include
medical, food retail, security, transportation, and defence.
Conversely, the Group is experiencing softness in the demand for
batteries for the commercial aerospace market and in computing
products for certain niche applications in the industrial sector.
Separately, owing to the fall in oil prices, we are currently
experiencing lower levels of orders for battery packs from the oil
and gas industry.
The Group continues to hold relatively high levels of stock to
limit exposure to supply chain volatility. At present, the Group
holds approximately 2.5 months' stock.
The Board is taking prudent steps to mitigate and manage its
cashflow and cost base to withstand this near-term uncertainty.
These included a recruitment freeze; a salary increase freeze for
all Directors and staff; adoption of available deferrals for VAT
and PAYE payments to HMRC; and furloughing of some staff under the
Coronavirus Job Retention Scheme.
Furthermore, the Board has suspended the Group's acquisition
strategy temporarily during this period of uncertainty, and
delaying new planned capital expenditure, for example in new EMC
test equipment for manufacturing. However, ongoing projects around
ERP system upgrades and the acquisition of an advanced welder to
support new battery developments have gone ahead.
While the Group's acquisition strategy has been paused, the
Group remains acquisitive and is at the early stage of
investigating several opportunities. It will look to be
opportunistic should an acquisition target arise as we exit the
COVID-19 pandemic.
The continued margin improvement and organic growth achieved by
the Manufacturing division, in conjunction with a technology
development across all of the key sectors of computing, power and
communications puts the Group in a strong position, albeit the
macroeconomic headwinds in 2020/21 continue to be a challenge. The
Manufacturing division is in a strong competitive position to
deliver profitable growth in the mid-term once we get past the
COVID-19 disruption.
Following the acquisition and integration of the Pacer Group of
companies, the enlarged VAD division has the scale, reach and
capabilities to attract further significant franchises such as
Microchip which we signed during the year. We have invested
significantly in our value added services facility in Weymouth,
which differentiates our VAD portfolio to provide us with exciting
opportunities for the future.
Whilst the order intake in Q1 has been just under 15% lower than
the prior year we have a number of significant opportunities which
we are currently bidding on which could provide upside to the
fortunes for the full year, albeit Q2 and the early part of Q3 are
expected to be challenging.
Over the next two years of Solid State's five year plan, the
Group will remain focused on securing quality orders as it strives
to achieve the goal set to double the size of the business through
a combination of organic growth and strategic acquisitions. The
Board is confident that the achievements of the last year and the
growth in the open order book demonstrate that Solid State is
making good progress towards achieving its goals and that the
prospects for the Group remain very positive in spite of the
disruption that COVID-19 is causing.
G S Marsh
Chief Executive Officer
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 March 2020
2020 2019
Continuing Operations Notes GBP'000 GBP'000
Revenue 6 67,417 56,299
======== ========= =========
Cost of sales (46,614) (39,927)
======== ========= =========
_______ _______
======== ========= =========
Gross profit 20,803 16,372
======== ========= =========
Sales, general and administration
expenses (16,681) (13,452)
======== ========= =========
_______ _______
======== ========= =========
Profit from operations 4,122 2,920
======== ========= =========
Finance expense (120) (109)
======== ========= =========
_______ _______
======== ========= =========
Profit before taxation 4,002 2,811
======== ========= =========
Tax expense 3 (588) (153)
======== ========= =========
_______ _______
--------------------------------------- -------- --------- ---------
Adjusted profit after taxation 4,002 3,108
======================================= ======== ========= =========
Adjustments to profit 7 (588) (450)
--------------------------------------- -------- --------- ---------
Profit after taxation 3,414 2,658
======== ========= =========
_______ _______
======== ========= =========
Profit attributable to equity holders
of the parent 3,414 2,658
======== ========= =========
_______ _______
======== ========= =========
Other comprehensive income - -
======== ========= =========
_______ _______
======== ========= =========
Total comprehensive income for the
year 3,414 2,658
======== ========= =========
_______ _______
======== ========= =========
Earnings per share 2020 2019
Basic EPS from profit for the year 4 40.1p 31.3p
====== ======
Diluted EPS from profit for the
year 4 39.5p 30.7p
====== ======
Adjusted EPS measures are reported in note 4 to the
accounts.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2020
Share Foreign Capital Shares
Share Premium Exchange Redemption Retained held Total
Capital Reserve Reserve Reserve Earnings in Treasury Equity
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
year ended 31 March
2020 - - - - 3,414 - 3,414
========== ========= ========== ============ =========== ============= ==========
Shares issued 1 (1) - - - - -
========== ========= ========== ============ =========== ============= ==========
Foreign exchange - - (2) - - - (2)
========== ========= ========== ============ =========== ============= ==========
Rounding (1) - - - 1 - -
========== ========= ========== ============ =========== ============= ==========
Transfer of treasury
shares to AESP - - - - (129) 129 -
========== ========= ========== ============ =========== ============= ==========
Dividends - - - - (1,153) - (1,153)
========== ========= ========== ============ =========== ============= ==========
Share based payment
credit - - - - 381 - 381
========== ========= ========== ============ =========== ============= ==========
______ _______ _______ _______ _______ ______ ______
========== ========= ========== ============ =========== ============= ==========
Balance at 31 March
2020 427 3,626 (7) 5 18,521 (43) 22,529
========== ========= ========== ============ =========== ============= ==========
______ _______ _______ _______ _______ ______ ______
========== ========= ========== ============ =========== ============= ==========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 March 2020
Share Foreign Capital Shares
Share Premium Exchange Redemption Retained held Total
Capital Reserve Reserve Reserve Earnings in Treasury Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 March
2018 425 3,629 - 5 14,204 (243) 18,020
========== ========= ========== ============ =========== ============= ==========
Total comprehensive
income for the
year ended 31 March
2019 - - - - 2,658 - 2,658
========== ========= ========== ============ =========== ============= ==========
Shares issued 2 (2) - - - -
========== ========= ========== ============ =========== ============= ==========
Foreign exchange - - (5) - - - (5)
========== ========= ========== ============ =========== ============= ==========
Purchase of treasury
shares - - - - - (34) (34)
========== ========= ========== ============ =========== ============= ==========
Transfer of treasury
shares to AESP - - - - (105) 105 -
========== ========= ========== ============ =========== ============= ==========
Dividends - - - (1,036) - (1,036)
========== ========= ========== ============ =========== ============= ==========
Share based payment
credit - - - 300 - 300
========== ========= ========== ============ =========== ============= ==========
______ _______ _______ _______ _______ ______ ______
========== ========= ========== ============ =========== ============= ==========
Balance at 31 March
2019 427 3,627 (5) 5 16,021 (172) 19,903
========== ========= ========== ============ =========== ============= ==========
______ _______ _______ _______ _______ ______ ______
========== ========= ========== ============ =========== ============= ==========
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 March 2020
2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
============= ============= ============ =============
ASSETS
============= ============= ============ =============
NON-CURRENT ASSETS
============= ============= ============ =============
Property, plant and equipment 2,286 2,425
============= ============= ============ =============
Right of use lease asset 1,055 -
============= ============= ============ =============
Intangible assets 8,213 8,892
============= ============= ============ =============
__________ __________
============= ============= ============ =============
TOTAL NON-CURRENT ASSETS 11,554 11,317
============= ============= ============ =============
CURRENT ASSETS
============= ============= ============ =============
Inventories 9,662 9,648
============= ============= ============ =============
Trade and other receivables 13,859 13,389
============= ============= ============ =============
Deferred tax asset 86 105
============= ============= ============ =============
Cash and cash equivalents 3,517 3,692
============= ============= ============ =============
____________ ___________
============= ============= ============ =============
TOTAL CURRENT ASSETS 27,124 26,834
============= ============= ============ =============
___________ ___________
============= ============= ============ =============
TOTAL ASSETS 38,678 38,151
============= ============= ============ =============
___________ ___________
============= ============= ============ =============
LIABILITIES
============= ============= ============ =============
CURRENT LIABILITIES
============= ============= ============ =============
Trade and other payables 10,597 8,725
============= ============= ============ =============
Contract liabilities 2,486 2,511
============= ============= ============ =============
Current borrowings 333 1,333
============= ============= ============ =============
Corporation tax liabilities 774 519
============= ============= ============ =============
Right of use lease liabilities 471 -
============= ============= ============ =============
___________ ___________
============= ============= ============ =============
TOTAL CURRENT LIABILITIES 14,661 13,088
============= ============= ============ =============
NON CURRENT LIABILITIES
============= ============= ============ =============
Non current borrowings - 4,334
============= ============= ============ =============
Right of use lease liabilities 677 -
============= ============= ============ =============
Provisions 304 250
============= ============= ============ =============
Deferred tax liability 507 576
============= ============= ============ =============
___________ ___________
============= ============= ============ =============
TOTAL NON-CURRENT LIABILITIES 1,488 5,160
============= ============= ============ =============
____________ ____________
============= ============= ============ =============
TOTAL LIABILITIES 16,149 18,248
============= ============= ============ =============
____________ ____________
============= ============= ============ =============
NET ASSETS 22,529 19,903
============= ============= ============ =============
____________ ___________
============= ============= ============ =============
CAPITAL AND RESERVES ATTRIBUTABLE
TO EQUITY
============= ============= ============ =============
HOLDERS OF THE PARENT
============= ============= ============ =============
Share capital 427 427
============= ============= ============ =============
Share premium reserve 3,626 3,627
============= ============= ============ =============
Capital redemption reserve 5 5
============= ============= ============ =============
Foreign exchange reserve (7) (5)
============= ============= ============ =============
Retained earnings 18,521 16,021
============= ============= ============ =============
Shares held in treasury (43) (172)
============= ============= ============ =============
____________ ___________
============= ============= ============ =============
TOTAL EQUITY 22,529 19,903
============= ============= ============ =============
____________ ___________
=================================== ============= ============= ============ =============
The financial statements were approved by the Board of Directors
and authorised for issue on 30 June 2020 and were signed on its
behalf by:
G S Marsh, Director P O James, Director
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2020
2020 2019
GBP'000 GBP'000 GBP'000 GBP'000
======== ======== ======== ========
OPERATING ACTIVITIES
======== ======== ======== ========
Profit before taxation 4,002 2,811
======== ======== ======== ========
Adjustments for:
======== ======== ======== ========
Depreciation 1,114 698
======== ======== ======== ========
Amortisation 960 732
======== ======== ======== ========
Impairment of right of use lease
asset 84
======== ======== ======== ========
(Profit)/Loss on disposal of property,
plant and equipment (31) 6
======== ======== ======== ========
Share based payment expense 381 300
======== ======== ======== ========
Finance costs 120 109
======== ======== ======== ========
_______ _______
======== ======== ======== ========
Profit from operations before changes
in working capital and provisions 6,630 4,656
======== ======== ======== ========
Decrease/(Increase) in inventories 1 (1,198)
======== ======== ======== ========
Increase in trade and other receivables (444) (1,071)
======== ======== ======== ========
Increase in trade and other payables 1,801 2,540
======== ======== ======== ========
Increase/(decrease) in provisions 54 (10)
======== ======== ======== ========
_______ _______
======== ======== ======== ========
1,412 261
=========================================== ======== ======== ======== ========
_______ _______
======== ======== ======== ========
Cash generated from operations 8,042 4,917
======== ======== ======== ========
Income taxes paid (385) (243)
======== ======== ======== ========
Income taxes recovered - -
======== ======== ======== ========
_______ _______
======== ======== ======== ========
(385) (243)
=========================================== ======== ======== ======== ========
_______ _______
======== ======== ======== ========
Net cash flow from operating activities 7,657 4,674
======== ======== ======== ========
INVESTING ACTIVITIES
======== ======== ======== ========
Purchase of property, plant and equipment (579) (600)
======== ======== ======== ========
Capitalised own costs and purchase
of intangible assets (281) (300)
======== ======== ======== ========
Proceeds of sales from property,
plant and equipment 103 113
======== ======== ======== ========
Consideration paid on acquisition
of subsidiaries - (3,812)
======== ======== ======== ========
_______ _______
======== ======== ======== ========
Net cash flow from investing activities (757) (4,599)
======== ======== ======== ========
FINANCING ACTIVITIES
======== ======== ======== ========
Issue of ordinary shares - (34)
======== ======== ======== ========
Borrowings drawn - 6,000
======== ======== ======== ========
Borrowings repaid (5,334) (1,776)
======== ======== ======== ========
Payment obligations for right of (513) -
use assets
======== ======== ======== ========
Interest paid (80) (109)
======== ======== ======== ========
Dividend paid to equity shareholders (1,153) (1,036)
======== ======== ======== ========
_______ _______
======== ======== ======== ========
Net cash flow from financing activities (7,080) 3,045
======== ======== ======== ========
_______ _______
======== ======== ======== ========
(Decrease)/Increase in cash and cash
equivalents (180) 3,120
======== ======== ======== ========
_______ _______
=========================================== ======== ======== ======== ========
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 March 2020 (continued)
2020 2019
GBP'000 GBP'000
Translational foreign exchange on opening
cash 5 (3)
========= =========
Net (decrease)/ increase in cash and cash
equivalents (180) 3,120
========= =========
Cash and cash equivalents at beginning
of year 3,692 575
========= =========
_______ _______
========= =========
Cash and cash equivalents at end of year 3,517 3,692
========= =========
_______ _______
========= =========
There were no significant non-cash transactions. Cash and cash
equivalents comprise:
2020 2019
GBP'000 GBP'000
Cash available on demand 3,517 3,692
========= =========
_______ _______
========= =========
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 March 2020
1. ACCOUNTING POLICIES
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.
Basis of preparation
The principal accounting policies adopted in the preparation of
the financial statements are set out below. These policies have
been consistently applied to all the years presented, except for
the impact of the implementation of IFRS 16 Leases.
These financial statements have been prepared in accordance with
International Financial Reporting Standards, International
Accounting Standards and Interpretations issued by the
International Accounting Standards Board as adopted by the European
Union ("IFRSs") and with those parts of the Companies Act 2006
applicable to companies preparing their accounts under IFRSs.
As allowed by IFRS 1, we have elected not to apply IFRS
retrospectively for business combinations computed prior to 1 April
2006 and have used the carrying value of goodwill resulting from
business combinations occurring before the date of transition as
deemed costs, subjecting this to impairment reviews at the date of
transition (1 April 2006) and at the end of each financial year
thereafter.
The Group financial statements are presented in pounds sterling
and all values are rounded to the nearest thousand (GBP'000) except
when otherwise indicated.
Going concern
Basis of preparation
In assessing the going concern position of the Group for the
Consolidated Financial Statements for the year ended 31 March 2020,
the Directors have considered the Group's cash flows, liquidity and
business activities.
At 31 March 2020, the Group had cash balances of GBP3.5 million,
a drawn term loan of GBP0.3m (which was repaid post year end in May
2020) and undrawn revolving credit facility (RCF) of GBP7.5
million.
Based on the Group's forecasts, the Directors have adopted the
going concern basis in preparing the Financial Statements. The
Directors have made this assessment after consideration of the
Group's cash flows and related assumptions and in accordance with
the Guidance published by the UK Financial Reporting Council. (Risk
Management, Internal Control and Related Financial and Business
Reporting 2014, the April 2016 guidance on Going concern basis of
accounting and reporting on solvency and liquidity risks and the
various guidance issued in 2020). This guidance provides support to
Directors and Boards in making the assessment of going concern.
In assessing going concern the Directors have given careful
consideration of the potential impact of the COVID-19 pandemic on
the cashflows and liquidity of the Group over the next 12 month
period.
COVID-19 has meant that the Group is facing uncertainty in
customer demand and potential for operational disruption, albeit to
date the Group has avoided material operational impact, and has
continued to trade without significant interruption. The assessment
of the impact of COVID-19 has taken in to account the current
measures that have been put in place by the Group to preserve cash,
which include; deferring non-essential capital expenditure, pausing
acquisition activity and reducing discretionary expenditure.
In preparing the going concern assessment the Directors
considered the principal risks and uncertainties that the business
faced. The appraisal identified that the impact of the COVID-19
disruption was the most significant uncertainty facing the
business. The assessment identified three areas of potentially
significant impact: supply chain disruption; operational
disruption; and, downturn in customer demand because of the global
business disruption caused by COVID-19. The board concluded that
the two areas of the risk which remained the most uncertain were
the impact of potential operational disruption and the length of
downturn in demand from customers.
Whilst the Group has seen an apparent decline in new programme
design-ins and related bookings, the post balance sheet period has
provided some reassurance as to the level of customer demand which
the Group has seen in the post lock down period. Q1 is expected to
be the period most significantly impacted by the disruption as a
result of the full lock down. However, it remains uncertain as to
the profile of how and when the demand will recover as the lockdown
is eased.
The Directors have prepared revised "stressed" forecasts taking
account of the results to date, current expected demand, and
mitigating actions taken, together with an assessment of the
liquidity headroom against the cash and bank facilities.
The bank facilities are subject to financial covenants requiring
the business to be EBITDA positive therefore this facility is
available to fund investment in working capital, capital investment
or acquisition activities. Should the business face such a
significant downturn that it was loss making the facility would not
be available to be drawn to fund additional losses without a
covenant waiver or amendment. As a result, in evaluating a stressed
forecast model the Board have not included the RCF in the
headroom.
This financial modelling is based on applying various
sensitivity scenarios to a 12 month base case to 30 June 2021 which
has been prepared based on an extension of the budget. The budget
was set before the severity of the COVID-19 impact was known.
In the period since the balance sheet date Group bookings were
down circa 15% over the average for the prior period, however, due
to the nature of the business where the Group has orders placed on
schedules and significant projects, bookings in any given month can
see material variations. In preparing a worst case downside
scenario with no overhead mitigation, it assumes a shortfall in
Group revenue of 23% over 12 months period with no cost mitigation.
This results in EBITDA reducing by 88% compared to the Board's base
case expectations prior to development of the COVID-19 pandemic.
Even with this level of Group EBITDA reductions, when combined with
the modest investment mitigation that are within the Group's
control, the Directors currently believe the Group would retain a
reasonable cash surplus thus maintaining sufficient liquidity to
meet its liabilities as they fall due.
The Directors have also assessed the impact of an even more
severe effect on the Group where the Group faced revenue reduction
across the 12 month period of 33%. In this scenario more mitigation
is required in terms of modest overhead reductions, reduced capital
investment to "critical investment only" and making no
distributions. In this scenario the Group remains cash positive and
therefore can maintain sufficient liquidity to meet its liabilities
as they fall due without looking to additional sources of
liquidity.
In considering the assessment of the Group's going concern
position the Directors have also identified that the Group could
look to both the Group's bankers and or the equity markets if
additional liquidity were required. Albeit none of the
sensitivities indicate that the Group would require additional
sources of liquidity.
In the post balance sheet period, the Group has prudently taken
actions to conserve cash which have increased the cash reserves
post year end improving the liquidity position.
The actions taken included: deferrals of FY19/20 Director and
staff pay raises; limiting discretionary expenditure; pausing
acquisition opportunities; delaying all capital investment other
than safety / required maintenance investment; adoption of
available deferrals on PAYE and VAT from HMRC; and, utilisation of
the job retention support announcements by the UK Government. At
the peak the Group furloughed approximately 30% of the staff to
align the level of staff resources with reduced Q1 business demand.
Given our relationship with the Groups primary bankers and the cash
and facilities the Group has available the Board has not felt it
was necessary or appropriate to apply for government backed
loans.
The Directors have concluded that the potential impact of the
COVID-19 pandemic described above does not represent a material
uncertainty over the Group and Company's ability to continue as a
going concern.
Nevertheless, it is acknowledged that there are potentially
material variations in the forecasted level of financial
performance for the coming year. As a result, the Board has not
issued guidance to analysts and shareholders.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
next 12 months, therefore it is appropriate to adopt a going
concern basis for the preparation of the Financial Statements.
Accordingly, these financial statements do not include any
adjustments to the carrying amount or classification of assets and
liabilities that would result if the Group and Company were unable
to continue as a going concern.
Changes in accounting policy and disclosures
New standards, amendments and interpretations adopted in the
year.
The following new standards, amendments and interpretations have
been adopted by the Group for the first time for the financial year
beginning on the 1 April 2019:
-- IFRS16 "Leases"
-- Annual improvements 2015-2017 cycle (effective for accounting
periods beginning or after 1 January 2019)
-- Amendment to IAS 28 Investments in associates and joint
ventures' which clarifies the accounting for long term interests in
an associate or joint venture, which in substance form part of the
net investment in the associate or joint venture, but to which
equity accounting is not applied.
-- Amendments to IFRS 9 "Financial Instruments which clarifies
the treatment of financial assets with prepayment features with
negative compensation.
-- IFRIC 23 Uncertainty over tax treatments which explains how
to recognise, and measure deferred and current tax where there is
uncertainty over the tax treatment.
The adoption of these standards and amendments has not had a
material impact on the Group's consolidated financial statements,
except for the adoption of IFRS 16 where the impact of adoption of
this new standard is set out in note 8.
New standards, amendments and interpretations to published
standards issued but not yet effective and not early adopted
A number of new standards, amendments and interpretations to
existing standards have been published that will be mandatory for
the Group's accounting periods beginning on or after 1 April 2020
or later periods and which the Group has decided not to adopt early
are listed below. The Group intends to adopt these standards when
they become effective.
-- IFRS 17 Insurance contracts which establishes the principles
for the recognition, measurement, presentation and disclosure of
insurance contracts and supersedes IFRS 4.
-- Amendments to IFRS 10 Consolidated financial statements and
IAS 28 investments in associates and joint ventures which clarifies
the accounting treatment for sales or contribution of assets
between an investor and its associate or joint venture.
-- Amendments to IFRS 3 business combinations which clarifies the definition of a business
-- Amendments to IAS 1 Presentation of financial statements and
IAS 8 Accounting policies changes in accounting estimates and
errors which are intended to make the definition of material easier
to understand.
-- Amendments to references to the Conceptual framework in IFRS Standards.
The Directors anticipate that none of the new standards,
amendments to standards and interpretations will have a significant
effect on the financial statements of the Group.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
The preparation of financial statements requires the use of
accounting estimates which, by definition, will seldom equal the
actual results. Management also needs to exercise judgement in
applying the Group's accounting policies. This note provides an
overview of the areas that involved a higher degree of judgement or
complexity, and of items which are more likely to be materially
adjusted due to estimates and assumptions turning out to be
wrong.
Expected credit losses
In accordance with IFRS 9 the Group is required to make an
assessment of the expected credit loss occurring over the life of
its trade receivables. As a result of the COVID-19 disruption to
businesses across the globe the Directors expect that the risk of
credit default has significantly increased over historical
norms.
As a result, the Directors have made a judgemental assessment of
the potential increase in credit losses in the current business
environment.
The increase in the provision based on the Directors judgemental
assessment of expected credit loss reflects an increase of GBP305k
to GBP496k. The increase in the year is significant but not
considered material to the financial statements as a whole.
Estimated useful life of research and development and intangible
assets arising on acquisitions
The periods of amortisation adopted to write down capitalised
product and process development requires estimates to be made in
respect of the useful economic lives of the intangible assets to
determine an appropriate amortisation rate.
Capitalised development costs are amortised over the period
during which economic benefits are expected to be received which is
typically 1 - 5 years. Intangible assets arising on acquisitions
are amortised straight line over the period during which economic
benefits are expected to be received which is typically 5 - 10
years.
The amortisation charge for capitalised development costs in the
current year is GBP367k; if the lives were reduced by one year
across all the projects which are being amortised the charge would
increase by circa GBP100k.
The amortisation charge for intangible assets arising on
acquisitions in the current year is GBP505k; if the lives were
reduced by one year the charge would increase by GBP51k.
Estimated goodwill impairment
Goodwill is not amortised; however, it is reviewed for
impairment at least annually or more frequently if events or
circumstances indicate a potential impairment. For the purpose of
impairment testing Goodwill is allocated to each of the cash
generating units (CGU) to which it relates. The impairment
assessment is made based on the discounted future cashflows of the
CGU.
Recognition criteria for capitalisation of development
expenditure
The Group capitalises R&D in accordance with IAS 38. There
is judgement in respect of when R&D projects meet the
requirement for capitalisation, which internal costs are directly
attributable and therefore appropriate to capitalise and when the
development programme is complete, and capitalisation should
cease.
Amounts capitalised include the total cost of any external
products or services and labour costs directly attributable to the
development programme. Management judgement is involved in
determining the appropriate internal costs to capitalise and the
amounts involved.
If there is any uncertainty in terms of the technical
feasibility, ability to sell the product or any other risk that
means the programme does not meet the requirements of the standard
the R&D costs are expensed within the consolidated statement of
comprehensive income.
Estimation of level of R&D expenditure which is eligible for
R&D tax credits under the SME and large company scheme.
Uncertainties exist in relation to the interpretation of complex
tax legislation, changes in tax laws and the amount and timing of
future taxable income. This could necessitate future adjustments to
taxable income and expense already recorded.
At the year-end date, tax liabilities and assets reflect
management's judgements in respect of the application of the tax
regulations, in particular the R&D tax.
In assessing our year-end corporation tax liability, we have
made a provisional assessment as to the likely amount of
development expenditure that will be eligible under each of the
HMRCs large company and SME R&D tax credit schemes as the
detailed tax computations have not been completed.
Our judgement at year end assumed that the level of eligible
spend was comparable with prior years. At 31 March 2020 there are
current and deferred tax provisions totalling approximately
GBP1.2m.
Due to the uncertainties noted above, it is possible that the
Group's initial estimates are different to the final position
adopted when the tax computation is finalised, resulting in a
different tax payable or recoverable from the amounts provided.
Provisions for returns
The Group provides for an estimate of sales returns at the year
end, which reduces product sales and accounts receivable, and
increases stock. This provision is estimated by management based on
historical experience and judgement on current contract sales.
The estimation process used to determine the provision has been
applied on a consistent basis with previous years and no material
adjustments have been necessary to increase or decrease these
reserves as a result of a significant change in underlying
estimates.
Due to the significant value of sales in the Group, the
difference between the actual and estimated returns could impact
operating results both positively and negatively.
Provisions for slow moving or obsolete inventories
Inventories are carried at the lower of cost and net realisable
value (NRV). NRV is reviewed in detail on an on going basis and
provision for obsolete inventory is made based on a number of
factors including age of inventories, the risk of technical
obsolescence and the expected future usage.
Differences between such estimates and actual market conditions
may have a material impact on the amount of the carrying value of
inventories and may result in adjustments to cost of sales.
3. TAX EXPENSE
2020 2019
GBP'000 GBP'000
Analysis of continuing total tax expense
========= =========
Total tax charge from continuing operations 588 153
========= =========
_______ _______
========= =========
588 153
========= =========
______ ______
========= =========
Current tax expense
========= =========
UK corporation tax on profits or losses
for the year 616 376
========= =========
Adjustment in respect of prior periods 22 (67)
========= =========
_______ _______
========= =========
638 309
========= =========
Deferred tax credit (50) (156)
========= =========
______ ______
========= =========
Total tax charge 588 153
========= =========
______ ______
========= =========
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the UK applied
to profits for the year are as follows:
2020 2019
GBP'000 GBP'000
Profit before tax including discontinued operations 4,002 2,811
========= =========
_______ _______
========= =========
Expected tax charge based on the standard
rate of corporation tax in the UK of 19% (2018
19%) 760 534
========= =========
Effect of:
========= =========
Expenses not deductible for tax purposes 24 25
========= =========
Difference between depreciation for the year
and capital allowances 42 25
========= =========
Tax relief on exercise of share options exercised 4 (52)
========= =========
Enhanced relief on research and development
expenditure (338) (359)
========= =========
Overseas tax rate differences 10 (27)
========= =========
Deferred tax asset (recognised)/not recognised (5) 74
========= =========
Change in rate in respect of deferred tax 69 -
recognition
========= =========
Adjustments in respect of prior years 22 (67)
========= =========
_______ _______
========= =========
Total tax charge 588 153
========= =========
_______ _______
========= =========
The UK corporation tax rate is 19% (effective from 1 April
2017). As a result of the amendment in 2020 which was substantially
enacted on 17 March 2020 the rate of corporation tax is set to
remain at 19%. The deferred tax liabilities at 31 March 2019 have
been calculated based on this rate.
R&D tax credits
The Group recognised a credit of GBP24k (2019: GBPnil) within
operating profit in relation to claims made under the Research and
Development expenditure credit scheme (RDEC). There were also
claims made under the SME scheme which are recognised within the
tax expense.
4. EARNINGS PER SHARE
The earnings per share is based on the following:
2020 2019
GBP'000 GBP'000
Adjusted continuing earnings post tax 4,002 3,108
========== ==========
Reported continuing earnings post tax 3,414 2,658
========== ==========
Weighted average number of shares 8,510,074 8,488,675
========== ==========
Diluted number of shares 8,635,331 8,648,719
========== ==========
Reported EPS
========== ==========
Basic EPS from profit for the year 40.1p 31.3p
========== ==========
Diluted EPS from profit for the year 39.5p 30.7p
========== ==========
Adjusted EPS
========== ==========
Adjusted Basic EPS from profit for the
year 47.0p 36.6p
========== ==========
Adjusted Diluted EPS from profit for
the year 46.3p 35.9p
========== ==========
Earnings per ordinary share has been calculated using the
weighted average number of shares in issue during the year. The
weighted average number of equity shares in issue was 8,510,074
(2019: 8,488,675) net of the treasury shares.
The diluted earnings per share is based on 8,635,331 (2019:
8,648,719) ordinary shares which allow for the exercise of all
dilutive potential ordinary shares.
The adjustments to profit made in calculating the adjusted
earnings are set out in note 7.
5. DIVIDS
2020 2019
GBP'000 GBP'000
Prior year final dividend paid of 8.3p
per share (2019: 8p) 708 682
========= =========
Current year interim dividend paid of
5.25p per share (2019: 4.2p) 448 358
========= =========
Cancelled dividends on shares held in
treasury (3) (4)
========= =========
_______ _______
========= =========
1,153 1,036
========= =========
_______ _______
========= =========
Final dividend proposed for the year 7.25p
per share (2019: 8.3p) 620 708
========= =========
_______ _______
========= =========
The proposed final dividend has not been accrued for as the
dividend will be approved by the shareholders at the annual general
meeting.
6. SEGMENT INFORMATION
The Group's primary reporting format for segment information is
business segments which reflect the management reporting structure
in the Group. The Value Added Distribution division comprises Solid
State Supplies Ltd, Pacer LLC and Pacer Components Ltd companies.
The Manufacturing division includes Steatite Ltd.
Year ended 31 March 2020
Value Added
Distribution Manufacturing Head Continuing
division division office operations
GBP'000 GBP'000 GBP'000 GBP'000
External revenue 39,247 28,170 - 67,417
============== ================ ========== =============
______ ______ ______ ______
============== ================ ========== =============
Profit before tax 2,252 4,439 (2,689) 4,002
============== ================ ========== =============
Taxation (510) (538) 460 (588)
============== ================ ========== =============
______ ______ ______ ______
============== ================ ========== =============
Profit after taxation 1,742 3,901 (2,229) 3,414
============== ================ ========== =============
Consolidated statement
of financial position
============== ================ ========== =============
Assets 18,649 11,890 8,139 38,678
============== ================ ========== =============
Liabilities (6,521) (7,845) (1,783) (16,149)
============== ================ ========== =============
______ ______ ______ ______
============== ================ ========== =============
Net assets 12,128 4,045 6,356 22,529
============== ================ ========== =============
Other
============== ================ ========== =============
Capital expenditure:
============== ================ ========== =============
Tangible fixed assets 565 316 - 881
============== ================ ========== =============
Intangible assets 2 279 - 281
============== ================ ========== =============
Depreciation 545 569 - 1,114
============== ================ ========== =============
Impairment 84 - - 84
============== ================ ========== =============
Amortisation 51 404 505 960
============== ================ ========== =============
Share based payments - - 381 381
============== ================ ========== =============
Interest 21 19 80 120
============== ================ ========== =============
______ _____ ______ ______
============== ================ ========== =============
No individual customer contributed more than 10% of the Group's
revenue in the financial year ended 31 March 2020 or the prior
year.
Year ended 31 March 2019
Value Added
Distribution Manufacturing Head Continuing
division division office operations
GBP'000 GBP'000 GBP'000 GBP'000
External revenue 30,402 25,897 - 56,299
============== ================ ========== =============
______ ______ ______ ______
============== ================ ========== =============
Profit before tax 1,677 2,707 (1,573) 2,811
============== ================ ========== =============
Taxation (349) (86) 282 (153)
============== ================ ========== =============
______ ______ ______ ______
============== ================ ========== =============
Profit after taxation 1,328 2,621 (1,291) 2,658
============== ================ ========== =============
Consolidated statement
of financial position
============== ================ ========== =============
Assets 17,387 12,137 8,627 38,151
============== ================ ========== =============
Liabilities (5,665) (6,227) (6,356) (18,248)
============== ================ ========== =============
______ _____ ______ ______
============== ================ ========== =============
Net assets 11,722 5,910 2,271 19,903
============== ================ ========== =============
Other
============== ================ ========== =============
Capital expenditure:
============== ================ ========== =============
Tangible fixed assets 62 538 - 600
============== ================ ========== =============
Intangible assets - 300 - 300
============== ================ ========== =============
Depreciation 417 281 - 698
============== ================ ========== =============
Amortisation 18 430 284 732
============== ================ ========== =============
Share based payments - - 300 300
============== ================ ========== =============
Interest 7 2 100 109
============== ================ ========== =============
______ _____ ______ ______
============== ================ ========== =============
External revenue Total assets by Net tangible capital
by location of assets expenditure by
location of customer location
of assets
2020 2019 2020 2019 2020 2019
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
============ =========== =========== ========== ============ ===========
United Kingdom 48,596 44,989 36,919 37,406 881 600
============ =========== =========== ========== ============ ===========
Rest of Europe 6,885 5,230 1 - - -
============ =========== =========== ========== ============ ===========
Asia 4,416 2,540 - - - -
============ =========== =========== ========== ============ ===========
North America 7,235 3,426 1,758 745 -
============ =========== =========== ========== ============ ===========
Other 285 114 - - - -
============ =========== =========== ========== ============ ===========
_______ _______ _______ _______ _______ _______
============ =========== =========== ========== ============ ===========
67,417 56,299 38,678 38,151 881 600
============ =========== =========== ========== ============ ===========
_______ _______ _______ _______ _______ _______
============ =========== =========== ========== ============ ===========
All the above relate to continuing operations.
7. ADJUSTMENTS TO PROFIT
The Group's results are reported after a number of imputed
non-cash charges and non-recurring items. We have provided
additional adjusted performance metrics to aid understanding and
provide clarity over the Group's performance on an on-going cash
basis before imputed non-cash accounting charges consistent with
how analysts and investors tell us they review our business
performance. In presenting an adjusted profit metric adjusting for
the following items:
-- Non-cash charges arising from share-based payments and the
amortisation of acquisition intangibles.
-- Non-recurring cash costs relating to the re-organisation of
the Manufacturing division and acquisition costs.
-- Non-recurring profit from the sale of fully written down stock.
-- Non-recurring tax credits arising primarily from prior year
R&D claims and tax deductions on share options.
2020 2019
GBP'000 GBP'000
Acquisition and re-organisation costs - 149
========= =========
Non recurring profit from sale of full written (160) -
down stock
========= =========
Amortisation of acquisition intangibles 505 284
========= =========
Share based payments 381 300
========= =========
_______ _______
========= =========
Adjustment to profit before tax 726 733
========= =========
Current and deferred taxation effect (138) (142)
========= =========
Non recurring tax credits - (141)
========= =========
_______ _______
========= =========
Adjustments to profit after tax 588 450
========= =========
2020 2019
GBP'000 GBP'000
Reported gross profit 20,803 16,372
========= =========
Adjustments to gross profit (160) -
========= =========
_______ _______
========= =========
Adjusted gross profit 20,643 16,372
========= =========
_______ _______
========= =========
Reported operated profit 4,122 2,920
========= =========
Adjustments to operating profit 726 733
========= =========
_______ _______
========= =========
Adjusted operating profit 4,848 3,653
========= =========
_______ _______
========= =========
Reported operating margin percentage 6.1% 5.2%
========= =========
Operating margin percentage impact of adjustments 1.1% 1.3%
========= =========
_______ _______
========= =========
Adjusted operating margin percentage 7.2% 6.5%
========= =========
_______ _______
========= =========
Reported profit before tax 4,002 2,811
========= =========
Adjustments to profit before tax 726 733
========= =========
_______ _______
========= =========
Adjusted profit before tax 4,728 3,544
========= =========
_______ _______
========= =========
Reported profit after tax 3,414 2,658
========= =========
Adjustments to profit after tax 588 450
========= =========
_______ _______
========= =========
Adjusted profit after tax 4,002 3,108
========= =========
_______ _______
========= =========
8. LEASES UNDER IFRS 16 "LEASES"
The implementation of IFRS 16 at 1 April 2019, which had no
material impact on total net assets or cash, is summarised in the
narrative and table set out below:
Reported Adoption
31 March of IFRS16 1 April
2019 19
ASSETS GBP'000 GBP'000 GBP'000
========== =========== ==========
NON-CURRENT ASSETS
========== =========== ==========
Non current assets previously reported 11,317 - 11,317
========== =========== ==========
Right of use lease assets - 1,305 1,305
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL NON-CURRENT ASSETS 11,317 1,305 12,622
========== =========== ==========
Total current assets previously reported 26,834 - 26,834
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL CURRENT ASSETS 26,834 - 26,834
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL ASSETS 38,151 1,305 39,456
========== =========== ==========
LIABILITIES
========== =========== ==========
CURRENT LIABILITIES
========== =========== ==========
Current liabilities previously reported (13,088) - (13,088)
========== =========== ==========
Right of use lease liabilities - (448) (448)
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL CURRENT LIABILITIES (13,088) (448) (13,536)
========== =========== ==========
NON-CURRENT LIABILITIES
========== =========== ==========
Non current liabilities previously
reported (5,160) - (5,160)
========== =========== ==========
Non current right of use lease liabilities - (871) (871)
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL NON-CURRENT LIABILITIES (5,160) (871) (6,031)
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL LIABILITIES (18,248) (1,319) (19,567)
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL NET ASSETS 19,903 (14) 19,889
========== =========== ==========
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE
PARENT
Retained earnings 16,021 (14) 16,007
========== =========== ==========
Other reserves as previously reported 3,882 - 3,882
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
TOTAL EQUITY 19,903 (14) 19,889
========== =========== ==========
__ ___ _____ ______
______ ___ ___ ___ __
========== =========== ==========
Differences between the operating lease commitments disclosed at
31 March 2019 under IAS 17 discounted at the incremental borrowing
rate at 1 April 2019 and lease liabilities recognised at 1 April
2019 are explained below:
GBP'000
Minimum operating leases commitments disclosed at 31
March 2019 1,409
==========
Include break clauses included under IFRS 16 39
==========
Exclude operating leases not treated under IFRS 16 (33)
==========
Discounted using the lessee's incremental borrowing
rate at the date of initial application (96)
==========
_______
==========
Lease liability recognised as at 1 April 2019 1,319
==========
______
___ __
==========
9. The Annual Report and Accounts will be sent to shareholders
shortly and made available to the public at the registered office
of the Company at 2 Ravensbank Business Park, Hedera Rd, Redditch,
B98 9EY and will also be available to download on the Company's
website www.solidstateplc.com .
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR PPUQAQUPUGMB
(END) Dow Jones Newswires
June 30, 2020 02:00 ET (06:00 GMT)
Grafico Azioni Solid State (LSE:SOLI)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Solid State (LSE:SOLI)
Storico
Da Apr 2023 a Apr 2024
