Interim Results

Solid State Supplies PLC 28 December 2005 Solid State Supplies plc Unaudited Interim Results for the six months ended 30 September 2005 Chairman's Statement Results The unaudited pre-tax profits for the Group for the six months ended 30 September 2005 was £131,000 (2004: £130,000) on a turnover of £5,010,000 (2004: £4,472,000). The basic earnings per share amounted to 1.6p (2004: 1.3p). The pre-tax profit is stated after goodwill amortisation of £22,000 (2004: £17,000). Trading Review Solid State Supplies The component distribution market in the UK continues to be challenging. AFDEC, our industry association, have recently announced that the Industrial distribution market is expected to decline by 10.8% in 2005, with a forecasted decline of 2.4% in 2006. Against this background we have recently taken steps to reduce costs and will continue to keep this under active review. Our compliance programme in relation to the Restriction of Hazardous Substances continues and we remain focused on managing our non compliant stock to minimize the impact of the directive due to come into force on 1 July 2006. Despite difficult market conditions, bookings have improved in recent months and as at 30 November our book to bill ration stood at 1.06 to 1.00. Our high reliability and connectivity markets remain strong and we expect this to be reflected in our results for the next financial year. Steatite and Wordsworth There has been an improvement in both turnover and profit as expected, due to the shipment and growth of sales in the European Space Programme. Whilst the market remains flat, additional sales and thus revenue are expected during the second half of the year through focused sales, campaigns and margin enhancement. With the re-organisation of Steatite and Wordsworth we will consolidate our logistics, warehousing, manufacturing, back office and support functions, with an associated reduction in headcount, to improve efficiency and effectiveness. Although it is not expected that market conditions will improve in the short term it is expected that a consolidated business will return a better performance, during 2006. Summary The group will incur significant non-recurring costs in particular in relation to staff redundancies during the second half year with the relocation of Wordsworth to our Steatite premises at Redditch. However, following this re-organisation the board believes we will be in a strong position which will be reflected in the results for 2006/2007 and beyond. Dividends In anticipation of the significant non-recurring costs which will be incurred in the next few months, the directors have decided to declare an interim dividend of 0.5p per share, compared with 1.5p per share last year. The interim dividend will be paid on 30 January 2006 to shareholders on the register at close of business on 13 January 2006. Conclusion I would like to thank my fellow directors and all the staff of the group for their support over the past six months. Peter Haining Chairman 28 December 2005 Interim consolidated profit and loss account for the six months ended 30 September 2005 Unaudited Unaudited Audited Six months to Six months to Year to 30 Sept 2005 30 Sept 2004 31 Mar 2005 £'000 £'000 £'000 Turnover 5,010 4,742 9,480 Cost of sales (3,525) (3,319) (6,698) -------------- -------------- -------------- Gross profit 1,485 1,423 2,782 -------------- -------------- -------------- Selling expenses and distribution costs (619) (571) (1,181) Administrative expenses (708) (687) (1,280) -------------- -------------- -------------- (1,327) (1,258) (2,467) -------------- -------------- -------------- Operating profit 158 165 315 Other income 1 - 2 Interest payable (28) (35) (2) -------------- -------------- -------------- Profit on ordinary activities before taxation 131 130 315 Tax on profit on ordinary activities (33) (48) (79) -------------- -------------- -------------- PROFIT FOR THE FINANCIAL PERIOD 98 82 236 -------------- -------------- -------------- RECONCILIATION OF MOVEMENT IN SHARHOLDERS' FUNDS Opening shareholders funds as previously 2,076 2,089 2,089 reported Prior year adjustments re proposed dividends 123 124 124 -------------- -------------- -------------- Opening shareholders' funds as restated 2,199 2,213 2,213 Profit for the financial period 98 82 236 Dividends Paid (123) (124) (218) Purchase of own shares - - (33) -------------- -------------- -------------- Closing shareholders' funds 2,174 2,171 2,198 -------------- -------------- -------------- Earnings per share Basic 1.6p 1.3p 3.8p Diluted 1.5p 1.3p 3.8p All amounts relate to continuing operations. Consolidated Balance Sheet as at 30 September 2005 Unaudited Unaudited Audited As at As at As at 30 Sept 2005 30 Sept 2004 31 Mar 2005 £'000 £'000 £'000 FIXED ASSETS Intangible assets 1,623 615 596 Tangible assets 471 492 415 -------------- -------------- -------------- 2,094 1,107 1,011 -------------- -------------- -------------- CURRENT ASSETS Stock 1,483 1,383 1,091 Debtors 1,982 1,700 1,941 Cash at bank and in hand 117 199 109 -------------- -------------- -------------- 3,582 3,282 3,141 -------------- -------------- -------------- CREDITORS Amounts falling due within one year (2,780) (1,815) (1,600) -------------- -------------- -------------- NET CURRENT ASSETS 802 1,467 1,541 -------------- -------------- -------------- TOTAL ASSETS LESS CURRENT LIABILITIES 2,896 2,574 2,552 -------------- -------------- -------------- CREDITORS Amounts falling due after more than one year (722) (403) (354) -------------- -------------- -------------- 2,174 2,171 2,198 -------------- -------------- -------------- CAPTIAL AND RESERVES Share capital 308 311 308 Capital redemption reserve 5 1 5 Share premium account 757 757 757 Profit and loss account 1,104 1,102 1,128 -------------- -------------- -------------- SHAREHOLDERS' FUNDS - EQUITY 2,174 2,171 2,198 -------------- -------------- -------------- CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30 September 2005 Unaudited Unaudited Audited Six months to Six months to Year to 30 Sept 2005 30 Sept 2004 31 Mar 2005 £'000 £'000 £'000 Net cash inflow from operating activities 907 580 674 Return on investments and servicing of finance: Interest received 1 - 2 Interest paid (28) (35) (2) -------------- -------------- -------------- Net cash (outflow) (27) (35) - -------------- -------------- -------------- Taxation: Corporation tax paid - - (72) -------------- -------------- -------------- Net cash (outflow) - - (72) -------------- -------------- -------------- Capital expenditure and financial investment: Payments to acquire tangible fixed asset (54) (49) (80) Receipts from sales of tangible fixed assets 7 12 26 -------------- -------------- -------------- Net cash (outflow) (47) (37) (54) -------------- -------------- -------------- Acquisitions and disposals Purchase of business operation (1,833) - - -------------- -------------- -------------- Net cash (outflow) (1,833) - (3) -------------- -------------- -------------- Equity dividend paid (123) (124) (218) -------------- -------------- -------------- Net cash inflow/(outflow) before financing (1,123) 384 330 -------------- -------------- -------------- Financing: Medium term loan received 500 - - Repayments of medium term loan (56) (60) (108) Hire purchase finance repaid: capital element - (2) (32) Invoice discounting finance received (net movement) 308 (192) (123) Purchase of own shares - - (34) -------------- -------------- -------------- Net cash inflow/(outflow) 752 (254) (297) -------------- -------------- -------------- Increase/(decrease) in cash (371) 130 33 -------------- -------------- -------------- NOTES TO THE INTERIM REPORT 1. Basis of preparation of interim financial information The interim financial statements have been prepared on the basis of accounting policies expected to be adopted in the Financial Statements for the year ending 31 March 2006. Following implementation of Financial Reporting Standard 21 dividends are only recognised in the period in which a binding obligation for payment arises. The effects of this change are set out in the Reconciliation of Movement in Shareholders' Funds on page 3. The unaudited financial statements do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for year ended 31 March 2005 have been filed with the Registrar of Companies. The Auditors' Report on these accounts was unqualified. 2. Earnings per share The earnings per share figures are based on the profit on ordinary activities after taxation as stated in the unaudited profit and loss account and the weighted average number of shares in issue during each period. The weighted average number of shares in issue during the period was 6,156,511 for the six months ended 30 September 2005, 6,207,342 for the year ended 31 March 2005 and 6,225,000 for the six months ended 30 September 2004. The calculation of diluted earnings per share was based on 6,476,511 for the six months ended 30 September 2005, 6,207,342 for the year ended 31 March 2005 and 6,225,000 for the six months ended 30 September 2004. 3. Reconciliation of operating profits to net cash inflow from operating activities Unaudited Unaudited Audited Six months to Six months to Year to 30 Sept 2005 30 Sept 2004 31 Mar 2005 £'000 £'000 £'000 Operating profit 158 165 315 Amortisation of intangible fixed assets 22 17 35 Depreciation charges 68 86 177 Loss on disposal of fixed assets 5 5 8 Decrease/(Increase) in stocks (142) (126) 166 Decrease in debtors 648 327 86 Increase/(decrease) in creditors 148 106 (113) ---------------- ---------------- ---------------- Net cash inflowfrom operating activities 907 580 674 ---------------- ---------------- ---------------- 4. Analysis and reconciliation of net cash Audited Acquisition Unaudited 31 Mar 2005 £ Cash flow 30 Sept 2005 £'000 £'000 £'000 £'000 Cash at bank and in hand 109 235 (227) 117 Bank overdrafts (6) - (144) (150) ---------------- ---------------- ---------------- ---------------- 103 235 (371) (33) ---------------- ---------------- ---------------- ---------------- 5. Acquisition On 10 August 2005, the Group acquired the entire share capital of Wordsworth Technology Limited. The acquisition was for a consideration of £1,832,567 paid by cash and financed from existing cash reserves and borrowings from the bank in the form of a loan for £500,000 repayable over three years. In calculating the goodwill arising on the acquisition, the fair value of the net assets has been assessed and adjustments from book value have been made where necessary. These adjustments are summarised in the following table: Book Value Adjustment Fair Value £,000 £'000 £'000 Tangible fixed assets 82 82 Stock 250 250 Debtors 689 689 Cash at bank 235 235 Trade creditors (319) 319 Corporation tax (135) (11) (146) ---------------- ---------------- ---------------- 802 (11) 791 ---------------- ---------------- ---------------- The adjustments in respect of corporation tax arise as a result of a higher corporation tax rate applying to the company's pre-acquisition profits as a result of it joining the Group. Cash consideration (including expenses of £52k) 1,833,000 Net assets acquired 791,000 ----------------- Goodwill arising on acquisition £1,042,000 ----------------- 6. Further copies of this document are available both at the registered office of the Company and from the offices of Charles Stanley & Company Limited, 25 Luke Street, London, EC2A 4AR. This information is provided by RNS The company news service from the London Stock Exchange

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