Annual Report & Accounts
31 March 2008
Solid State PLC
CONTENTS
Directors, Secretary and Advisers
Chairman’s Statement
Directors’ Report
Report of the Independent Auditors
Consolidated Income Statement
Consolidated Statement of Changes in Equity
Consolidated Balance Sheet
Consolidated Cash Flow Statement
Notes to the Financial Statements
Notice of Annual General Meeting
Page
2
3
5
9
11
12
13
14
15
51
1
Solid State PLC
Directors:
DIRECTORS, SECRETARY AND ADVISERS
Peter Haining, FCA, Chairman
Lewis Cyril Ashby Newnham, Deputy Chairman
Gary Stephen Marsh, Managing Director
William George Marsh, Director
John Michael Lavery, Director
Company Secretary and
Registered Office:
Peter Haining, FCA
Solid State PLC
Unit 2
Eastlands Lane
Paddock Wood
Kent TN12 6BU
Company Number:
771335
Nominated Adviser:
Broker:
Auditors:
Solicitors:
Bankers:
Registrars:
Charles Stanley Securities
25 Luke Street
London EC2A 4AR
Charles Stanley Securities
25 Luke Street
London EC2A 4AR
BDO Stoy Hayward LLP
55 Baker Street
London W1U 7EU
Thomson Snell & Passmore
3 Lonsdale Gardens
Tunbridge Wells
Kent TN1 1NX
HSBC plc
9 Wellesley Road
Croydon
Surrey CR9 2AA
Capita IRG plc
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
West Yorkshire
HD8 0LA
Country of Incorporation
of Parent Company:
Great Britain
Legal Form:
Public Limited Company
2
Solid State PLC
CHAIRMAN’S STATEMENT
Results
The audited profit before tax of the Group was £424,442 (2007: £556,170) on revenue of £10,724,333 (2007:
£12,369,904). The basic earnings per share amounted to 5.4p (2007: 7.5p). The pre-tax profit is stated after
charging non-recurring costs of the re-organisation at Paddock Wood of £57,863. Following adoption of
International Financial Reporting Standards no provision for amortisation of goodwill has been made in these
accounts and the results for the previous year have been restated accordingly.
Dividends
The Directors recommend that a final dividend of 1.25p per share be paid. An interim dividend of 0.75p per
share was paid in January 2008 giving a total dividend in respect of the year of 2p per share (2007: 3p per share).
The final dividend will be paid on 31st October 2008 to shareholders on the register at the close of business on
17th October 2008.
Trading Review
The key performance indicators measured by management are sales, bookings and gross profit margins. Bookings
are sales orders received.
Solid State Supplies
Trading conditions were difficult during this financial period with the distribution market contracting as further
production moved offshore. However, our programme of introducing new higher value products meant that sales
declined only marginally, from £3,719,661 to £3,545,594 and we closed the year with bookings for the year
exceeding sales for the year by just over £100,000. As reported previously, during the first quarter we
restructured our operations at Paddock Wood and coupled with our focus on improving gross profit margins
meant that we were trading profitably by the fourth quarter with the gross profit margin on the distribution
business increasing from 26.3% to 27.5%. The outlook for the rest of 2008 and 2009 suggests that trading will
again be challenging and to help combat this we are actively seeking new franchise lines and will continue to
reduce costs where considered appropriate.
Steatite and Wordsworth Technology
Sales in both companies declined over the previous year, Steatite from £4,558,707 to £3,471,297 and Wordsworth
from £4,518,189 to £3,744,339, whilst bookings remained largely flat. However, bookings exceeded sales by
£1,020,000 compared with a deficit in the previous year of £90,000, and the combined gross profit rose from
25.4% to 29.4%. The decline in sales being largely due to two major military related contracts that were delayed
for both Steatite and Wordsworth.
The integration after acquisition of RZ Pressure SARL and RZ Pressure UK into the Redditch site went well
adding to our range of high value lithium batteries and opening European and International markets through a
range of UN approved packs.
Our strategy to focus on the creation of value added products has meant margin improvement in both companies
giving a 9% return on sales (net profit before tax as a percentage of sales) and a profit figure matching the
previous year on a lower sales total. Both businesses are well structured and continue to gain reputation as
leading suppliers to their relevant market sectors with new and innovative product offerings along with strong
technical support. This means a cautiously optimistic outlook for 2008 with a return to growth in sales along with
continuing gross profit margin enhancement in a market that suffers from low cost offshore manufacturing
relocation.
Summary
The difficult trading conditions throughout the industry are reflected in the fall in Group revenue of 13.3%
compared with the previous year. Close control of gross profit margins and overheads resulted in an overall
increase in gross profit margin from 29% to 29.4% and an overall reduction in overheads of £288,002
representing just over 10% of last year’s level.
3
Solid State PLC
CHAIRMAN’S STATEMENT (continued)
The new financial year has started strongly which contrasts with the very quiet trading period in the
corresponding period last year. However, the Directors appreciate that the UK economy is likely to have a
disappointing year but are confident that the Group is well placed to increase its market share in its key trading
areas. The recent acquisition of RZ Pressure Instrument Supply SARL is leading to enhanced revenue and
margins in the battery division of Steatite Limited and the Group continues to look for suitable acquisitions within
the electronics industry.
Renewal of authority to purchase the Company’s shares
Last year, a resolution was passed at the Annual General Meeting to give the Company the authority to purchase
its own Ordinary shares on the Stock Exchange. This authority would expire after a period of eighteen months
from the passing of the resolution. In order to avoid this authority expiring during the next year and the need to
call an extraordinary general meeting to renew the authority, a resolution to renew the authority is set out in the
notice of the Annual General Meeting on page 51 of this document.
Under the terms of the resolution to be proposed at the Annual General Meeting, the maximum number of shares
which may be purchased is 923,476 shares representing 15% of the issued Ordinary share capital of the Company.
The minimum price payable by the Company for its Ordinary shares will be 20p and the maximum price will be
£1. The authority will automatically expire after a period of eighteen months from the passing of the resolution
unless renewed.
It is not the Directors’ current intention to exercise the power to purchase the Company’s Ordinary shares but they
believe that under certain circumstances it would be in the Company’s best interests to do so.
Your Directors consider that the resolution to be proposed at the meeting is in the best interests of the Company
and its shareholders. They unanimously recommend that all Ordinary shareholders vote in favour of the
resolution at the Annual General Meeting as they intend to do in respect of their beneficial holdings amounting to
1,796,989 Ordinary shares, representing 29.19% of the Company’s issued Ordinary share capital.
Removal of age limit on appointment of directors
The notice of the Annual General Meeting includes a Special Resolution to remove the age limit for the
appointment of Directors. Section 293 of the Companies Act 1985 (which contains the age limit for Directors) has
been repealed by the Companies Act 2006 to be consistent with new age discrimination laws. As the changes
brought about by the Companies Act 2006 can, in some cases, be overruled by provisions in the Company’s
Articles of Association it is necessary to amend the Articles to conform with the new legislation.
Conclusion
I would like to thank my fellow Directors and all the staff of the Group for their continued support.
Peter Haining
Chairman
8th September 2008
4
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2008
The Directors submit their report together with the audited financial statements of the Group in respect of the year
ended 31st March 2008.
Principal Activities, Review of the Business and Future Developments
The principal activities of the Group during the year continued to be those of the distribution of electronic
components and materials and the manufacturing of electronic equipment.
An overall review of the Group’s trading performance and future developments is given in the Chairman’s
Statement.
The year started quietly for all three trading companies and in June non-recurring costs of restructuring of
£57,863 were incurred at Paddock Wood. The resulting fall in overheads has resulted in a return to profitability
in the Paddock Wood trading operations.
John Macmichael, in his role as commercial director at Paddock Wood, has been successful in securing new
franchises with higher value products which should enable revenue levels to be increased with sound gross profit
margins despite the continuing decline in the traditional component distribution market.
At Redditch both companies saw a decline in revenue compared with the previous year. Steatite saw a decline in
military business due to contracts being postponed but the acquisition and integration of the RZ Pressure business
into the battery division of Steatite is providing a useful boost to revenue and has enabled the company to qualify
for lower purchase prices from its principal supplier. The company is actively promoting the new markets
available as a result of the UN approved packs acquired as part of the RZ acquisition.
Wordsworth Technology also suffered a loss of revenue in the military sector but it is anticipated that these
contracts will be awarded later in the new financial year. The ICP division of the company had a good year with
significantly enhanced margins which enabled the company to record an improved net profit despite a 17% fall in
revenue compared with the prior year.
The Group has continued to invest in research and development activities at Redditch with expenditure of over
£94,000 in the year. The Group has also invested £40,000 in a new customer relation management system at
Paddock Wood which will be a useful marketing tool. Continuing improvements have been made to the websites
for all divisions and it is noted that there have been increases in use of the websites and receipt of direct orders.
The Group holds or issues financial instruments to finance its operations. Operations are financed by a mixture of
retained profits, bank borrowings, invoice discounting facilities and long term loans. Working capital
requirements are met principally out of floating rate overdraft and retained profits. In addition, various financial
instruments such as trade debtors and trade creditors arise directly from the Group’s operations.
The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new
customers and to factor the information from these credit ratings into future dealings with the customers. At the
balance sheet date there were no significant concentrations of credit risk. The maximum exposure to credit risk is
represented by the carrying amount of each financial asset in the balance sheet. The directors monitor the
liquidity and cash flow risk of the Group carefully. The Group has an agreed overdraft limit with the Group’s
bankers to help manage fluctuations in cash flow. Cash flow is monitored by the directors on a regular basis and
appropriate action is taken where additional funds are required.
Results and Dividends
The consolidated income statement is set out on page 11. The Directors recommend that a final dividend of
1.25p per share is paid. The total dividend for the year is thus 2p per share. The final dividend will be paid on
31st October 2008 to shareholders on the register at the close of business on 17th October 2008.
5
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2008 (continued)
Directors
The Directors of the Company during the year were:
P Haining FCA
L C A Newnham
G S Marsh
W G Marsh
J M Lavery
Peter Haining FCA, aged 52, Non-executive Director, Company Secretary and Chairman
Peter Haining qualified as a chartered accountant in 1980 and later worked at Binder Hamlyn. He left Binder
Hamlyn in 1992, together with three colleagues, to establish The Kings Mill Partnership, who were the
Company’s previous auditors. As well as fulfilling a role as Non-executive Director and Chairman, Peter Haining
has specific responsibility for reviewing and advising on the Group’s budgets and financial affairs.
Cyril Newnham, aged 71, Non-executive Director and Deputy Chairman
Cyril Newnham is a chartered accountant who has held senior management posts in major companies, both in the
UK and overseas. He has held a number of directorships within the electronics industry. He currently conducts a
management consultancy practice.
Details of the interests of Directors in the shares of the Company and Directors’ service contracts are stated in
Note 6 to the financial statements.
Corporate Governance
The Board confirms that the Group has had regard, throughout the accounting period, with the provisions set out
in Section 1 of the Combined Code which was issued by the Financial Reporting Council in June 2006. Whilst
not required to do so, as a matter of best practice, the Directors have voluntarily endeavoured to comply with
those provisions which they consider to be relevant to a company of this size.
The audit committee consists of Messrs L C A Newnham and W G Marsh, and meets regularly to ensure that the
financial performance of the Group is properly recorded and monitored, to meet the auditors and to review the
reports from the auditors relating to accounts and internal control systems.
The remuneration committee consists of Messrs W G Marsh, L C A Newnham and P Haining. The purpose of the
committee is to review the performance of the full time executive Directors and to set the scale and structure of
their remuneration and the basis of their service agreements with due regard to the interests of the shareholders. It
is a rule of the committee that no Director shall participate in discussions or decisions concerning his own
remuneration.
Board of Directors
The Board consists of three executive Directors and two Non-executive Directors and meets regularly throughout
the year.
The Board comprises the executive management of the Group and thus maintains full control over its activities.
Decisions are accordingly taken quickly and effectively following consultation among the Directors concerned if
any matters arise. The Board takes the view that this direct but flexible approach has enabled the Company to deal
effectively with all matters.
Going Concern
The Directors confirm that they are satisfied that the Group has adequate resources to continue in business for the
foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the accounts.
Purchase of Own Shares
At the year end the Company had in place authority to purchase 923,476 ordinary shares under authority given by
a resolution at the Annual General Meeting on 8th August 2007. This authority expires on 8th February 2009.
6
DIRECTORS’ REPORT
For the year ended 31st March 2008 (continued)
Solid State PLC
Financial Instruments
Details of the use of financial instruments by the Company and its subsidiaries are contained in Note 21 of the
financial statements.
Internal Control
In respect of internal controls, the Directors are aware of the Turnbull Report and are continually reviewing the
effectiveness of the systems of internal controls, the key elements of which having regard to the size of the Group
are that the Board meets regularly and takes the decisions on all material matters, the organisational structure
ensures that responsibilities are defined and authority only delegated where appropriate, and that the regular
management accounts are presented to the Board wherein the financial performance of the Group is analysed.
The Directors acknowledge that they are responsible for the system of internal control which is established in
order to safeguard the assets, maintain proper accounting records and ensure that financial information used
within the business or published is reliable. Any such system of control can, however, only provide reasonable,
not absolute, assurance against material misstatement or loss.
Statement of Directors’ Responsibilities
The Directors are responsible for keeping proper accounting records which disclose with reasonable accuracy at
any time the financial position of the Group, for safeguarding the assets of the company, for taking reasonable
steps for the prevention and detection of fraud and other irregularities and for the preparation of a Directors’
Report which complies with the requirements of the Companies Act 1985.
The Directors are responsible for preparing the annual report and financial statements in accordance with the
Companies Act 1985. The Directors are also required to prepare financial statements for the Group in accordance
with International Financial Reporting Standards as adopted by the European Union (IFRSs) and the rules of the
London Stock Exchange for companies trading securities on the Alternative Investment Market. The Directors
have chosen to prepare financial statements for the Company in accordance with UK Generally Accepted
Accounting Practice.
Group Financial Statements
International Accounting Standard 1 requires that financial statements present fairly for each financial year the
Group’s financial position, financial performance and cash flows. This requires the faithful representation of the
effects of transactions, other events and conditions in accordance with the definitions and recognition criteria for
assets, liabilities, income and expenses set out in the International Accounting Standards Board’s “Framework for
the preparation and presentation of financial statements.” In virtually all circumstances, a fair presentation will be
achieved by compliance with all applicable IFRSs.
A fair presentation also requires the Directors to:
•
•
•
consistently select and apply appropriate accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable,
comparable and understandable information; and
provide additional disclosures when compliance with the specific requirements in IFRSs is insufficient to
enable users to understand the impact of particular transactions, other events and conditions on the
entity’s financial position and financial performance.
7
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2008 (continued)
Parent company financial statements
Company law requires directors to prepare financial statements for each financial year which give a true and fair
view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing
these financial statements, the Directors are required to:
•
•
select suitable accounting policies and then apply them consistently.
prepare financial statements on the going concern basis unless it is inappropriate to presume that the
company will continue in business.
• make judgements and estimates that are reasonable and prudent.
•
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements.
Financial statements are published on the Group’s website in accordance with legislation in the United Kingdom
governing the preparation and dissemination of financial statements, which may vary from legislation in other
jurisdictions. The maintenance and integrity of the Group’s website is the responsibility of the Directors. The
Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
Creditor Payment Policy
The Company’s policy for the year to 31st March 2008 for all suppliers is to fix terms of payment when agreeing
the terms of each business transaction, to ensure the supplier is aware of those terms and to abide by the agreed
terms of payment.
Creditor days based on the year end trade creditors and purchases made in the year were 52 days (2007: 36 days).
Auditors
All of the current directors have taken all the steps that they ought to have taken to make themselves aware of any
information needed by the Company’s auditors for the purposes of their audit and to establish that the auditors are
aware of that information. The directors are not aware of any relevant audit information of which the auditors are
unaware.
A resolution to reappoint BDO Stoy Hayward LLP as auditors will be proposed at the next annual general
meeting.
By order of the Board
P Haining FCA
Secretary
8th September 2008
Registered Office:
Unit 2
Eastlands Lane
Paddock Wood
Kent TN12 6BU
8
REPORT OF THE INDEPENDENT AUDITORS
TO THE SHAREHOLDERS OF SOLID STATE PLC
Solid State PLC
We have audited the Group and Parent Company financial statements (the “financial statements”) of Solid State
PLC for the year ended 31st March 2008 which comprise the consolidated income statement, the consolidated and
company balance sheets, the consolidated cash flow statement, the consolidated statement of changes in equity
and the related notes. These financial statements have been prepared under the accounting policies set out therein.
Respective Responsibilities of Directors and Auditors
The Directors’ responsibilities for preparing the annual financial report and Group financial statements in
accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the
European Union and for preparing the Parent Company financial statements in accordance with applicable law
and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set
out in the Statement of Directors’ Responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory
requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and have been
properly prepared in accordance with the Companies Act 1985. We also report to you if, in our opinion, the
Directors’ Report is not consistent with the financial statements, if the Company has not kept proper accounting
records, if we have not received all the information and explanations we require for our audit, or if information
specified by law regarding directors’ remuneration and transactions is not disclosed.
We read other information contained in the Annual Report and consider whether it is consistent with the audited
financial statements. The other information comprises only the Directors’ Report and the Chairman’s Statement.
We consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any other information.
Our report has been prepared pursuant to the requirements of the Companies Act 1985 and for no other purpose.
No person is entitled to rely on this report unless such a person is a person entitled to rely on this report by virtue
of and for the purpose of the Companies Act 1985 or has been expressly authorised to do so by our prior written
consent. Save as above we do not accept responsibility for this report to any other person or for any other purpose
and we hereby expressly disclaim any and all such liability.
Basis of Audit Opinion
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the
Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements
made by the Directors in the preparation of the financial statements, and of whether the accounting policies are
appropriate to the Group’s and the Company’s circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered
necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements
are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion
we have also evaluated the overall adequacy of the presentation of information in the financial statements.
9
Solid State PLC
Opinion
In our opinion:
REPORT OF THE INDEPENDENT AUDITORS
TO THE SHAREHOLDERS OF SOLID STATE PLC (continued)
-
the Group financial statements give a true and fair view, in accordance with IFRS adopted by the European
Union, of the state of the Group’s affairs as at 31st March 2008 and of the Group’s profit for the year then
ended;
-
the Parent Company financial statements give a true and fair view, in accordance with United Kingdom
Generally Accepted Accounting Practice, of the state of the Parent Company’s affairs as at 31st March
2008;
-
the financial statements have been properly prepared in accordance with the Companies Act 1985; and
-
the information given in the Directors’ Report is consistent with the financial statements.
BDO Stoy Hayward LLP
Chartered Accountants and
Registered Auditors
London
8th September 2008
10
Solid State PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31st March 2008
Revenue
Cost of sales
GROSS PROFIT
Distribution costs
Administrative expenses
PROFIT FROM OPERATIONS
Finance income
Finance costs
PROFIT BEFORE TAXATION
Tax expense
PROFIT ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
Notes
3
4
7
8
9
2008
£
10,724,333
(7,569,347)
_________
3,154,986
(1,238,794)
(1,392,107)
_________
2007
£
12,369,904
(8,784,024)
_________
3,585,880
(1,356,520)
(1,562,383)
_________
524,085
666,977
397
(100,040)
_________
424,442
(91,362)
_________
333,080
_________
2,326
(113,133)
_________
556,170
(94,865)
_________
461,305
_________
EARNINGS PER SHARE
Basic
Diluted
10
10
5.4p
5.4p
7.5p
7.5p
The notes on pages 15 to 45 form part of these financial statements.
11
Solid State PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31st March 2008
Share
Capital
£
Share
Premium
Reserve
£
Capital
Redemption
Reserve
£
Foreign
Exchange
Reserve
£
Retained
Earnings
£
Total
£
Balance at 31st March 2006
307,826
756,980
4,674
-
949,497
2,018,977
Profit for year ended 31st March
2007
Total recognised income in year
Dividends
Share based payment expense
-
_______
-
_______
-
-
_______
-
_______
-
_______
-
-
_______
-
_______
-
_______
461,305
________
461,305
________
-
_______
-
_______
461,305
________
461,305
________
-
-
_______
-
-
_______
(61,565)
7,633
_______
(61,565)
7,633
_______
Balance at 31st March 2007
307,826
756,980
4,674
-
1,356,870
2,426,350
Profit for year ended 31st March
2008
Translation differences on
overseas operation
Total recognised income in year
Dividends
Share based payment expense
Balance at 31st March 2008
-
-
-
-
333,080
333,080
-
_______
-
_______
-
-
_______
307,826
_______
-
_______
-
_______
-
-
_______
756,980
_______
-
_______
52,864
_______
(52,864)
_______
-
_______
-
_______
52,864
_______
280,216
_______
333,080
_______
-
-
_______
-
_______
(169,304)
9,753
_______
(169,304)
9,753
_______
4,674
_______
52,864
_______
1,477,535
_______
2,599,879
_______
The notes on pages 15 to 45 form part of these financial statements.
12
CONSOLIDATED BALANCE SHEET
at 31st March 2008
Solid State PLC
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
CURRENT ASSETS
Inventories
Trade and other receivables
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
Bank overdraft
Trade and other payables
Bank borrowings
Corporation tax liabilities
TOTAL CURRENT LIABILITIES
NON-CURRENT LIABILITIES
Bank borrowings
TOTAL NON-CURRENT LIABILITIES
TOTAL LIABILITIES
TOTAL NET ASSETS
CAPITAL AND RESERVES
ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
Share capital
Share premium reserve
Capital redemption reserve
Foreign exchange reserve
Retained earnings
TOTAL EQUITY
Notes
£
2008
£
2007
£
£
12
13
16
17
288,534
2,040,373
________
2,328,907
342,838
1,660,878
________
2,003,716
1,562,832
2,043,869
340,190
________
1,249,419
2,365,117
84,466
________
3,946,891
________
6,275,798
________
3,699,002
________
5,702,718
________
18
19
803,721
1,826,434
938,893
106,871
________
555,640
1,645,082
762,783
94,865
________
3,675,919
3,058,370
20
-
________
217,998
________
-
________
3,675,919
________
2,599,879
________
307,826
756,980
4,674
52,864
1,477,535
________
2,599,879
________
217,998
________
3,276,368
________
2,426,350
________
307,826
756,980
4,674
-
1,356,870
________
2,426,350
________
22
23
23
23
23
The financial statements were approved by the Board of Directors and authorised for issue on 8th September 2008
and were signed on its behalf by:
P. Haining
Director
The notes on pages 15 to 45 form part of these financial statements.
13
Solid State PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st March 2008
2008
2007
£
£
£
£
OPERATING ACTIVITIES
Profit before taxation
Adjustments for:
Depreciation
Amortisation
Loss on disposal of property, plant and equipment
Share based payment expense
Investment income
Finance costs
Profit from operations before changes
in working capital and provisions
Increase in inventories
Decrease/(increase) in trade and other receivables
Increase in trade payables
Cash generated from operations
Income taxes paid
Income taxes repaid
Cash flow from operating activities
INVESTING ACTIVITIES
Purchase of property, plant and equipment
Purchase of computer software
Proceeds of sales from property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Interest received
FINANCING ACTIVITIES
Repayment of bank borrowings
Invoice discounting finance (net movement)
Interest paid
Dividend paid to equity shareholders
INCREASE/(DECREASE) IN CASH AND CASH
EQUIVALENTS (Note 28)
424,442
107,794
641
579
9,753
(397)
100,040
_______
642,852
308,035
_______
950,887
(91,411)
_______
859,476
(540,601)
_______
318,875
(311,232)
_______
7,643
_______
(167,921)
(543,375)
43,685
_______
(39,955)
42,112
_______
(188,808)
-
49,444
-
2,326
_______
(262,270)
(142,730)
(113,133)
(61,565)
_______
556,170
152,240
-
17,847
7,633
(2,326)
113,133
______
844,697
(667,611)
_______
177,086
2,157
_______
179,243
(137,038)
_______
42,205
(579,698)
_______
(537,493)
_______
(293,042)
441,248
159,829
_______
(92,352)
941
_______
(67,310)
(38,477)
13,499
(448,710)
397
_______
(335,809)
293,921
(100,040)
(169,304)
_______
The notes on pages 15 to 45 form part of these financial statements.
14
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS
Solid State PLC
The principal accounting policies adopted in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the years presented, unless otherwise stated.
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
1985 applicable to companies preparing their accounts under IFRSs. This is mandatory for accounting
periods beginning on or after 1st January 2007.
As allowed by IFRS 1, we have elected not to apply IFRS retrospectively for business combinations
computed prior to 1st 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 (1st April 2006) and at the end of each financial year thereafter.
The only effect of the transition on the reported results has been the elimination of the amortisation of
goodwill as a result of the prohibition of this charge imposed by IFRS 3. Consequently the goodwill on
consolidation at 31st March 2007 is now carried in the balance sheet at its book value at 31st March 2006
of £1,660,878, and the amortisation charge of £91,553 in the accounts for the year ended 31st March 2007
has been eliminated. The effect has been to reduce administrative expenses and to increase net profit and
retained earnings by this amount.
Basis of Consolidation
Where the company has the power, either directly or indirectly, to govern the financial and operating
policies of another entity or business so as to obtain benefits from its activities, it is classified as a
subsidiary. The consolidated financial statements present the results of the company and its subsidiaries
(“the Group”) as if they formed a single entity. Intercompany transactions and balances between Group
companies are therefore eliminated in full.
Business Combinations
The consolidated financial statements incorporate the results of business combinations using the purchase
method other than disclosed above. In the consolidated balance sheet, the acquiree’s identifiable assets,
liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The
results of acquired operations are included in the consolidated income statement from the date on which
control is obtained.
Goodwill
Goodwill represents the excess of the cost of a business combination over the interest in the fair value of
identifiable assets, liabilities and contingent liabilities acquired. Cost comprises the fair value of assets
given, liabilities assumed and equity instruments issued, plus any direct costs of acquisition.
Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the
income statement.
Impairment of non-financial assets
Impairment tests on goodwill are undertaken annually on 31st March, and on other non-financial assets
whenever events or changes in circumstances indicate that their carrying value may not be reasonable.
Where the carrying value of an asset exceeds its recoverable amount (ie the higher of value in use and fair
value less costs to sell), the asset is written down accordingly.
Impairment charges are included in the administrative expenses line item in the consolidated income
statement, except to the extent that they reverse gains previously recognised in the consolidated statement
of recognised income and expense. An impairment loss recognised for goodwill is not reversed.
15
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Intangible Assets (other than goodwill)
Intangible assets are recognised on business combinations if they are separable from the acquired entity or arise
from other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate
valuation techniques (see the section related to critical estimates and judgements below).
Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight line
basis over their useful economic lives. Cost includes all directly attributable costs of acquisition. The
amortisation expense is included within the administration expense line in the consolidated income statement.
Software is amortised over its useful economic life of 5 years, and UN licences are amortised over their expected
useful life of 10 years from the date of original grant.
Intangible assets are subject to impairment tests whenever events or changes in circumstances indicate that their
carrying value may not be recoverable.
Revenue
Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes on sales.
Revenue is recognised when the risks and rewards of owning the goods has passed to the customer which is
generally on collection. For goods that are subject to bill and hold arrangements this means:
•
•
the goods are complete and ready for collection;
the goods are separately identified from the Group’s other stock and are not used to fulfil any other
orders;
• and the customer has specifically requested that the goods be held pending collection.
Normal payment terms apply to the bill and hold arrangements.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost
includes directly attributable costs. The corresponding liability is recognised within provisions.
Depreciation is provided on all items of property, plant and equipment to write off the carrying value of items
over their expected useful economic lives. It is applied at the following rates:
Short leasehold property improvements
Fittings and equipment
Computers
Motor vehicles
- straight line over minimum life of lease
- 25% per annum on a reducing balance basis
- 20% per annum on a straight line basis
- 25% per annum on a reducing balance basis
Depreciation is provided on all UN licences to write off the carrying value of each licence over its expected
useful life, which is generally 10 years from its original grant.
Leased assets
Where substantially all of the risks and rewards incidental to ownership are retained by the lessor (an “operating
lease”), the total rentals payable under the lease are charged to the income statement on a straight-line basis over
the lease term.
The land and buildings elements of property leases are considered separately for the purposes of lease
classification.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost is based on the cost of purchase on a first
in, first out basis. Work in progress and finished goods include labour and attributable overheads. Net realisable
value is based on estimated selling price less any additional costs to completion and disposal.
16
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Deferred taxation
Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the balance
sheet differs from its tax base, except for differences arising on:
•
•
•
the initial recognition of goodwill
the initial recognition of an asset or liability in a transaction which is not a business combination and at
the time of the transaction affects neither accounting nor taxable profit: and
investments in subsidiaries and jointly controlled entities where the Group is able to control the timing
of the reversal of the difference and it is probable the difference will not reverse in the foreseeable
future.
Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be
available against which the differences can be utilised.
The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted
by the balance sheet date and are expected to apply when the deferred tax liabilities/(assets) are
settled/(recovered)
Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax
assets and liabilities, and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
Pensions
The pension schemes operated by the Group are defined contribution schemes. The pension cost charge
represents the contributions payable by the Group.
Foreign currency
Transactions entered into by Group entities in a currency other than the currency of the primary economic
environment in which it operates are recorded at the rates ruling when the transactions occur. Foreign currency
monetary assets and liabilities are translated at the rates ruling at the balance sheet date. Exchange differences
arising on the retranslation of unsettled monetary assets and liabilities are similarly recognised immediately in
the income statement
On consolidation, the results of overseas operations are translated into sterling at rates approximating to those
ruling at the balance sheet date. Exchange differences arising on retranslation of the net assets and results of the
overseas operations are recognised directly in the “foreign exchange reserve”.
Research and development costs
Expenditure on internally developed products is capitalised if it can be demonstrated that:
•
•
•
•
•
•
it is technically feasible to develop the product for it to be sold;
adequate resources are available to complete the development;
there is an intention to complete and sell the product;
the Group is able to sell the product;
sale of the product will generate future economic benefits; and
expenditure on the project can be measured reliably.
Capitalised development costs are amortised over the periods the Group expects to benefit from selling the
products developed. The amortisation expense is included within the cost of sales line in the income statement.
Development expenditure not satisfying the above criteria and expenditure on the research phase of internal
projects are recognised in the income statement as incurred.
None of the development costs during the years ended 31st March 2007 and 31st March 2008 met the conditions
necessary for capitalisation.
17
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Dividends
Equity dividends are recognised when they become legally payable. Interim dividends are recognised when paid.
Final dividends are recognised when approved by the shareholders at an annual general meeting.
Financial assets
The Group classifies its assets into one of the following categories, depending on the purpose for which the asset
was acquired. The Group’s accounting policy for each category is as follows:
Fair value through profit or loss: This category comprises only in-the-money derivatives. They are carried in the
balance sheet at fair value with changes in fair value recognised in the income statement. The Group does not
have any assets held for trading nor does it voluntarily classify any financial assets as being at fair value through
the profit and loss account
Loans and receivables: These assets are non-derivative financial assets with fixed or determinable payments that
are not quoted in an active market. They arise principally through the provision of goods and services to
customers (trade receivables), but also incorporate other types of contractual monetary asset. They are initially
recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue and
subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.
The effect of discounting on these financial instruments is not considered to be material.
Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties
on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect
all the amounts due under the terms receivable, the amount of such a provision being the difference between the
net carrying amount and the present value of the future expected cash flows associated with the impaired
receivable. For trade receivables, such provisions are recorded in a separate allowance account with the loss
being recognised within administrative expenses in the income statement. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the asset is written off against the associated
provision.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the
asset was acquired. Other than financial liabilities in a qualifying hedging relationship (see below), the Group’s
accounting policy for each category is as follows:
Fair value through the profit and loss: This category comprises only out-of-money derivatives. They are carried
in the balance sheet at fair value with changes in fair value recognised in the income statement.
Other financial liabilities: Other financial liabilities include the following items:
• Trade payables and other short term monetary liabilities, which are recognised at amortised cost.
• Bank borrowings are initially recognised at the amount advanced net of any transaction costs directly
attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method, which ensures that any interest expense over the
period to repayment is at a constant rate on the balance of liability carried in the balance sheet. “Interest
expense” in this context includes initial transaction costs and premia payable on redemption, as well as any
interest while the liability is outstanding.
18
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Shared based payment
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to the
consolidated income statement over the vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the
cumulative amount recognised over the vesting period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of options granted. As long as all other vesting
conditions are satisfied, a change is made irrespective of whether the market vesting conditions are satisfied. The
cumulative expense is not adjusted for failure to achieve a market vesting condition.
Where the terms and conditions of options are modified before the vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the income statement over
the remaining vesting period.
Standards, amendments and interpretations to published standards not yet effective
Certain new standards, amendments and interpretations to existing standards have been published that are
mandatory for the Group’s accounting periods beginning on or after 1st April 2008 or later periods and which
the Group has decided not to adopt early. These are:
-
IFRS 8, Operating Segments (effective for accounting periods beginning on or after 1st January 2009). This
standard sets out requirements for the disclosure of information about an entity’s operating segments and
also about the entity’s products and services, the geographical areas in which it operates, and its major
customers. It replaces IAS 14, Segmental Reporting. The Group expects to apply this standard in the
accounting period beginning on 1 April 2009. As this is a disclosure standard it will not have any impact on
the results or net assets of the Group.
- Amendment to IFRS 2, Share-based payments: vesting conditions and cancellations (effective for
accounting periods beginning on or after 1st January 2009). Management is currently assessing the impact
of the Amendment on the accounts.
- Amendment to IAS 1, Presentation of financial statements: a revised presentation (effective for accounting
periods beginning on or after 1st January 2009). The revised IAS 1 introduces a single “statement of
comprehensive income” incorporating both the profits and losses that have traditionally been reported in the
income statement and other gains and losses that are currently reported in the Statement of Recognised
Income and Expense or the Statement of Changes in Equity. As this is a disclosure standard it will not have
any impact on the results or net assets of the Group.
- Revised IFRS 3, Business Combinations and complementary Amendments to IAS 27, ‘Consolidated and
separate financial statements (both effective for accounting periods beginning on or after 1st July 2009).
This revised standard and amendments to IAS 27 are still to be endorsed by the EU. The revised IFRS 3 and
amendments to IAS 27 arise from a joint project with the Financial Accounting Standards Board (FASB),
the US standards setter, and result in IFRS being largely converged with the related, recently issued, US
requirements. There are certain very significant changes to the requirements of IFRS, and options available,
if accounting for business combinations. Management is currently assessing the impact of revised IFRS 3
and amendments to IAS 27 on the accounts.
-
-
IFRIC 12 ‘Service concession arrangements’, IFRIC 13 ‘Customer loyalty programmes’, IFRC 14 ‘IAS 19 –
The limit on a defined benefit asset, minimum funding, requirements and their interaction’, Amendment to
IAS 23 ‘Borrowing and Amendments to IAS 32 and IAS 1 ‘Puttable Financial Instruments and Obligations
Arising on Liquidation’ will not have a material impact on the financial statements of the Group.
Improvements to IFRS (effective for accounting periods beginning on or after 1st July 2009). This
improvements project is still to be endorsed by the European Union (EU). The amendments take various
forms, including the clarification of the requirements of IFRS, the elimination of inconsistencies between
Standards and a restructuring of IFRS 1 First-time Adoption of IFRS. Amendments to IFRS 1 and IAS 27
Cost of an Investment in a Subsidiary, Jointly–Controlled Entity or Associate (effective for accounting
periods beginning on or after 1st January 2009). These amendments are still to be endorsed by the EU.
19
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Standards, amendments and interpretations to published standards not yet effective (continued)
Improvements to IFRS (continued)
The amendments permit the entity at its date of transition to
IFRSs in its separate financial statements to use a deemed cost to account for its investment in subsidiary,
jointly-controlled entity or associate. The deemed cost of such investment could be either the fair value of
the investment at the date of transition, which would be determined in accordance with IAS 39 Financial
instruments: Recognition and Measurement or; the carrying amount of the investment under the previous
GAAP at the date of transition. These changes would have no material effect on the financial statements of
the Group.
-
IAS 23, Borrowing Costs (revised) (effective for accounting periods beginning on or after 1st January 2009).
The revised IAS 23 is still to be endorsed by the EU. The main change from the previous version is the
removal of the option of immediately recognising as an expense borrowing costs that relate to qualifying
assets, broadly being assets that take a substantial period of time to get ready for use or sale. This revision
will have no material impact on the financial statements of the Group.
- Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements
– Puttable Financial Instruments and Obligations Arising on Liquidations (effective for accounting periods
beginning on or after 1st January 2009). This amendment is still to be endorsed by the EU. The amendments
result in certain types of financial instrument that meet the definition of a liability, but represent the residual
interest in the net assets of the entity, being classified as equity. These amendments will have no material
impact on the financial statements of the Group.
Critical Accounting Judgements and Estimates
The Group’s principal accounting policies are set out above. Management is required to exercise significant
judgement and make use of estimates and assumptions in the application of these policies. Areas which
Management believes require the most critical accounting judgements are:
Impairment of receivables
At each balance sheet date, each subsidiary evaluates the collectability of trade receivables and records
provisions for impairment based on experience including, for example, comparisons of the relative age of
accounts and consideration of actual write-off history. The actual level of debt collected may differ from the
estimated levels of recovery, which could impact on operating results positively or negatively.
Inventory provisions
At each balance sheet date, each subsidiary evaluates the recoverability of inventories and records provisions
against these based on an assessment of net realisable values. The actual net realisable value of inventory may
differ from the estimated realisable values, which could impact on operating results positively or negatively.
Impairment of intangible assets
In line with IAS 36 the Group is required to test the carrying value of goodwill, at least annually, for impairment.
As part of this review process the recoverable amount of goodwill is determined using value in use calculations,
which requires estimates for future cash flows and as such is subject to estimates and assumptions. Further
details are contained in note 14 of the financial statements.
Development costs
The Group is engaged in the development of new products and processes the costs of which are capitalised as
intangible assets or tangible fixed assets if, in the opinion of Management, there is a reasonable expectation of
economic benefits being achieved. The factors considered in making these judgements include the likelihood of
future orders and the anticipated volumes, margins and duration associated with these. In the years under review
no development costs were capitalised or there were no projects where there were expected to be future
economic benefits due to uncertainty as to the markets for new products
20
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
2.
FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
Reconciliations and explanatory notes on how the transition to IFRS has affected profit and net assets previously
reported under UK Generally Accepted Accounting Principles are given below:
Income statement reconciliation for the year ended 31st March 2007
Revenue
Cost of sales
Gross profit
Distribution costs
Administrative expenses
Sub-
note
UK GAAP
£’000
Adjustments
£’000
IFRS
£’000
12,369,904
-
12,369,904
(8,784,024)
__________
-
________
(8,784.024)
__________
3,585,880
-
3,585,880
i
(1,356,520)
(1,653,936)
__________
-
91,553
________
(1,356,520)
(1,562,383)
__________
Profit from operations
575,424
91,553
666,977
Finance costs
Finance income
Profit before tax
Tax expense
Profit attributable to the equity holders of the
parent
(113,133)
2,326
__________
-
-
________
(113,133)
2,326
__________
464,617
91,553
556,170
(94,865)
__________
-
________
(94,865)
__________
369,752
__________
91,553
________
461,305
__________
21
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
2.
FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRS) (continued)
Balance sheet reconciliation as at 31st March 2007
Sub-
note
UK GAAP
£’000
Adjustments
£’000
342,838
1,569,325
________
1,912,163
________
1,249,419
2,365,117
84,466
________
3,699,002
________
5,611,165
________
555,640
1,645,082
762,783
94,865
________
3,058,370
________
217,998
________
217,998
________
3,276,368
________
2,334,797
________
-
91,553
________
91,553
________
-
-
-
________
-
________
91,553
________
-
-
-
-
________
-
________
-
________
-
________
-
________
91,553
________
Property, plant and equipment
Intangible assets
i
Total non-current assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Bank overdraft
Trade and other payables
Bank borrowings
Corporation tax liabilities
Total current liabilities
Non-current liabilities
Bank borrowings
Total non-current liabilities
Total liabilities
TOTAL NET ASSETS AND EQUITY
There was no change to the balance sheet at 1st April 2006.
22
IFRS
£’000
342,838
1,660,878
________
2,003,716
________
1,249,419
2,365,117
84,466
________
3,699,002
________
5,702,718
________
555,640
1,645,082
762,783
94,865
________
3,058,370
________
217,998
________
217,998
________
3,276,368
________
2,426,350
________
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
2.
FIRST TIME ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
(IFRS) (continued)
Adjustments
Explanations of the adjustments made to the UK GAAP income statement and balance sheets are as follows:
Sub-note
Explanation
i
ii
iii
iv
v
vi
Elimination of amortisation of goodwill as a result of the prohibition of the charge imposed
by IFRS 3. The carrying value of capitalised goodwill at 31st March 2006 that arose on
business combinations accounted for using the acquisition method under UK GAAP was
frozen at this amount and tested for impairment at 1st April 2006.
Expenditure on research and development did not meet the conditions for capitalisation.
Business combinations before 1st April 2006 have not been restated.
IFRS 2 “Share-based payments” has been applied to employee options granted after 7th
November 2002 that had not vested by 1st April 2006.
IAS 39 permits derivatives to be measured at fair value through the profit and loss account.
Under UK GAAP these were previously carried at cost. There is no material impact on the
accounts as a result of this change in accounting policy.
Under IAS 12 deferred tax is required to be provided in full on all differences between the
carrying values for accounts purposes and those for taxation. Under UK GAAP, FRS 19
requires deferred tax to be provided on all timing differences that have originated but not
reversed by the balance sheet date. There is no material impact on the accounts as a result of
this change of policy.
Cash flow statement for the year ended 31st March 2007
The only changes to the cash flow statement are presentational. The key ones include:
• Presenting a statement showing movements in cash and cash equivalents, rather than just cash. Cash
under UK GAAP comprised only amounts accessible in 24 hours without penalty less overdrafts
repayable on demand. The components of cash equivalents are shown in note 28.
• Classifying tax cash flows as relating to operating activities.
• Classifying equity dividends as relating to financing activities.
3.
REVENUE
Revenue arises from:
Sale of goods
Provision of services
2008
£
10,688,925
35,408
_________
2007
£
12,271,643
98,261
_________
10,724,333
_________
12,369,904
_________
23
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
4.
PROFIT FROM OPERATIONS
This has been arrived at after charging/(crediting):
Staff costs (see note 5)
Employment termination costs (included in staff costs)
Depreciation of property, plant and equipment
Amortisation of computer software
Loss on disposal of property, plant and equipment
Goodwill impairment charge
Auditors’ remuneration:
Audit services
Non-audit services
Operating lease rentals:
Plant and machinery
Other
Research and development costs
Foreign exchange differences
2008
£
1,844,172
57,863
107,794
641
579
-
38,670
-
24,724
108,140
94,422
(155,408)
_________
2007
£
1,851,928
6,127
152,240
-
17,847
-
43,794
8,818
26,981
128,881
89,448
(72,824)
_________
Included in audit fees is an amount of £1,000 (2007: £1,000) in respect of the Company. Additional, non-audit
services in relation to the acquisition of RZ Pressure Instruments SARL of £Nil (2007: £8,818) arose and have
been capitalised and added to the goodwill figure on consolidation.
5.
STAFF COSTS
Staff costs for all employees during the year, including the executive Directors, were as follows:
Wages and salaries
Social security costs
Other pension costs
2008
£
1,663,748
180,424
-
________
1,844,172
________
2007
£
1,673,018
178,910
-
________
1,851,928
________
Wages and salaries include termination costs of £57,863 (2007: £6,127)
The average monthly number of employees during the year, including the three executive Directors,
was as follows:
Selling and distribution
Manufacturing
Management and administration
2008
Number
2007
Number
25
15
22
_____
62
_____
25
15
23
_____
63
_____
24
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
6.
DIRECTORS’ EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS
The value of all elements of remuneration received by each Director in the year was as follows:
31st March 2008
Executive Directors
W G Marsh
G S Marsh
J M Lavery
Non-executive Directors
P Haining
L C A Newnham
Salary
£
Fees
£
Benefits
in kind
£
12,000
95,000
85,000
-
-
-
-
-
______
12,000
12,000
______
4,000
11,000
16,000
-
-
______
Total
£
16,000
106,000
101,000
12,000
12,000
______
Total
192,000
______
24,000
______
31,000
______
247,000
______
31st March 2007
Executive Directors
W G Marsh
G S Marsh
J M Lavery
Non-executive Directors
P Haining
L C A Newnham
12,000
97,000
92,000
-
-
-
-
-
______
12,000
12,000
______
4,000
10,000
16,000
-
-
______
16,000
107,000
108,000
12,000
12,000
______
Total
201,000
______
24,000
______
30,000
______
255,000
______
Pension
contribs
£
Share based
payments
£
-
-
-
-
-
______
-
______
-
-
-
-
-
______
-
______
-
4,877
4,876
-
-
______
9,753
______
-
3,816
3,817
-
-
______
7,633
______
The executive Directors waived their entitlement to emoluments during the year as follows:
W G Marsh
2008
£
24,000
______
2007
£
24,000
______
The principal benefits in kind relate to the provision of company cars.
In addition to the above, fees totalling £47,825 (2007: £53,260) arose during the year in respect of accountancy
services provided by The Kings Mill Partnership, a firm of which P Haining is a partner. A balance of £9,470
(2007: £12,055) was due to The Kings Mill Partnership at 31st March 2008. The fees for the year ended 31st
March 2008 included £2,300 which relates to the purchase of RZ Pressure Instruments Supply SARL. These
costs have been capitalised in investments in the Company and added to the goodwill on consolidation.
25
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
6.
DIRECTORS’ EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS (continued)
The three executive Directors have service contracts with the Company which are terminable by the Company,
or the relevant Director, on one year’s notice.
The Directors of the Company on 8th September 2008 and at the balance sheet date, and their interest in the
issued ordinary share capital of the Company at that date, at 31st March 2008 and 31st March 2007 or date of
appointment if later, were as follows:
W G Marsh
G S Marsh
J M Lavery
P Haining
L C A Newnham
08.09.08
31.03.08
31.03.07
1,700,500
73,420
569
12,500
10,000
1,700,500
73,420
569
12,500
10,000
1,700,500
73,154
23
12,500
10,000
Details of the options over the Company’s shares granted under the Enterprise Management Incentives Scheme
are as follows:
Options
held at
1st Apr
2007
Lapsed
Granted
Options
held at
31st Mar 2008
Subscrip-
tion price
Date of
Grant
Exercise
Period
G S Marsh
J M Lavery
160,000
-
80,000
80,000
-
160,000
-
80,000
80,000
-
-
317,460
-
-
317,460
-
317,460
-
-
317,460
60.5p
31.5p
60p
60.5p
31.5p
29.09.03
22.01.08
01.07.02
29.09.03
22.01.08
Sept 2005- Sept 2013
Jan 2009 onwards
Jul 2004 – Jul 2013
Sept 2005-Sept 2013
Jan 2009 onwards
The market price of the shares at 31st March 2008 was 28.5p (2007: 30.5p), with a quoted range during the
year of 28.5p to 56.5p. No director exercised any share options during the year, or in the prior year.
7.
FINANCE INCOME
Bank deposit interest receivable
Other interest receivable
Government electronic filing incentives
2008
£
-
97
300
______
397
______
2007
£
889
937
500
______
2,326
______
26
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
8.
FINANCE COSTS
Bank borrowings
Invoice discounting interest
Other interest
9.
TAX EXPENSE
UK corporation tax and income tax of overseas operations on
profits or losses for the year
Adjustment in respect of prior periods
2008
£
71,756
21,283
7,001
______
100,040
______
2008
£
93,875
(2,513)
______
91,362
______
2007
£
80,676
32,457
-
______
113,133
______
2007
£
94,865
-
______
94,865
______
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax is the UK applied to profits for the year are as follows:
Profit before tax
2008
£
424,442
_______
2007
£
556,170
_______
Expected tax charge based on the standard rate of corporation
tax in the UK of 30% (2007 – 30%)
127,333
166,851
Effect of:
Expenses not deductible for tax purposes
Deductible expenses not charged in Group accounts
Depreciation for the year in excess of capital allowances
Utilisation of tax losses
Marginal relief
Enhanced relief on research and development expenditure
Non-taxable government incentive received
Different tax rates and rules applied in overseas jurisdictions
Adjustment to enhanced relief on research and development
expenditure in prior year
Deferred tax has not been provided as it is not material
6,597
(9,738)
1,370
(5,085)
(3,758)
(14,164)
(90)
(8,590)
(2,513)
_______
91,362
_______
8,627
-
9,382
(71,800)
(4,630)
(13,415)
(150)
-
-
_______
94,865
_______
27
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
.
10.
EARNINGS PER SHARE
The earnings per share is based on the following:
Earnings
Weighted average number of shares
Diluted number of shares
Earnings per share
Diluted earnings per share
2008
£
330,080
_______
2007
£
461,305
_______
6,156,511
6,156,511
6,156,511
6,156,511
5.4p
5.4p
7.5p
7.5p
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 6,156,511 (2007: 6,156,511).
The Diluted earnings per share is based on 6,156,511 (2007: 6,156,511) ordinary shares which allow for the
exercise of all dilutive potential ordinary shares.
Certain employee options have not been included in the calculation of diluted EPS because their exercise is
contingent on the satisfaction of certain criteria that had not been met at the end of the year. In addition, certain
employee options have also been excluded from the calculation of diluted EPS as their exercise price is greater
than the weighted average share price during the year (ie they are out-of-the-money) and therefore it would not
be advantageous for the holders to exercise the options.
The number of shares included in the option agreement which have not been included in the calculation of the
weighted average number of shares was 380,231 (2007: 320,000).
11.
DIVIDENDS
Final dividend paid for the prior year of 2p per share (2007: nil)
Interim dividend paid of 0.75p per share (2007: 1p)
Final dividend proposed for the year 1.25p per share (2007: 2p)
2008
£
123,130
46,174
_______
169,304
_______
76,956
_______
2007
£
-
61,565
_______
61,565
_______
123,130
_______
The proposed final dividend has not been accrued for as the dividend was declared after the balance sheet date.
28
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
12.
TANGIBLE FIXED ASSETS
Year ended 31st March 2007
Cost
1st April 2006
Additions
Disposals
31st March 2007
Depreciation
1st April 2006
Charge for the year
On disposal
31st March 2007
Short
leasehold
property
improvements
£
Motor vehicles
£
Fittings,
equipment and
computers
£
Total
£
337,852
1,699
(84,375)
_________
226,195
159,806
(127,007)
_________
829,390
27,303
(13,563)
_________
1,393,437
188,808
(224,945)
_________
255,176
_________
258,994
_________
843,130
_________
1,357,300
_________
287,809
34,549
(84,375)
_________
75,822
49,659
(60,116)
_________
656,244
68,032
(13,162)
_________
1,019,875
152,240
(157,653)
_________
237,983
_________
65,365
_________
711,114
_________
1,014,462
_________
Net book value 31st March 2007
17,193
_________
193,629
_________
132,016
_________
342,838
_________
31st March 2006
Year ended 31st March 2008
Cost
1st April 2007
Additions
Acquisition of subsidiary
Disposals
31st March 2008
Depreciation
1st April 2007
Charge for the year
On disposal
31st March 2008
50,043
_________
150,373
_________
173,146
_________
373,562
_________
255,176
-
-
_________
258,994
57,076
-
(36,829)
_________
843,130
10,234
256
(256)
_________
1,357,300
67,310
256
(37,085)
_________
255,176
_________
279,241
_________
853,364
_________
1,387,781
_________
237,983
17,193
-
_________
65,365
51,967
(23,009)
_________
711,114
38,634
-
_________
1,014,462
107,794
(23,009)
_________
255,176
_________
94,323
_________
749,748
_________
1,099,247
_________
Net book value 31st March 2008
-
_________
184,918
_________
103,616
_________
288,534
_________
There were no capital commitments at 31st March 2007 and 31st March 2008.
Disposals of motor vehicles in the year ended 31st March 2007 include one vehicle purchased from the
Company by Mr G S Marsh for a consideration of £12,600. This represented the open market value. No
amounts were outstanding at the year end.
29
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
13.
INTANGIBLE ASSETS
Year ended 31st March 2007
Cost
1st April 2006 and 31st March 2007
Amortisation
1st April 2006 and 31st March 2007
Net book value
31st March 2007
31st March 2006
Year ended 31st March 2008
Cost
1st April 2007
Additions
31st March 2008
Amortisation
1st April 2007
Charge for the year
31st March 2008
Net book value
31st March 2008
UN
Licences
£
Computer
software
£
Goodwill on
consolidation
£
Total
£
-
_________
-
_________
-
_________
-
_________
1,660,878
_________
1,660,878
_________
-
_________
-
_________
1,660,878
_________
1,660,878
_________
1,660,878
_________
1,660,878
_________
-
38,477
_________
1,660,878
331,859
_________
1,660,878
380,136
_________
38,477
_________
1,992,737
_________
2,041,014
_________
-
641
_________
641
_________
-
-
_________
-
641
_________
-
_________
641
_________
37,836
_________
1,992,737
_________
2,040,373
_________
-
______
-
______
-
______
-
______
-
9,800
______
9,800
______
-
-
______
-
______
9,800
______
30
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
14.
GOODWILL AND IMPAIRMENT
Details of the carrying amount of goodwill allocated to cash generating units (CGUs) is as follows:
Steatite Limited
Wordsworth Technology Limited
Goodwill carrying amount
2008
£
893,214
1,099,523
_________
1,992,737
_________
2007
£
561,355
1,099,523
_________
1,660,878
_________
The recoverable amounts of all the above CGUs have been determined from a review of the current and
anticipated performance of these units. In preparing the projection, a discount rate of 19% has been used based
on the working average cost of capital and a future growth rate of 2.25% has been assumed beyond the first
year for which the projection is based on the budget approved by the board of directors. The future growth rate
has been applied for the next four years. It has been assumed investment in capital equipment will equate to
depreciation over this period. The discount rate was based on the group’s “beta” which is a measure of the
volatility of the share price against the market. This amounts to 0.94.
The recoverable amount exceeds the carrying amount by £863,000. If any one of the following changes were
made to the above key assumptions, the carrying amount would still exceed the recoverable amount.
Discount rate: Increase from 19% to 22%
Growth rate: Reduction from 2.25% to 1.75%
15.
SUBSIDIARIES
The principal subsidiaries of Solid State PLC, all of which have been included in these consolidated
financial statements are as follows:
Subsidiary undertakings
Country of
Incorporation
Proportion of
voting rights and
Ordinary share
capital held
Solid State Supplies Limited
Steatite Limited
Great Britain
Great Britain
Wordsworth Technology Limited
Great Britain
RZ Pressure Instruments Supply SARL Switzerland
SSS Highway Technologies Limited
Great Britain
100%
100%
100%
100%
100%
Nature of business
Distribution of electronic components
Distribution of electronic components and
manufacture of electronic equipment
Distribution of industrial computing equipment
and manufacture of electronic equipment
Dormant
Dormant
In all cases, except for RZ Pressure Instruments Supply SARL, the country of operation and of incorporation
or registration is England.
16.
INVENTORIES
Finished goods and goods for resale
Work in progress
2008
£
1,324,017
238,815
________
1,562,832
________
2007
£
1,195,220
54,199
________
1,249,419
________
There is no material difference between the replacement cost of inventories and the amount stated above.
31
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
17.
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments
2008
£
1,965,616
13,676
64,577
________
2,043,869
________
2007
£
2,267,797
800
96,520
________
2,365,117
________
Group trade receivables include £1,082,559 (2007: £1,388,462) which are subject to an invoice discounting
agreement. Under this agreement, borrowing equal to 85% of the relevant book debts can be taken with
interest charged at 1.3% over bank base rate and an administration fee of 0.15% of the gross value of debts per
month. At 31st March 2008 borrowing under the agreement of £920,175 (2007: £1,144,886) was available of
which £722,556 (2007: £428,635) was taken up leaving unused borrowing facilities of £197,619 (2007:
£716,251). Interest charges in the year amounted to £21,283 (2007: £32,457) and administration fees to
£12,400 (2007: £14,993).
18.
TRADE AND OTHER PAYABLES
Trade payables
Other taxes and social security taxes
Other payables
Accruals
Dividends payable
19.
BANK BORROWINGS
Bank loans (secured)
Amounts due to invoice discounters
2008
£
1,416,357
258,797
38,204
90,890
22,186
________
1,826,434
________
2008
£
216,337
722,556
_________
938,893
_________
2007
£
1,128,386
370,114
3,179
141,572
1,831
________
1,645,082
________
2007
£
334,148
428,635
_________
762,783
_________
The bank loan and overdraft are secured by a fixed and floating charge over the assets of the Company and the Group.
At the balance sheet date, the Group had an undrawn overdraft facility of £nil (2007: £128,826) which enables flexibility
in the management of liquidity.
32
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
20.
NON-CURRENT BANK BORROWING
Bank loans (secured)
Bank loan repayments are due:
In more than one year but not more than two years
In more than two years but not more than five years
Solid State PLC
2008
£
-
_________
-
_________
-
-
_________
-
_________
2007
£
217,998
_________
217,998
_________
217,998
-
_________
217,998
_________
There are two bank loans. The first was for £750,000 taken out in May 2002 and repayable by instalments
over seven years. The second loan was for £500,000 taken out in August 2005 and repayable by instalments
over three years. The loans are secured by a fixed and floating charge over the assets of the Company and the
Group.
21.
FINANCIAL INSTRUMENTS
The Group’s overall risk management programme seeks to minimise potential adverse effects on the Group’s
financial performance.
The Group’s financial instruments comprise cash and cash equivalents and various items such as trade
payables and receivables that arise directly from its operations. The Group is exposed through its operations to
the following risks:
• Credit risk
• Foreign currency risk
• Liquidity risk
• Cash flow interest rate risk
In common with all other businesses, the Group is exposed to risks that arise from its use of financial
instruments. This note describes the Group’s objectives, policies and processes for managing those risks.
Further quantitative information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks and
consequently the objectives, policies and processes are unchanged from the previous period.
The Board has overall responsibility for the determination of the Group’s risk management policies. The
objective of the Board is to set policies that seek to reduce the risk as far as possible without unduly affecting
the Group’s competitiveness and effectiveness. Further details of these policies are set out below:
33
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21.
FINANCIAL INSTRUMENTS (continued)
Credit risk
The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of
customers and countries, a factor that helps to dilute the concentration of the risk.
It is Group policy, implemented locally, to assess the credit risk of each new customer before entering into
binding contracts. Each customer account is then reviewed on an ongoing basis (at least once a year) based on
available information and payment history.
The maximum exposure to credit risk is represented by the carrying value in the balance sheet as shown in note
17. The amount of the total exposure shown in note 17 is stated net of provisions for doubtful debts.
The credit risk on liquid funds is limited as the funds are held at banks with high credit ratings assigned by
international credit rating agencies.
Foreign currency risk
Foreign exchange transaction risk arises when individual Group operations enter into transactions denominated
in a currency other than their functional currency. The general policy for the Group is to sell to customers in
the same currency that goods are purchased in reducing the transactional risk. Where transactions are not
matched excess foreign currency amounts generated from trading are converted back to sterling and required
foreign currency amounts are converted from sterling and the use of forward currency contracts is considered.
Foreign exchange translation risk arises on translation of the balance sheets of Group operations whose
functional currency is different to that of the Group as a whole. The predominant area where this risk applies is
US dollars and Swiss francs.
Liquidity risk
The Group operates a Group overdraft facility common to all its trading companies and invoice discounting is
used on some sales to customers meaning that the UK business can receive immediate payment on its sales.
The Group has approximately a three month visibility in its trading and runs a rolling 3 month cash flow
forecast. If any part of the Group identifies a shortfall in its future cash position the Group has sufficient
facilities that it can direct funds to the location where they are required. If this situation is forecast to continue
into the future remedial action is taken.
Cash flow interest rate risk
External Group borrowings are approved centrally. The Board accepts that this neither protects the Group
entirely from the risk of paying rates in excess of current market rates nor eliminates fully cash flow risk
associated with interest payments. It considers, however, that by ensuring approval of borrowings is made by
the Board the risk of borrowing at excessive interest rates is reduced. The Board considers that the rates being
paid are in line with the most competitive rates it is possible for the Group to achieve.
Credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
Current financial assets
Trade and other receivables
Cash and cash equivalents
34
Loans and
Receivables
2008
£
2,043,869
340,190
________
2,384,059
________
2007
£
2,365,117
84,466
________
2,449,583
________
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21.
FINANCIAL INSTRUMENTS (continued)
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
UK
Non UK
Carrying value
2008
£
1,879,272
164,597
2007
£
2,301,638
63,479
________
________
2,043,869
________
2,365,117
________
The Group policy is to make a provision against those debts that are overdue, unless there are grounds for
believing that all or some of the debts will be collected. During the year the value of provisions made in
respect of bad and doubtful debts was £38,000 which represented less than 0.36% of revenue. This provision is
included within the distribution costs in the Consolidated Income Statement.
Trade receivables ageing by geographical segment
Geographical area
2008
UK
Non UK
Total
Total
£
Current
£
30 days
past due
£
60 days
past due
£
90 days
past due
£
2,010,736
164,597
________
1,818,335
100,944
________
115,833
63,490
________
7,000
-
______
69,568
163
______
2,175,333
1,919,279
179,323
7,000
69,731
Less: Provisions
(131,464)
-
(54,733)
(7,000)
(69,731)
Total
2007
UK
Non UK
Total
________
________
______
______
______
2,043,869
________
1,919,279
________
125,490
______
-
______
-
______
2,421,120
63,479
________
2,201,722
49,496
________
146,596
6,156
_______
34,133
2,556
______
38,669
5,271
______
2,484,599
2,251,218
152,752
36,689
43,940
Less: Provisions
(119,482)
-
(38,853)
(36,689)
(43,940)
________
________
_______
______
______
Total
2,365,117
________
2,251,218
________
113,899
_______
-
______
-
______
35
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21.
FINANCIAL INSTRUMENTS (continued)
The Group records impairment losses on its trade receivables separately from gross receivables. The
movements on this allowance account during the year are summarised below:
Opening balance
Increases in provisions
Written off against provisions
2008
£
119,482
38,000
(26,018)
_______
131,464
_______
2007
£
76,446
57,000
(13,964)
_______
119,482
_______
The main factor used in assessing the impairment of trade receivables is the age of the balances and the
circumstances of the individual customer.
As shown in the above table, at 31st March 2008 trade receivables of £125,490 which were past their due date
were not impaired (2007: £113,899). All of these were less than 60 days past their due date.
36
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21. FINANCIAL INTRUMENTS (continued)
Liquidity risk
Current financial
Liabilities
Trade and other payables
Bank borrowings
Bank overdraft
Non current financial
Liabilities
Loans and borrowings
Financial liabilities
measured at amortised cost
2007
£
1,645,082
762,783
555,640
________
2008
£
1,826,434
938,893
803,721
________
3,569,048
________
2,963,505
________
-
________
217,998
________
The following are maturities of financial liabilities, including estimated contracted interest payments.
2008
Secured bank loans
Bank overdrafts
Amounts due to invoice
Discounters
Trade and other payables
2007
Secured bank loans
Bank overdrafts
Amounts due to invoice
discounters
Trade and other payables
Carrying
amount
216,337
803,721
Contractual
cash flow
227,803
803,721
6 months
or less
162,329
803,721
6 – 12
months
65,474
-
1 – 2
years
-
-
2 or more
Years
-
-
722,556
1,933,305
________
722,556
1,933,305
________
722,556
1,826,434
________
-
106,871
-
-
________ _______
_
-
-
________
3,675,919
________
3,687,385
________
3,515,040
________
172,345
-
________ _______
-
________
552,146
555,640
593,956
555,640
185,684
555,640
180,469
-
227,803
-
-
-
428,635
1,739,947
________
428,635
1,739,947
________
428,635
1,645,082
________
-
94,865
-
-
________ _______
-
-
________
3,276,368
________
3,318,178
________
2,815,041
________
275,334
227,803
________ _______
-
________
Interest rate risk
The Group finances its business through a mixture of bank overdrafts, bank and other loans and invoice
discounting facilities. During the year the Group utilised these facilities at floating rates of interest.
The Group bank loan with HSBC plc incurs interest at the rate of 1.3% over the HSBC’s base rate and bank
overdraft with HSBC plc incurs interest at the rate of 1.3% over the HSBC’s base rate. The Group is affected
by changes in the UK interest rate.
Details of interest payable under the invoice discounting agreement are stated in Note 17.
37
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21.
FINANCIAL INTRUMENTS (continued)
Interest rate risk (continued)
The US Dollar overdraft facility bears the interest rate of 1.3% over the HSBC’s US dollar base rate and is
therefore affected by changes in the US interest rate.
The fair value of the Group’s financial instruments is not materially different to the book value.
In terms of sensitivity, if the HSBC base rate had been 1% higher throughout the year the level of interest
payable would have been £14,630 (2007: £18,519) higher and if 1% lower throughout the year the level of
interest payable would have been lower by the same amounts.
Foreign currency risk
The Group’s main foreign currency risk is the short term risk associated with accounts receivable and payable
denominated in currencies that are not subsidiaries functional currency. The risk arises on the difference in the
exchange rate between the time invoices are raised/received and the time invoices are settled/paid. For sales
denominated in foreign currencies the Group will try to ensure that the purchases associated with the sale will
be in the same currency.
All monetary assets and liabilities of the Group were denominated in sterling with the exception of the
following items which were denominated in US dollars, and which are included in the financial statements at
the sterling value based on the exchange rate ruling at the balance sheet date.
The following table shows the net liabilities exposed to exchange rate risk that the Group has at 31st March
2008:
Trade receivables
Cash and cash equivalents
Trade payables
2008
£
416,594
157,272
(593,252)
_________
(19,386)
_________
2007
£
233,514
28,809
(388,060)
_________
(125,737)
_________
There were also net liabilities of £34,074 in euros (2007: £10,938), net liabilities of £Nil in Japanese yen
(2007: £14,356) and net liabilities of £8,109 in Swiss francs. (2007: £Nil)
The Group is exposed to currency risk because it undertakes trading transactions in US dollars, euros, Swiss
francs and Japanese yen. The Directors do not generally consider it necessary to enter into derivative financial
instruments to manage the exchange risk arising from its operations, but from time to time when the Directors
consider foreign currencies are weak and it is known that there will be a requirement to purchase those
currencies, forward arrangements are entered into. Details of those outstanding at the balance sheet date are
given below.
The effect of a strengthening of 10% in the rate of exchange in the currencies against sterling at the balance
sheet date would have resulted in an estimated net decrease in pre-tax profit for the year and a decrease in net
assets of approximately £6,800 (2007: £16,800) and the effect of a weakening of 10% in the rate of exchange
in the currencies against sterling at the balance sheet date would have resulted in an estimated net increase in
pre-tax profit for the year and an increase in net assets of approximately £6,200 (2007: £15,000).
38
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
21.
FINANCIAL INTRUMENTS (continued)
Foreign currency risk (continued)
At 31st March 2007 the Group had entered into agreements with its bankers to purchase US dollars as follows:
$
150,000
350,000
150,000
100,000
250,000
150,000
Rate
1.9609
1.95 – 1.9904
1.9609
1.9675
1.9675
1.9608
2nd April 2007
16th April 2007
1st May 2007
1st May 2007
15th May 2007
1st June 2007
At 31st March 2008 the Group had entered into agreement with its bankers to purchase US dollars as follows:
1st April 2008
15th April 2008
1st May 2008
15th May 2008
2nd June 2008
16th June 2008
100,000
300,000
100,000
50,000
100,000
50,000
2.0055
1.97
2.00-2.05
1.9985
2.00-2.05
1.9930
Applying the actual exchange rate at the balance sheet date to these agreements gives rise to a liability of
£1,396 at 31st March 2008 and to an asset of £69 at 31st March 2007. In view of the immaterial nature of
these amounts, no adjustment has been made in the financial statements.
Capital under management
The Group considers its capital to comprise its ordinary share capital, share premium account, capital
redemption reserve, foreign exchange reserve and accumulated retained earnings.
In managing its capital, the Group’s primary objective is to maximise returns for its equity shareholders. The
Group seeks to maintain a gearing ratio that balances risks and returns at an acceptable level and also to
maintain sufficient funding to enable the Group to meet its working capital and strategic investment need. In
making decisions to adjust its capital structure to achieve these aims the Group considers not only its short
term position but also its long term operational and strategic objectives.
The Group’s gearing ratio at 31st March 2008 is shown below:
Cash and cash equivalents
Bank overdrafts
Bank loans
Invoice discounting advance
Share capital
Share premium account
Retained earnings
Capital redemption reserve
Foreign exchange reserve
Gearing ratio
39
2008
£
(340,190)
803,721
216,337
722,556
________
1,402,424
________
307,826
756,980
1,477,535
4,674
52,864
________
2,599,879
________
0.278
________
2007
£
(84,466)
555,640
552,146
428,635
________
1,451,955
________
307,826
756,980
1,356,870
4,674
-
________
2,426,350
________
0.177
________
Solid State PLC
22.
SHARE CAPITAL
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
Authorised
9,000,000 ordinary shares of 5p each
Allotted issued and fully paid
6,156,511 ordinary shares of 5p each
2008
£
2007
£
450,000
_________
307,826
_________
450,000
_________
307,826
_________
An Enterprise Management Incentive Scheme was adopted by the Company in September 2000 and formally
approved at an Extraordinary General Meeting on 12th December 2000.
Details of options granted are set out in Note 6. At 31st March 2008 the number of shares covered by option
agreements amounted to 634,920 (2007: 320,000).
No options were exercised in the year (2007: nil).
23.
RESERVES
Full details of movements in reserves are set out in the consolidated statement of changes in equity on page 12.
The following describes the nature and purpose of each reserve within owners’ equity.
Reserve
Description and Purpose
Share premium
Capital redemption
Foreign exchange
Retained earnings
Amount subscribed for share capital in excess of nominal value.
Amounts transferred from share capital on redemption of issued shares.
Gains/losses from the retranslation of net assets of overseas operations
into sterling
Cumulative net gains and losses recognised in the consolidated income
statement.
24.
LEASING COMMITMENTS
At 31st March 2008 the Group had future commitments under operating leases as follows:
2008
£
46,933
105,000
______
9,117
6,264
______
2007
£
97,933
-
_________
6,315
29,806
_________
Group Buildings:
Leases expiring in less than one year
Leases expiring in one to five years
Plant and machinery:
Leases expiring in less than one year
Leases expiring in one to five years
40
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
25.
SHARE BASED PAYMENT
The Group operates an approved Enterprise Management Incentive Scheme whereby Mr G S Marsh and Mr J
M Lavery have been granted options to purchase shares in Solid State PLC at a subscription price which was
not less than the market value at the time the option was granted. The options in place at 31st March 2008 all
have an exercise period of any time after one year from the date of the grant subject to the Group share price
having equalled or exceeded 50p per share at the close of business on 20 consecutive business days.
The options in place at 31st March 2007 comprised an option granted on 29th September 2003 to purchase
160,000 to Mr G S Marsh at an exercise price of 60.5p, an option granted on 1st July 2002 to purchase 80,000
to Mr J M Lavery at an exercise price of 60p and an option granted on 29 September 2003 to Mr J M Lavery to
purchase 80,000 at an exercise price of 60.5p. All these options were cancelled on 22nd January 2008, when
the new options were granted. In accordance with the transitional provisions of FRS 20, Share-based payment,
the standard was applied retrospectively to grants of equity instruments after 7th November 2002 that were
unvested as of 1st April 2005 and all liabilities for share based transactions existing at 1st April 2005.
None of the options have been exercised since the scheme was put into place. Details of the current options
are stated in Note 6.
The share-based remuneration expenses amounted to £9,753 for the year (2007: £7,633).
The following information is relevant to the determination of the fair value of the options. The 2008 details
relate to options that were granted during the year and the 2007 details relate to options which were in place at
31st March 2007 but were cancelled on 22nd January 2008.
Equity settled share based payments
Option pricing model used
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk free interest rate
2008
2007
Binominal Tree
31.5p
31.5p
1.2 years
Black - Scholes
60.5p
60.5p
4.0 years
78.52%
-
4.31%
45.00%
-
4.30%
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a
statistical analysis of daily share prices over the twelve months prior to the date of the grant.
The market vesting conditions have been factored into the calculation by applying an appropriate discount to
the fair value of equivalent share options without the specified vesting conditions.
41
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
26
ACQUISITIONS DURING THE PERIOD
On 3rd November 2007 the Group acquired 100% of the voting equity instruments of RZ Pressure Instruments
Supply SARL, a company incorporated in Switzerland whose principal activity was the manufacture and
supply of industrial batteries. During December 2007 the business was transferred to Redditch where it is now
operating as a division of Steatite Limited.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are
as follows:
Fair value of assets acquired
UN licences
Property, plant and equipment
Inventories
Receivables
Cash
Payables
Tax liabilities
Consideration paid
Cash
Cost of acquisition
Goodwill
£
9,800
256
20,371
120,000
176,009
(21,521)
(12,055)
_______
292,860
_______
577,048
47,671
________
624,719
________
331,859
________
At 31st March 2008, £37,511 of the cash consideration remained outstanding.
In all cases, apart from the UN licences, which were not recognised in the company records, the book value of
assets and liabilities was the same as the fair values.
The main factors leading to the recognition of goodwill are the anticipated synergistic cost savings resulting
from the amalgamation of the business with the battery division of Steatite Limited.
Since the acquisition date, RZ Pressure Instruments Supply SARL has contributed £4,265 to Group profit. It
has not been practical to quantify the effect on Group profit if the acquisition date had been 1st April 2007 or
the revenue of the combined entity on the same basis as the company did not have 31st March as an accounting
reference date and did not produce periodic management accounts which could be used for this purpose.
27.
RELATED PARTY DISCLOSURES
The only related party disclosures for both the Group and the Company are stated in Note 6 and Note 12.
42
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
28.
NOTES SUPPORTING CASH FLOW STATEMENT
Cash and cash equivalents comprise:
Cash available on demand
Overdrafts
2008
£
340,190
(803,721)
_________
(463,531)
_________
2007
£
84,466
(555,640)
_________
(471,174)
_________
Net increase/(decrease) in cash and cash equivalents
7,643
(537,493)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
There were no significant non-cash transactions.
(471,174)
_________
(463,531)
_________
66,319
_________
(471,174)
_________
43
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
29. SEGMENT INFORMATION
The Group’s primary reporting format for segment information is business segments which reflect the
management reporting structure in the Group. The distribution division includes Solid State Supplies Limited
and the manufacturing division includes Wordsworth Technology Limited and Steatite Limited which
incorporates RZ Pressure.
Year ended 31st March 2008
Revenue
External
Intercompany
Profit/(loss) before tax
Balance sheet
Assets
Liabilities
Net assets/(liabilities)
Other
Capital expenditure
- Tangible fixed assets
- Intangible fixed assets
Depreciation, amortisation and
other non cash expenses
Distribution
division
£
Manufacturing
division
£
Head
office
£
Total
£
3,545,594
-
________
3,545,594
________
(78,374)
________
1,605,438
(1,880,237)
________
(274,799)
________
10,234
38,477
58,432
________
7,178,739
142,335
________
7,321,074
________
715,816
________
4,670,360
(1,502,307)
________
3,168,053
________
57,076
341,659
88,582
________
-
-
________
10,724,333
142,335
________
-
________
10,866,668
________
(213,000)
________
424,442
________
-
(293,375)
________
(293,375)
________
6,275,798
(3,675,919)
________
2,599,879
________
-
-
67,310
380,136
-
________
147,014
________
44
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
29.
SEGMENT INFORMATION (continued)
Year ended 31st March 2007
Revenue
External
Intercompany
Profit/(loss) before tax
Balance sheet
Assets
Liabilities
Net assets/(liabilities)
Other
Capital expenditure
- Tangible fixed assets
- Intangible fixed assets
Depreciation, amortisation and
other non cash expenses
Distribution
division
£
Manufacturing
division
£
Head
office
£
Total
£
3,719,661
-
________
3,719,661
________
49,377
________
1,881,279
(1,794,900)
________
86,379
________
131,750
-
71,805
________
8,650,243
436,717
________
9,086,960
________
684,793
________
3,821,439
(1,130,486)
________
2,690,953
________
-
-
________
12,369,904
436,717
________
-
________
12,806,621
________
(178,000)
________
556,170
________
-
(350,982)
________
(350,982)
________
5,702,718
(3,276,368)
________
2,426,350
________
57,058
-
-
-
188,808
-
155,282
________
-
________
227,087
________
The Group’s secondary reporting format for reporting segment information is geographic segments.
External revenue by
location of customer
Total assets by
location of assets
2008
2007
2008
2007
United Kingdom
Europe
North America
Asia
Africa
Australasia
South America
£
9,951,944
561,843
100,175
92,002
12,589
5,780
-
________
£
11,604,721
663,798
72,269
18,180
6,741
1,635
2,560
________
£
£
6,159,228 5,702,718
-
-
-
-
-
-
________ ________
116,570
-
-
-
-
-
Net tangible capital
expenditure by location
of assets
2008
2007
£
53,811
-
-
-
-
-
-
________
£
139,364
-
-
-
-
-
-
________
10,724,333
________
12,369,904
________
6,275,798 5,702,718
________ ________
53,811
________
139,364
________
All the above relate to continuing operations.
45
Solid State PLC
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
COMPANY BALANCE SHEET
at 31st March 2008
Notes
2008
£
2,464,056
_________
2,464,056
4
5
6
7
8
9
9
9
2007
£
1,879,474
________
1,879,474
118,810
________
1,991,284
217,998
________
1,773,286
________
307,826
756,980
4,674
703,806
________
1,773,286
________
-
________
-
860,214
________
447,789
________
447,789
335,979
________
(860,214)
________
1,603,842
-
________
1,603,842
________
307,826
756,980
4,674
534,362
________
1,603,842
________
CREDITORS: Amounts falling due within
one year
NET CURRENT (LIABILITIES)/ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS: Amounts falling due after
more than one year
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
SHAREHOLDERS’ FUNDS
The financial statements were approved by the Board of Directors and authorised for issue on 8th September 2008.
P Haining
Director
The notes on pages 47 to 50 form part of these financial statements.
46
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2008
1. ACCOUNTING POLICIES
The following accounting policies have been applied consistently in dealing with items which are considered
material in relation to the Company’s financial statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable UK accounting standards and under
the historical cost convention. The accounts have been prepared on the going concern basis.
Profit and loss account
Under section 230(4) of the Companies Act 1985 the Company is exempt from the requirement to present its
own profit and loss account. The loss for the year ended 31st March 2008 is disclosed in Note 9.
Foreign currencies
Assets and liabilities in foreign currencies are translated into sterling at closing rates of exchange.
Investments in subsidiaries
Investments in subsidiaries are stated at cost less amounts provided for impairment.
Other financial liabilities
Other financial liabilities include the following items:
• Amounts owed by group undertakings and other creditors, which are recognised at amortised cost.
• Bank borrowings are initially recognised at the amount advanced net of any transaction costs directly
attributable to the issue of the instrument. Such interest bearing liabilities are subsequently measured at
amortised cost using the effective interest rate method which ensures that any interest expense over the
period to repayment is at a constant rate on the balance of the liabilities carried in the balance sheet.
Interest expense in this context includes initial transaction costs and premium payable on redemption, as
well as any interest or coupon payable while the liability is outstanding.
Shared based payment
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to
the profit and loss account over the vesting period. Non-market vesting conditions are taken into account by
adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the
cumulative amount recognised over the vesting period is based on the number of options that eventually vest.
Market vesting conditions are factored into the fair value of options granted. As long as all other vesting
conditions are satisfied, a change is made irrespective of whether the market vesting conditions are satisfied.
The cumulative expense is not adjusted for factors to achieve a market vesting condition.
Where the terms and conditions of options are modified before the vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the profit and loss account
over the remaining vesting period.
2.
STAFF COSTS
Staff costs amounted £9,753 (2007: £7,633) and comprised the share based payment expense. There were 3
employees (2007: 3), all of whom were executive directors and none of whom received any remuneration from
the Company. No other remuneration was paid by the Company and the Directors receive their remuneration
from subsidiary companies. Details of directors’ emoluments are given in note 6 to the Group financial
statements.
47
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2008
3.
SHARE BASED PAYMENT
The Group operates an approved Enterprise Management Incentive Scheme whereby Mr G S Marsh and Mr J
M Lavery have been granted options to purchase shares in Solid State PLC at a subscription price which was
not less than the market value at the time the option was granted. The options in place at 31st March 2008 all
have an exercise period of any time after one year from the date of the grant subject to the Group share price
having equalled or exceeded 50p per share at the close of business on 20 consecutive business days.
The options in place at 31st March 2007 comprised an option granted on 29th September 2003 to purchase
160,000 to Mr G S Marsh at an exercise price of 60.5p, an option granted on 1st July 2002 to purchase 80,000
to Mr J M Lavery at an exercise price of 60p and an option granted on 29 September 2003 to Mr J M Lavery to
purchase 80,000 at an exercise price of 60.5p. All these options were cancelled on 22nd January 2008, when
the new options were granted. In accordance with the transitional provisions of FRS 20, Share-based payment,
the standard was applied retrospectively to grants of equity instruments after 7th November 2002 that were
unvested as of 1st April 2005 and all liabilities for share based transactions existing at 1st April 2005.
None of the options have been exercised since the scheme was put into place. Details of the current options
are stated in Note 6 of the consolidated financial statements.
The share-based remuneration expenses amounted to £9,753 for the year (2007: £7,633).
The following information is relevant to the determination of the fair value of the options. The 2008 details
relate to options that were granted during the year and the 2007 details relate to options which were in place at
31st March 2007 but were cancelled on 22nd January 2008.
Equity settled share based payments
Option pricing model used
Weighted average share price at grant date
Exercise price
Weighted average contractual life
Expected volatility
Expected dividend growth rate
Risk free interest rate
2008
2007
Binominal Tree
31.5p
31.5p
1.2 years
Black - Scholes
60.5p
60.5p
4.0 years
78.52%
-
4.31%
45.00%
-
4.30%
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a
statistical analysis of daily share prices over the twelve months prior to the date of the grant.
The market vesting conditions have been factored into the calculation by applying an appropriate discount to
the fair value of equivalent share options without the specified vesting conditions.
48
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
4.
INVESTMENTS
Company
Cost
1st April 2007
Additions
Disposals
31st March 2008
Net book value
31st March 2008
31st March 2007
Subsidiary undertakings
Group
undertakings
£
1,879,474
584,719
(137)
________
2,464,056
________
2,464,056
________
1,879,474
________
The principal undertakings in which the Company’s interest at the year end is 20% or more are as follows:
Proportion of voting
rights and Ordinary
share capital held
Nature of business
Subsidiary undertakings
Solid State Supplies Limited
Steatite Limited
Wordsworth Technology Limited
RZ Pressure Instruments Supply SARL
SSS Highway Technologies Limited
100%
100%
100%
100%
100%
Distribution of electronic components
Distribution of electronic components and
manufacture of electronic equipment
Distribution of industrial computing equipment
and manufacture of electronic equipment
Dormant
Dormant
In all cases the country of operation and of incorporation or registration is England apart from RZ Pressures
Instruments Supply SARL which is incorporated in Switzerland.
5.
DEBTORS
Amounts owed by Group undertakings
6.
CREDITORS: Amounts falling due within one year
Bank loans (secured)
Amounts owed to Group undertakings
Other creditors
49
2008
£
-
________
2008
£
216,337
584,180
59,697
________
860,214
________
2007
£
447,789
________
2007
£
334,148
-
1,831
________
335,979
________
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2008 (continued)
7.
CREDITORS: Amounts falling due after more than one year
Bank loans (secured)
2008
£
-
______
2007
£
217,998
______
There are two bank loans. The first was for £750,000 taken out in May 2002 and repayable by instalments
over seven years. The second loan was for £500,000 taken out in August 2005 and repayable by instalments
over three years. The loans are secured by a fixed and floating charge over the assets of the Company and the
Group.
The Company has guaranteed bank borrowings of its subsidiary undertakings, Solid State Supplies Limited,
Steatite Limited and Wordsworth Technology Limited. At the year end the liabilities covered by those
guarantees amounted to £803,721 (2007: £555,640). The Company accounts for guarantees provided to Group
companies as insurance contracts, recognising a liability only to the extent that it is probable the guarantees
will be called upon.
8.
SHARE CAPITAL
Authorised
9,000,000 ordinary shares of 5p each
Allotted issued and fully paid
6,156,511 ordinary shares of 5p each
2008
£
450,000
________
307,826
________
2007
£
450,000
________
307,826
________
An Enterprise Management Incentive Scheme was adopted by the Company in September 2000 and formally
approved at an Extraordinary General Meeting on 12th December 2000.
Details of options granted are set out in Note 6 of the Consolidated Accounts. At 31st March 2008 the number
of shares covered by option agreements amounted to 634,920 (2007: 320,000).
No options were exercised in the year (2007: nil).
9.
RESERVES
1st April 2007
Loss for the year
Add: Share based expense
Dividend paid
31st March 2008
Share premium
account
Capital redemption
reserve
Profit and
loss account
756,980
-
_______
756,980
-
_______
756,980
-
________
756,980
________
4,674
-
_____
4,674
-
_____
4,674
-
_____
4,674
_____
703,806
(9,893)
_______
693,913
9,753
_______
703,666
(169,304)
_______
534,362
_______
The loss for the year comprises the share based expense and the loss on disposal of a dormant subsidiary.
The cumulative amount of goodwill which has been eliminated against reserves at 31st March 2008 is £30,000
(2007: £30,000).
50
Solid State PLC
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of Solid State PLC will be held at Unit 2, Eastlands Lane,
Paddock Wood, Kent TN12 6BU on 30th October 2008 at 11.00am for the following purposes:
(1)
(2)
(3)
(4)
(5)
(6)
(7)
To pass the following resolution: That Article 88 of the Company’s Articles of Association be and is hereby
deleted in its entirety. (Resolution 1)
SPECIAL RESOLUTION
ORDINARY RESOLUTIONS
To receive and adopt the accounts for the year ended 31st March 2008, together with the reports of the
Directors and auditors thereon. (Resolution 2)
To declare a final dividend of 1.25p per share. (Resolution 3)
To reappoint William George Marsh, who retires by rotation, as a Director of the Company in accordance with
the Companies Articles of Association. (Resolution 4)
To reappoint Lewis Cyril Ashby Newnham, who retires by rotation, as a Director of the Company in
accordance with the Companies Articles of Association. (Resolution 5)
To reappoint BDO Stoy Hayward LLP as auditors of the Company and to authorise the Directors to fix their
remuneration. (Resolution 6)
To pass the following resolution:
That the Company is, pursuant to Section 166 of the Companies Act 1985, hereby generally and
unconditionally authorised to make market purchases (within the meaning of Section 163 of the Companies
Act 1985) of ordinary shares of 5p each in the capital of the Company (“ordinary shares”) provided that:-
the minimum price which may be paid for the ordinary shares is 20p per ordinary share;
i)
ii)
the maximum price which may be paid for the ordinary shares is £1.00 per ordinary share;
iii)
the authority hereby conferred shall expire after a period of 18 months from the passing of this
resolution unless such authority is renewed prior to such expiry;
the authority hereby conferred is in substitution for any existing authority to purchase ordinary shares
under the said Section 166;
the Company may make a contract to purchase ordinary shares under the authority hereby conferred
prior to the expiry of such authority which will be executed wholly or partly after the expiry of such
authority and may make a purchase or purchases of ordinary shares in pursuance of any such contract;
and
the maximum number of ordinary shares hereby authorised to be purchased by the Company does not
exceed 15 per cent of the issued ordinary share capital of the Company at the date of the passing of
this resolution. (Resolution 7)
iv)
vi)
v)
BY ORDER OF THE BOARD
P Haining FCA
Secretary
8th September 2008
Registered office:
Unit 2, Eastlands Lane, Paddock Wood, Kent TN12 6BU
NOTES:
1.
Proxies
Only holders of ordinary shares are entitled to attend and vote at this meeting. A member entitled to attend and
vote may appoint a proxy or proxies who need not be a member of the Company to attend (and on a poll to vote)
instead of him or her. Forms of proxy need to be deposited with the Company’s registrar, Capita Group plc,
Balfour House, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, not later than 48 hours before
the time of the meeting. Completion of a form of proxy will not preclude a member attending and voting in
person at the meeting.
2.
Documents on Display
The register of Directors’ interests in the share capital and debentures of the Company, together with copies of
service agreements under which Directors of the Company are employed, are available for inspection at the
Company’s registered office during normal business hours from the date of this notice until the date of the
Annual General Meeting and will also be available for inspection at the place of the Annual General Meeting for
at least 15 minutes prior to the meeting.
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52
SOLID STATE PLC
FORM OF PROXY
Please read the notes below before completing the form. Any amendments to this form should be initialled by the
signatory.
I/We (name/(s) in full
of address(es)
being a member(s) of the above named company, hereby appoint the Chairman of the Meeting, or
failing him
as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held
at Unit 2, Eastlands Lane, Paddock Wood, Kent, TN12 6BU on Thursday 30th October 2008 at 11.00am and at
any adjournment thereof.
Resolution
For
Against
1. To remove the age limit on the appointment of directors.
2. To receive and adopt the accounts for the year ended 31st March 2008
together with the reports of the Directors and auditors thereon.
3. To declare a final dividend of 1.25p per share.
4. To re-appoint William George Marsh, who retires by rotation, as a Director
of the Company in accordance with the Company’s Articles of Association.
5. To re-appoint Lewis Cyril Ashby Newnham, who retires by rotation, as a
Director of the Company in accordance with the Company’s Articles of
Association.
6. To re-appoint BDO Stoy Hayward LLP as auditors of the Company and to
authorise the Directors to fix their remuneration.
7. To authorise the Company to purchase its own shares.
Signature
Notes
Date
1. You may appoint one or more proxies of your own choice, if you are unable to attend the meeting but would like to vote.
If such an appointment is made, delete the words “the Chairman of the Meeting” and insert the name(s) of the person or
persons appointed as proxy/proxies in the space provided. A proxy need not be a member of the Company. If no name is
entered above, the return of this form duly signed will authorise the Chairman of the meeting to act as your proxy.
2.
In the case of a corporation, this form of proxy must be properly executed under the hand of its duly authorised officer or
attorney or any other person authorised to sign on behalf of the corporation.
3. To be valid, this form must be deposited (together with any power of attorney or other authority under which it is signed
or a notarially certified copy of such power or a copy certified in accordance with Powers of Attorney Act 1971 or in some
other manner approved by the Directors), at Capita IRG plc, The Registry, 34 Beckenham Road, Kent BR3 4TU, not later
than 48 hours before the time appointed for the Meeting. The completion and return of a form of proxy will not, however,
preclude shareholders from attending and voting in person at the Meeting.
4.
5.
If two or more persons are jointly entitled to a share conferring the right to vote, any one of them may vote at the Meeting
either in person or by proxy, but if more than one joint holder be present at the Meeting either in person or by proxy
the one whose name stands first in the Register of Members in respect of the joint holding shall alone be entitled to vote.
In any event the names of all joint holders should be stated above.
If this form is returned without any indication as to how the person(s) appointed shall vote on the resolutions, such
persons(s) will exercise his/her/their discretion as to how to vote or whether to abstain from voting. Unless instructed
other wise, the proxy may also vote or abstain from voting as he or she thinks fit on any other business, which may
properly come before the meeting (including amendments to resolutions).
Please return this form to:
Capita IRG plc, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU