Annual Report & Accounts
31 March 2010
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
11
12
13
14
15
17
48
1
Solid State PLC
Directors:
DIRECTORS, SECRETARY AND ADVISERS
Peter Haining, FCA, Chairman
Lewis Cyril Ashby Newnham, Deputy Chairman
Gary Stephen Marsh, Chief Executive Officer
William George Marsh, Director
John Michael Lavery, Director
Gordon Leonard Comben, Director
John Lawford Macmichael, Director
Anthony Brian Frere, 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
131 Finsbury Pavement
London EC2A 1NT
Charles Stanley Securities
131 Finsbury Pavement
London EC2A 1NT
Haysmacintyre
Fairfax House
15 Fulwood Place
London WC1V 6AY
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
Key Results
• Turnover
• Profit before tax
• Earnings per share
• Cash generated from operations
£13.5m
£530k
6.6p
£425k
(2009: £12.5m)
(2009: £615k)
(2009: 7.9p)
(2009: £632k)
Dividends
The Directors recommend that a final dividend of 2p per share be paid. An interim dividend of 1p per share was
paid in January 2010 giving a total dividend in respect of the year of 3p per share (2009: 3p per share). The final
dividend will be paid on 6th September 2010 to shareholders on the register at the close of business on 20th August
2010.
Trading Review
The key performance indicators measured by management are sales, bookings and gross profit margins. Bookings
are sales orders received.
Solid State Supplies
Although sales from our component distribution business declined by 3.4% in FY09/10, the effects of the economic
downturn were not as great as those felt by the market in general. Our industry association AFDEC reported a
contraction in the DTAM (Distributor’s Total Available Market) for the UK of 11.3% in 2009. We believe our
strategy of focusing on specialist electronic components and the continued programme of new product introductions
helped to insulate us from the worst of the recession. We are pleased to report gross margins improved in the
second half of the year and closed at 27.3% (2009: 27.4%).
In the light of the contraction of the overall market we implemented a restructuring programme which we completed
in the first quarter of the new financial year. We began to see an upturn in the market during the final quarter and
our bookings at the close of this financial year were 5.4% up on the previous year. We start the new financial year
with an increased order book 11.2% up on this time last year. Whilst the economic outlook remains uncertain these
results coupled with the newly restructured business give us grounds for optimism as we start the new financial year.
Steatite
As a result of new product developments we achieved a very strong performance during the second half of the year
and are very pleased to report sales for a whole of FY09/10 increased by 11.8%. Both the battery and industrial
computer divisions performed well. Gross margins remained under pressure owing to the weakness of Sterling, with
overall margins slipping by 0.9% compared to FY08/09. The strong bookings performance throughout the year has
meant the open order book going into FY10/11 is some 76% up on the previous year. Our robust order book and
potential for a number of significant new contracts together place us in a strong position as we enter the new fiscal
year.
Summary
Despite the fall in profit before tax of 13.8%, the increase achieved in turnover of 7.9% and in gross profit of 3.7%,
reflect a strong result in what has been a very difficult economic climate.
We completed our fourth acquisition with the purchase of Rugged Systems Limited at the beginning of April 2010.
The addition of this company will strengthen significantly our computer business as we seek to become the UK’s
leading supplier of industrial computers.
Steatite has had a strong start to the new financial year and we believe that the restructuring undertaken at Solid
State Supplies will return that division to profitability.
We believe that the Group is well placed to benefit from the current economic recovery and to achieve increases in
turnover and profitability in the new financial year.
3
Solid State PLC
CHAIRMAN’S STATEMENT (continued)
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 50 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 5p 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 4,525,113
Ordinary shares, representing 73.5% of the Company’s issued Ordinary share capital.
Conclusion
I would like to thank my fellow Directors and all the staff of the Group for their continued support.
Peter Haining
Chairman
28th July 2010
4
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010
The Directors submit their report together with the audited financial statements of the Group in respect of the year
ended 31st March 2010.
Principal Activities, Review of the Business and Future Developments
The principal activities of the Group during the year continued to be those of the manufacturing of electronic
equipment and the distribution of electronic components and materials.
The key performance indicators recognised by management are sales, bookings and group profit margins. Bookings
are sales orders received.
An overall review of the Group’s trading performance and future developments is given in the Chairman’s
Statement.
The Directors consider the results for the year to be satisfactory in view of the decline in the UK economy. Group
turnover increased by 7.8% and despite considerable pressure on gross profit margins during the economic recession
and the weakness of sterling against the dollar throughout the period the Group gross profit margin declined but this
decline was restricted to a fall from 28.1% to 27.0%. Trends in gross profit margins remain under close review by
the board. The net profit before tax of £529,785 is lower than the corresponding figure of £614,501 in the prior year
but the Directors believe this to be a sound result in what, at its start, was expected to be a difficult year.
The book to bill ratio had been 0.939 to 1 in the previous year and in the first three months of the year under review
the turnover was 15.9% lower than in the previous year. The fact that turnover for the whole year was 7.8% higher
than the previous year reflects the success in obtaining bookings during the year. At Steatite the book to bill ratio for
the year under review was 1.19 : 1 and at Solid State Supplies 1.05 : 1, and this strong result has already been
reflected in an increase in group turnover in the first quarter of the new financial year of 29.8% over the
corresponding period last year and ignoring the turnover of Rugged Systems Limited which was acquired on 1st
April 2010. Despite the strong turnover in the first quarter, the Directors are pleased to report that the group book to
bill ratio this quarter has remained positive at 1.1 : 1.
The close scrutiny of group profit margins is reflected in the enhanced rates achieved at both Steatite and Solid State
Supplies in the first quarter of the new financial year compared with the corresponding period last year. The newly
acquired Rugged Systems Limited historically has fairly low gross profit margins but these too are being closely
monitored and the Directors are confident that a satisfactory margin level will be achieved in the first year of trading
as part of the Group.
Overheads increased in the year compared with the previous year, by 8.8%, mainly reflecting the increased scale of
operations at Steatite. In the first quarter of the new financial year a review of costs at Solid State Supplies has been
undertaken and cuts are being effected in overheads, in particular staff and premises costs, with a view to returning
the distribution business undertaken by the Group to profitability. The results to date are encouraging.
The Directors are mindful of the forthcoming reductions in Government expenditure which will almost certainly
result in significant reductions in military budgets. The Group has been successful in obtaining significant contracts
in non-military products to mitigate the effect of defence spending reductions.
The Group has continued to invest in research and development activities at Redditch with expenditure of
approximately £66,000 in the year, particularly in the area of industrial batteries. The Group has continued to
improve its websites which are considered a major marketing tool.
The Group finances its operations by a mixture of retained profits, bank borrowings and invoice discounting
facilities. The Directors are pleased to note that the net tangible assets have increased by over £230,000 in the year.
5
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010 (continued)
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.
The success of the Group’s policies on credit sales is evidenced by the fact that the provision in the year was
£20,000 which is approximately 0.15% of turnover.
The Group does not comment on environmental matters.
The Group continues to look for suitable UK acquisitions within the electronics industry.
Results and Dividends
The consolidated income statement is set out on page 11. The Directors recommend that a final dividend of 2p per
share is paid. The total dividend for the year is thus 3p per share. The final dividend will be paid on 6th September
2010 to shareholders on the register at the close of business on 20th August 2010.
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
G L Comben
On 1st April 2010 J L Macmichael and A B Frere joined the board
Peter Haining FCA, (dob 05/09/1956), 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. 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, (dob 19/08/1937), 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.
Gary Marsh, (dob 27/04/1966), Chief Executive Officer
Gary Marsh joined the Company in 1986 having gained an HND in Business and Finance Studies. He has held
various positions within the Group including that of Operations Director of Solid State Supplies prior to his
appointment as its Managing Director in 1997. In addition to this role, Gary Marsh was appointed Group Managing
Director in 2002 following the acquisition of Steatite. In 2010 following the acquisition of Rugged Systems Ltd he
was appointed Chief Executive Officer of the Group.
6
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010 (continued)
William Marsh, (dob 23/07/1937), Director
Educated at Kingston-upon-Thames Technical College, Bill Marsh started work at Hackbridge Transformers in
1954 as a Student Apprentice. In 1960, having gained an HNC qualification in electrical/electronic engineering he
joined the Royal Air Force as an Air Radar Fitter. In 1962 he joined Hewittic Rectifiers where he worked as a
Design Engineer and later as a Contracts Engineer. In 1968 Bill joined International Rectifier as an Area Sales
Manager, rising to the position of General Sales Manager (Northern Europe). In 1974 he joined Solid State Supplies
as Managing Director until he stepped down in 1997. Following a spell as Company Chairman he has continued to
serve on the Board of Directors.
John Lavery, (dob 06/05/1961), Director
John Lavery is an apprenticed trained engineer in Electronics Communications. He moved into Sales in the 1980’s
with Steatite before being appointed to The Board of Directors at the age of 28.He has held positions of Director of
Sales and Marketing after a years training with the Institute of Directors for Corporate Governance, before being
appointed Managing Director of Steatite in 1999. He presently runs the operations of both Steatite and Wordsworth
on behalf of Solid State plc.
John Macmichael, (dob 20/04/1961), Director
John Macmichael is an electronics and communications graduate whose career has encompassed design and
development through applications engineering, sales, sales management and general business management. John has
gained extensive management experience of multiple sales channels with distributors and OEMs both here in the
UK and worldwide through his international sales management role whilst living in the USA. Formerly managing
director of Breckenridge Technologies Limited John joined Solid State Supplies Limited in 2006 before being
appointed managing director in April 2010.
Gordon Comben, (dob 09/09/1939), Non-executive Director
Gordon Comben trained as radio officer and after leaving the merchant navy worked in the electronics industry with
Plessey, Texas Instruments, Philips and International Rectifier. In 1971 he founded Solid State Supplies and has
been employed in various roles including Company Chairman. He is currently a Non-executive Director of the
Company.
Tony Frere (dob 15/10/1947) Non-executive Director
Tony Frere has been in the Electronics Industry for 40 years, 30 of which serving the component distribution sector.
Former directorships include Managing Director of DT Electronics and Nu Horizons Electronics. Currently a
member of the Institute of Directors and sitting on the executive council of the ECSN (the electronic component
supply network trade association).
Details of the interests of Directors in the shares of the Company and Directors’ service contracts are stated in Note
5 to the financial statements.
7
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010 (continued)
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, W G Marsh and A B Frere, 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 G L Comben, A B Frere, 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 four executive Directors and four 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 3rd September 2009. This authority expires on 3rd March 2011.
Financial Instruments
Details of the use of financial instruments by the Company and its subsidiaries are contained in Note 19 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 2006.
8
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010 (continued)
The Directors are responsible for preparing the annual report and financial statements in accordance with the
Companies Act 2006. 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.
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 2010 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 56 days (2009: 47 days).
9
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2010 (continued)
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.
BDO Stoy Hayward LLP resigned as auditors on 7th October 2009. The Directors appointed Haysmacintyre to fill
the casual vacancy. A resolution to reappoint Haysmacintyre as auditors will be proposed at the next annual general
meeting.
By order of the Board
P Haining FCA
Secretary
28th July 2010
Registered Office: Unit 2, Eastlands Lane, Paddock Wood, Kent, TN12 6BU
10
Solid State PLC
REPORT OF THE INDEPENDENT AUDITORS
TO THE SHAREHOLDERS OF SOLID STATE PLC
We have audited the financial statements of Solid State PLC for the year ended 31st March 2010 which comprise the
Consolidated Income Statement, the Consolidated Statement of Changes in Equity, the Consolidated and Company
Balance Sheets, the Consolidated Cash Flow Statement and the related notes. The financial reporting framework
that has been applied in the preparation of the group financial statements is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that
has been applied in the preparation of the parent company financial statements is applicable law and United
Kingdom Accounting Standards (United Kingdom GAAP).
This report is made solely to the company’s members, as a body, in accordance with Section 495 of the Companies
Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we
are required to state to them in an Auditor’s report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company and the company’s members as a body,
for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Responsibilities Statement set out on pages 7 and 8, the directors are
responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit the financial statements in accordance with applicable law and International Standards
on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical
Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are appropriate to the group’s and the parent
company’s circumstances and have been consistently applied and adequately disclosed; the reasonableness of
significant accounting estimates made by the directors; and the overall presentation of the financial statements.
Opinion on financial statements
In our opinion:
•
the financial statements give a true and fair view of the state of the group’s and of the parent company’s
affairs as at 31 March 2010 and the group’s profit for the year then ended;
the group financial statements have been properly prepared in accordance with IFRSs as adopted by the
European Union;
the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
•
•
•
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Directors’ Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit
have not been received from branches visited by us; or
•
the parent company financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
David Cox (Senior statutory auditor)
for and on behalf of Haysmacintyre, Statutory Auditor
28th July 2010
Fairfax House
15 Fulwood Place
London
WC1V 6AY
11
Solid State PLC
CONSOLIDATED INCOME STATEMENT
For the year ended 31st March 2010
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
OTHER COMPREHENSIVE (EXPENSE)/INCOME
Translation differences on overseas operations
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
Notes
2
3
6
7
8
2010
£
13,509,123
(9,865,137)
_________
3,643,986
(1,331,452)
(1,760,052)
_________
2009
£
12,521,786
(9,007,486)
_________
3,514,300
(1,204,574)
(1,634,967)
_________
552,482
674,759
-
(22,697)
_________
67
(60,325)
_________
529,785
(124,150)
_________
614,501
(128,670)
_________
405,635
_________
485,831
_________
(3,000)
_________
5,262
_________
402,635
_________
491,093
_________
EARNINGS PER SHARE
Basic
Diluted
9
9
6.6p
6.6p
7.9p
7.9p
The notes on pages 17 to 47 form part of these financial statements.
12
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31st March 2010
Solid State PLC
Share
Capital
Capital
Share
Premium Redemption Exchange Retained
Reserve
Reserve
Foreign
Reserve Earnings Total
Balance at 31st March 2008
307,826
756,980
4,674
52,864
1,477,535
2,599,879
Total comprehensive income
For the year ended 31st March 2009
Share based payment expense
Dividends
-
-
-
-
-
-
5,262
485,831
491,093
-
12,546
12,546
-
_______
-
_______
-
_______
-
_______
(138,522)
________
(138,522)
________
Balance at 31st March 2009
307,826
756,980
4,674
58,126
1,837,390
2,964,996
Total comprehensive income
For the year ended 31st March 2010
Share based payment expense
Dividends
-
-
-
-
-
-
(3,000)
405,635
402,635
-
12,546
12,546
-
_______
-
_______
-
_______
-
_______
(184,695)
_______
(184,695)
_______
Balance at 31st March 2010
307,826
_______
756,980
_______
4,674
_______
55,126
_______
2,070,876
_______
3,195,482
_______
The notes on pages 17 to 47 form part of these financial statements.
13
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
CONSOLIDATED BALANCE SHEET
at 31st March 2010
Notes
£
£
£
£
2010
2009
289,248
2,032,806
________
2,322,054
3,990,699
________
6,312,753
________
299,844
2,028,946
________
2,328,790
4,693,742
________
7,022,532
________
11
12
15
16
1,787,520
2,562,387
343,835
________
17
18
461,627
2,172,882
1,063,703
118,814
________
1,554,029
2,219,874
216,796
________
668,280
1,838,768
712,039
128,670
________
TOTAL CURRENT LIABILITIES
3,817,026
3,347,757
NON CURRENT LIABILITIES
Deferred tax liability
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
20
10,024
________
-
________
10,024
________
3,827,050
________
3,195,482
________
307,826
756,980
4,674
55,126
2,070,876
________
3,195,482
________
-
________
3,347,757
________
2,964,996
________
307,826
756,980
4,674
58,126
1,837,390
________
2,964,996
________
21
22
22
22
22
The financial statements were approved by the Board of Directors and authorised for issue on 28th July 2010 and
were signed on its behalf by:
P. Haining
Director
The notes on pages 17 to 47 form part of these financial statements.
14
Solid State PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st March 2010
2010
2009
£
£
£
£
OPERATING ACTIVITIES
Profit before taxation
Adjustments for:
Depreciation
Amortisation
Loss on disposal of property, plant and equipment
Share based payment expense
Finance income
Finance costs
Profit from operations before changes
in working capital and provisions
(Increase)/decrease in inventories
(Increase) in trade and other receivables
Increase in trade and other payables
Cash generated from operations
Income taxes paid
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
Interest received
FINANCING ACTIVITIES
Repayment of bank borrowings
Invoice discounting finance (net movement)
Interest paid
Dividend paid to equity shareholders
INCREASE IN CASH AND CASH
EQUIVALENTS
529,785
88,929
7,695
4,928
12,546
-
22,697
_______
666,580
(233,491)
(342,513)
334,117
________
8,803
(176,005)
12,334
________
(241,887)
_______
424,693
(123,982)
_______
(106,871)
_______
(158,014)
(3,835)
53,558
-
_______
-
351,664
(22,697)
(184,695)
_______
(123,982)
_______
300,711
(108,291)
_______
192,420
144,272
_______
336,692
_______
(101,795)
-
8,500
67
_______
(216,337)
(10,517)
(60,325)
(138,522)
_______
614,501
89,235
7,567
3,346
12,546
(67)
60,325
______
787,453
(154,868)
_______
632,585
(106,871)
_______
525,714
(93,228)
_______
432,486
(425,701)
_______
6,785
_______
The notes on pages 17 to 47 form part of these financial statements.
15
Solid State PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31st March 2010 (continued)
Cash and cash equivalents comprise:
2010
£
2009
£
Net increase in cash and cash equivalents
336,692
6,785
Cash and cash equivalents at beginning of year
(451,484)
(463,531)
Exchange gains on cash and cash equivalents
Cash and cash equivalents at end of year
There were no significant non-cash transactions.
Cash available on demand
Overdrafts
(3,000)
_______
(117,792)
_______
5,262
_______
(451,484)
_______
2010
£
2009
£
343,835
(461,627)
_______
(117,792)
_______
216,796
(668,280)
_______
(451,484)
_______
16
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010
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
2006 applicable to companies preparing their accounts under IFRSs. The consolidated financial statements
have been prepared under the historical cost convention.
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.
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.
17
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (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.
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- straight line over minimum life of lease
Fittings and equipment- 25% per annum on a reducing balance basis
Computers- 20% per annum on a straight line basis
Motor vehicles- 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.
18
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Solid State PLC
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 retranslated at the rates ruling at the balance sheet date. Exchange differences
arising are recognised in the income statement
On consolidation, the balance sheet 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 2009 and 31st March 2010 met the conditions
necessary for capitalisation.
19
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (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. Other than derivatives,
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
liability 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.
20
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (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 they 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.
2.
REVENUE
Revenue arises from:
Sale of goods
Provision of services
2010
£
2009
£
13,440,759
68,364
_________
12,487,364
34,422
_________
13,509,123
_________
12,521,786
_________
21
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
3.
PROFIT FROM OPERATIONS
This has been arrived at after charging/(crediting):
Staff costs (see note 4)
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 fees
Audit of accounts of associates of the company pursuant to legislation
Operating lease rentals:
Plant and machinery
Other
Research and development costs
Foreign exchange differences
2010
£
2,111,835
5,000
88,929
7,695
4,928
-
1,000
26,395
29,166
103,801
87,461
(127,648)
_______
2009
£
1,961,019
16,559
89,235
7,567
3,346
-
1,000
36,273
23,423
100,473
154,348
(238,397)
_______
The foreign exchange differences have been treated as a reduction in cost of sales rather than as a negative
overhead.
4.
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
2010
£
1,912,592
197,400
1,843
________
2,111,835
________
2009
£
1,768,479
192,540
-
________
1,961,019
________
Wages and salaries include termination costs of £5,000 (2009: £16,559)
The average monthly number of employees during the year, including the three executive Directors, was as
follows:
Selling and distribution
Manufacturing
Management and administration
22
2010
Number
2009
Number
23
19
24
__
66
__
26
14
25
__
65
__
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
5.
DIRECTORS’ EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS
The value of all elements of remuneration received by each Director in the year was as follows:
Salary
£
Fees
£
Benefits
in kind
£
Total
emoluments
£
Pension
contributions
£
Share based
payments
£
Total
£
31st March 2010
Executive Directors
W G Marsh
G S Marsh
J M Lavery
Non-executive Directors
P Haining
L C A Newnham
G L Comben
Total
31st March 2009
Executive Directors
W G Marsh
G S Marsh
J M Lavery
Non-executive Directors
P Haining
L C A Newnham
G L Comben
Total
12,000
107,000
107,000
-
12,000
12,000
______
-
-
-
12,000
-
-
______
5,000
11,000
15,000
-
-
5,000
______
250,000
______
12,000
______
36,000
______
12,000
109,000
102,000
-
-
5,000
______
-
-
-
12,000
12,000
-
______
4,000
9,000
16,000
-
-
2,000
______
228,000
______
24,000
______
31,000
______
17,000
118,000
122,000
12,000
12,000
17,000
______
298,000
______
16,000
118,000
118,000
12,000
12,000
7,000
______
283,000
______
-
-
2,000
-
-
-
______
2,000
______
-
-
-
-
-
-
______
-
______
-
17,000
6,000 124,000
6,000 130,000
-
-
-
______
12,000
12,000
17,000
______
12,000 312,000
______
______
-
16,000
6,000 124,000
6,000 124,000
-
-
-
______
12,000
12,000
7,000
______
12,000 295,000
______
______
The executive Directors waived their entitlement to emoluments during the year as follows:
W G Marsh
2010
£
2009
£
24,000
______
24,000
______
The principal benefits in kind relate to the provision of company cars.
In addition to the above, fees totalling £50,895 (2009: £52,655) 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 £11,574
(2009: £8,369) was due to The Kings Mill Partnership at 31st March 2010.
23
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
5.
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 28th July 2010 and at the balance sheet date, and their interest in the issued
ordinary share capital of the Company at that date, at 31st March 2010 and 31st March 2009 or date of
appointment if later, were as follows:
G L Comben
W G Marsh
G S Marsh
J M Lavery
P Haining
L C A Newnham
J L Macmichael
A B Frere
28.07.10
31.03.10
31.03.09
2,727,606
1,700,500
73,683
824
12,500
10,000
-
-
2,727,606
1,700,500
73,683
824
12,500
10,000
-
-
2,727,606
1,700,500
73,472
569
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
01.04.09
Lapsed Granted
G S Marsh
317,460
J M Lavery
317,460
-
-
-
-
Options
held at
31.03.10
317,460
317,460
Exercise
price
Date of
grant
Exercise
period
31.5p
31.5p
22.01.08
Jan 2009 onwards
22.01.08
Jan 2009 onwards
The market price of the shares at 31st March 2010 was 37.5p (2009: 17.5p), with a quoted range during the
year of 17.5p to 51.5p. No director exercised any share options during the year, or in the prior year.
6.
FINANCE INCOME
Interest receivable
2010
£
-
___
-
___
2009
£
67
_____
67
_____
24
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
7.
FINANCE COSTS
Bank borrowings
Invoice discounting interest
Other interest
8.
TAX EXPENSE
Current tax expense
UK corporation tax and income tax of overseas operations on
profits or losses for the year
Adjustment in respect of prior periods
Deferred tax expense
Total tax charge
Solid State PLC
2010
£
11,565
10,474
658
______
22,697
______
2009
£
35,796
24,529
-
______
60,325
______
2010
£
2009
£
118,814
(4,688)
______
128,670
-
______
114,126
128,670
10,024
_______
124,150
_______
-
_______
128,670
_______
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation
tax in the UK applied to profits for the year are as follows:
Profit before tax
Expected tax charge based on the standard rate of
corporation tax in the UK of 28% (2009 – 28%)
Effect of:
Expenses not deductible for tax purposes
Deductible expenses not charged in Group accounts
Difference between depreciation for the year and 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
Total tax charge
25
2010
£
2009
£
529,785
_______
614,501
_______
148,340
172,060
8,535
(9,649)
1,225
-
(1,246)
(18,367)
-
-
(4,688)
_______
124,150
_______
11,947
(9,649)
(7,233)
(3,391)
(8,902)
(21,609)
(28)
(4,525)
-
_______
128,670
_______
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
9.
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
2010
£
2009
£
405,635
_______
485,831
_______
6,156,511
6,156,511
6,156,511
6,156,511
6.6p
6.6p
7.9p
7.9p
Earnings per ordinary share has been calculated using the weighted average number of shares in issue during
the year. The weighted average number of equity shares in issue was 6,156,511 (2009: 6,156,511).
The Diluted earnings per share is based on 6,156,511 (2009: 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 634,920 (2009: 634,920).
10.
DIVIDENDS
Final dividend paid for the prior year of 2p per share (2009: 1.25p)
Interim dividend paid of 1p per share (2009: 1p)
Final dividend proposed for the year 2p per share (2009: 2p)
2010
£
123,130
61,565
_______
184,695
_______
123,130
______
2009
£
76,957
61,565
_______
138,522
_______
123,130
_______
The proposed final dividend has not been accrued for as the dividend was declared after the balance sheet date.
26
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
11.
PROPERTY, PLANT AND EQUIPMENT
Solid State PLC
Year ended 31st March 2009
Cost
1st April 2008
Additions
Disposals
31st March 2009
Depreciation
1st April 2008
Charge for the year
On disposal
31st March 2009
Net book value
31st March 2009
31st March 2008
Year ended 31st March 2010
Cost
1st April 2009
Additions
Disposals
31st March 2010
Depreciation
1st April 2009
Charge for the year
On disposal
31st March 2010
Net book value
31st March 2010
Short
leasehold
property
Motor
improvements vehicles
Fittings
equipment and
computers
£
£
£
Total
£
255,176
-
-
_______
279,241
56,546
(26,204)
_______
853,364
45,249
-
_______
1,387,781
101,795
(26,204)
________
255,176
_______
309,583
_______
898,613
_______
1,463,372
________
255,176
-
-
_______
94,323
50,353
(14,358)
_______
749,748
38,882
-
_______
1,099,247
89,235
(14,358)
________
255,176
_______
130,318
_______
788,630
_______
1,174,124
________
-
_______
179,265
_______
109,983
_______
289,248
________
-
_______
184,918
_______
103,616
_______
288,534
________
255,176
-
-
_______
309,583
132,459
(142,963)
_______
898,613
25,552
-
_______
1,463,372
158,011
(142,963)
________
255,176
_______
299,079
_______
924,165
_______
1,478,420
________
255,176
-
-
_______
130,318
51,015
(84,477)
_______
788,630
37,914
-
_______
1,174,124
88,929
(84,477)
________
255,176
_______
96,856
_______
826,544
_______
1,178,576
________
-
_______
202,223
_______
97,621
_______
299,844
________
There were no capital commitments at 31st March 2009 and 31st March 2010.
27
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
12.
INTANGIBLE ASSETS
Year ended 31st March 2009
Cost
1st April 2008 and 31st March 2009
Amortisation
1st April 2008
Charge for the year
31st March 2009
Net book value
31st March 2009
Year ended 31st March 2010
Cost
1st April 2009
Additions
31st March 2010
Amortisation
1st April 2009
Charge for the year
31st March 2010
Net book value
31st March 2010
UN
Licences
£
Computer
software
Goodwill on
consolidation
£
£
Total
£
9,800
_____
38,477
______
1,992,737
________
2,041,014
________
641
7,567
______
8,208
______
30,269
______
38,477
3,835
______
42,312
______
8,208
7,695
______
15,903
______
26,409
______
-
-
________
-
________
1,992,737
________
1,992,737
-
________
1,992,737
________
-
-
________
-
________
1,992,737
________
641
7,567
________
8,208
________
2,032,806
________
2,041,014
3,835
________
2,044,849
________
8,208
7,695
________
15,903
________
2,028,946
________
-
-
_____
-
_____
9,800
_____
9,800
-
_____
9,800
_____
-
-
_____
-
_____
9,800
_____
28
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
13.
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
2010
£
2009
£
1,992,737
-
________
893,214
1,099,523
________
1,992,737
________
1,992,737
________
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 15% (2009: 15%) 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 0.84 (2009: 0.84).
The recoverable amount exceeds the carrying amount by £2,110,000 (2009: £2,048,000). 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 15% to 18%
Growth rate: Reduction from 2.25% to 1.75%
14.
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
100%
100%
Nature of business
Distribution of electronic components
Distribution of electronic components
and manufacture of electronic equipment
In both cases the country of operation and of incorporation or registration is England.
With effect from 1st April 2009 the trade of Wordsworth Technology Limited was transferred to Steatite
Limited and the company became dormant.
29
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
15.
INVENTORIES
Finished goods and goods for resale
Work in progress
2010
£
1,422,504
365,016
________
1,787,520
________
2009
£
1,408,602
145,427
________
1,554,029
________
There is no material difference between the replacement cost of inventories and the amount stated above.
16.
TRADE AND OTHER RECEIVABLES
Trade receivables
Other receivables
Prepayments
2010
£
2,489,507
-
72,880
________
2,562,387
________
2009
£
2,115,226
2,232
102,416
________
2,219,874
________
Group trade receivables include £1,318,785 (2009: £1,016,697) 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 1.35% over bank base rate and an administration fee of 0.175% of the gross value of the
debts per month. At 31st March 2010 borrowing under the agreement of £1,063,703 (2009: £864,191) was
available of which £1,063,703 (2009: £712,039) was taken up. Interest charges in the year amounted to
£10,474 (2009: £24,529) and administration fees to £17,770 (2009: £16,114).
17.
TRADE AND OTHER PAYABLES
Trade payables
Other taxes and social security taxes
Other payables
Accruals
Deferred income
2010
£
1,525,761
321,837
12,574
143,140
169,570
________
2,172,882
________
2009
£
1,456,699
244,207
2,402
135,460
-
________
1,838,768
________
30
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
18.
BANK BORROWINGS
Amounts due to invoice discounters
Solid State PLC
2010
£
2009
£
1,063,703
_______
712,039
_______
The bank overdraft is 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 £140,000 (2009: £nil).
19.
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:
31
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
19.
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
16 and in the balance sheet. The amount of the exposure shown in note 16 is stated net of provisions for
doubtful debts.
The credit risk on liquid funds is low 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
32
Loans and Receivables
2009
£
2010
£
2,562,387
343,835
________
2,906,222
________
2,219,874
216,796
________
2,436,670
________
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
Solid State PLC
19.
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
2010
£
2,346,611
142,896
________
2,489,507
________
2009
£
1,998,256
116,970
________
2,115,226
________
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 £20,000 (2009: £28,000) which represented less than 0.15% (2009:
0.22%) of revenue. This provision is included within the management and administration costs in the
Consolidated Income Statement.
Trade receivables ageing by geographical segment
Geographical area
2010
UK
Non UK
Total
Total
£
Current
£
30 days
past due
£
60 days
past due
£
90 days
past due
£
2,449,254
142,896
________
2,309,465
138,913
________
135,142
1,790
_______
3,293
2,193
______
1,354
-
______
2,592,150
2,448,378
136,932
5,486
1,354
Less: Provisions
(102,643)
-
(95,803)
(5,486)
(1,354)
Total
2009
UK
Non UK
Total
________
________
_______
______
______
2,489,507
________
2,448,378
________
41,129
_______
-
______
-
______
2,100,397
116,970
________
1,815,974
107,921
________
236,493
9,017
________
42,394
-
______
5,536
32
______
2,217,367
1,923,895
245,510
42,394
5,568
Less: Provisions
(102,141)
-
(54,179)
(42,394)
(5,568)
________
________
______
______
______
Total
2,115,226
________
1,923,895
________
191,331
______
-
______
-
______
33
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
19.
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
2010
£
102,141
20,000
(19,498)
_______
102,643
_______
2009
£
131,464
28,000
(57,323)
_______
102,141
_______
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 earlier table, at 31st March 2010 trade receivables of £41,129 which were past their due date
were not impaired (2009: £191,331). All of these were less than 60 days past their due date.
34
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
19.
FINANCIAL INSTRUMENTS (continued)
Liquidity risk
Current financial liabilities
Trade and other payables
Bank borrowings
Bank overdraft
Non current financial liabilities
Loans and borrowings
Solid State PLC
Financial liabilities
measured at amortised cost
2010
£
2,200,308
1,063,703
434,201
________
3,698,212
________
-
________
2009
£
1,838,768
712,039
668,280
________
3,219,087
________
-
________
The following are maturities of financial liabilities, including estimated contracted interest payments.
Carrying Contractual
amount
cash flow
6 months
or less
6 – 12
months
1 or more
years
2010
Secured bank loans
Bank overdrafts
Amounts due to invoice
discounters
Trade and other payables
2009
Bank overdrafts
Amounts due to invoice
discounters
Trade and other payables
-
461,627
-
461,627
-
461,627
-
-
-
-
1,063,703
2,172,882
________
1,063,703
2,172,882
________
1,063,703
2,172,882
________
-
-
_______
-
_______
3,698,212
________
3,698,212
________
3,698,212
________
-
_______
-
_______
668,280
668,280
668,280
-
-
712,039
1,973,388
________
712,039
1,973,388
________
712,039
1,838,768
________
-
134,620
_______
-
-
________
3,353,707
________
3,353,707
________
3,219,087
________
134,620
_______
-
________
Interest rate risk
The Group finances its business through a mixture of bank overdrafts and invoice discounting facilities.
During the year the Group utilised these facilities at floating rates of interest.
The Group bank overdraft with HSBC plc incurs interest at the rate of 2.3% 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 16.
35
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
19.
FINANCIAL INSTRUMENTS (continued)
Interest rate risk (continued)
The US Dollar overdraft facility bears the interest rate of 2.3% 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 £19,235 (2009: £11,579) higher and if 1% lower throughout the year the level of
interest payable would have been lower by the same amount.
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 the 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
2010:
Trade receivables
Cash and cash equivalents
Trade payables
2010
£
636,794
84,796
(825,929)
_______
(104,339)
_______
2009
£
677,047
85,843
(854,922)
_______
(92,032)
_______
There were also net liabilities of £32,954 in euros (2009: £19,832).
The Group is exposed to currency risk because it undertakes trading transactions in US dollars and euros. 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 later in this note.
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 £13,700 (2009: £11,200) 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 £13,700 (2009: £11,200).
36
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
Solid State PLC
19.
FINANCIAL INSTRUMENTS (continued)
Foreign currency risk (continued)
At 31st March 2009 the Group had entered into agreement with its bankers to purchase US dollars as follows:
1st April 2009
9th April 2009
9th April 2009
1st May 2009
1st May 2009
$
200,000
250,000
100,000
250,000
100,000
Rate
1.40
1.42
1.4515
1.42
1.4515
At 31st March 2010 the Group had entered into agreement with its bankers to purchase US dollars as follows:
1st April 2010
4th May 2010
1st June 2010
$
200,000
200,000
200,000
Rate
1.5582
1.558
1.529
Applying the actual exchange rate at the balance sheet date to these agreements gives rise to an asset of
£10,561 at 31st March 2010 (2009: a liability of £421). 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 2010 is shown below:
Cash and cash equivalents
Bank overdrafts
Invoice discounting advance
Share capital
Share premium account
Retained earnings
Capital redemption reserve
Foreign exchange reserve
Gearing ratio
37
2010
£
(343,835)
461,627
1,063,703
________
1,181,495
________
307,826
756,980
2,199,714
4,674
55,126
________
3,324,320
________
0.262
________
2009
£
(216,796)
668,280
712,039
________
1,163,523
________
307,826
756,980
1,837,390
4,674
58,126
________
2,964,996
________
0.282
________
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
20.
DEFERRED TAX
Accelerated capital allowances
At 1st April 2009
Charge for the year
At 31st March 2010
21.
SHARE CAPITAL
Allotted issued and fully paid
6,156,511 ordinary shares of 5p each
2010
£
-
10,024
______
10,024
______
2010
£
2009
£
307,826
_______
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 5. At 31st March 2010 the number of shares covered by option
agreements amounted to 634,920 (2009: 634,920).
No options were exercised in the year (2009: nil).
22.
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.
23.
LEASING COMMITMENTS
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
2010
£
86,402
32,555
-
______
2009
£
117,454
81,822
1,320
______
No later than 1 year
Later than 1 year and no later than 5 years
Later than 5 years
38
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
24.
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 2010 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.
None of the options have been exercised since the scheme was put into place. Details of the current options
are stated in Note 5.
The share-based remuneration expenses amounted to £12,546 for the year (2009: £12,546).
The following information is relevant to the determination of the fair value of the options.
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
2009 and 2010
Binominal Tree
31.5p
31.5p
1.2 years
78.52%
-
4.31%
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.
39
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
25.
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 2009
Revenue
External
Intercompany
Distribution
division
£
Manufacturing
division
£
Head
office
£
Total
£
3,642,911
-
________
8,878,875
96,789
________
-
-
________
12,521,786
96,789
________
3,642,911
8,975,664
-
12,618,575
________
________
________
________
Profit/(loss) before tax
38,827
________
782,674
________
(207,000)
________
614,501
________
Balance sheet
Assets
Liabilities
1,719,736
(2,111,952)
________
4,593,017
(1,217,921)
________
-
(17,884)
________
6,312,753
(3,347,757)
________
Net assets/(liabilities)
(392,216)
________
3,375,096
________
(17,884)
________
2,964,996
________
Other
Capital expenditure
- Tangible fixed assets
- Intangible fixed assets
Depreciation, amortisation and
other non cash expenses
Interest paid
44,812
-
48,108
12,000
________
56,983
-
80,040
12,639
________
-
-
-
35,686
________
101,795
-
128,148
60,325
________
40
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
25.
SEGMENT INFORMATION (continued)
Year ended 31st March 2010
Revenue
External
Intercompany
Profit/(loss) before tax
Balance sheet
Assets
Liabilities
Distribution
division
£
Manufacturing
division
£
Head
office
£
Total
£
3,544,437
-
________
3,544,437
________
(40,748)
________
9,964,686
6,125
________
9,970,811
________
779,533
________
-
-
________
13,509,123
6,125
_________
-
________
13,515,248
_________
(209,000)
________
529,785
________
1,650,165
(2,059,313)
________
5,372,367
(1,708,268)
________
-
(49,445)
_______
7,022,532
(3,817,026)
________
Net assets/(liabilities)
(409,148)
________
3,664,099
_________
(49,445)
_______
3,205,506
________
Other
Capital expenditure
- Tangible fixed assets
- Intangible fixed assets
Depreciation, amortisation and
other non cash expenses
Interest paid
69,929
3,835
53,956
11,565
________
88,082
-
67,596
10,474
________
-
-
-
658
________
158,011
3,835
121,552
22,697
________
Included within the manufacturing division is £1,864,461 (2009: £0) relating to income from a major
customer which accounts for greater than 10% of the Group’s turnover.
United Kingdom
Ireland
Europe
North America
Asia
Africa
Australasia
South America
External revenue by
location of customer
2009
£
2010
£
Total assets by
location of assets
2009
2010
£
£
12,351,720 11,397,659
-
747,966
119,234
148,332
92,076
14,302
2,217
_________ _________
109,893
763,260
95,930
159,643
15,894
12,442
341
7,007,211
-
15,321
-
-
-
-
-
________
6,195,887
-
116,866
-
-
-
-
-
________
Net tangible capital
expenditure by location
of assets
2010
£
104,456
-
-
-
-
-
-
-
______
2009
£
93,295
-
-
-
-
-
-
-
_______
13,509,123 12,521,786
_________ _________
7,022,532
________
6,312,753
________
104,456
______
93,295
_______
All the above relate to continuing operations.
41
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
26.
POST BALANCE SHEET EVENT
On 1st April 2010 the Group acquired 100% of the ordinary shares in Rugged Systems Limited for a cash
consideration of £225,263. The investment in Rugged Systems Limited will be included in the Group’s balance
sheet at its fair value at the date of acquisition. Rugged Systems Limited is one of Europe’s leading suppliers
of rugged mobile computer, display and communications services which will strengthen the Group’s product
offering.
Analysis of the acquisition of Rugged Systems Limited: Net assets at the date of acquisition.
Intangible fixed assets
Tangible fixed assets
Net current (liabilities)
Deferred tax
Net assets/(liabilities) on acquisition
Goodwill arising on acquisition
Discharged by:
Cash
Book
value
Fair value
adjustments
Fair value
to Group
£
£
£
-
140,434
140,434
71,690
(63,851)
7,839
(100,038)
-
(100,038)
-
_______
(28,348)
_______
(36,513)
______
40,070
______
(36,513)
_______
11,722
213,541
_______
225,263
_______
225,263
_______
In addition to the purchase price, the Group incurred costs relating to the acquisition of £7,500.
The intangible fixed assets comprise the estimated net present value of customer relationships. The goodwill
arises from the expected synergies from adding Rugged Systems Limited to the rugged computer division of
Steatite Limited with the aim of becoming the UKs leading supplier of rugged computers.
42
Solid State PLC
COMPANY BALANCE SHEET
at 31st March 2010
FIXED ASSETS
Investments
CURRENT ASSETS
Debtors
Cash at bank and in hand
CREDITORS: Amounts falling due within
one year
NET CURRENT ASSETS/(LIABILITIES)
NET ASSETS
CAPITAL AND RESERVES
Called up share capital
Share premium account
Capital redemption reserve
Profit and loss account
SHAREHOLDERS’ FUNDS
Notes
2010
2009
£
£
£
£
4
5
2,454,056
_________
2,464,056
________
2,454,056
2,464,056
1,425,091
254,603
________
1,679,694
-
-
-
________
-
-
6
922,288
________
998,736
________
757,406
________
3,211,462
________
307,826
756,980
4,674
2,141,982
________
3,211,462
________
(998,736)
________
1,465,320
________
307,826
756,980
4,674
395,840
________
1,465,320
________
7
8
8
8
The financial statements were approved by the Board of Directors and authorised for issue on 28th July 2010.
P Haining
Director
The notes on pages 46 to 49 form part of these financial statements.
43
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2010
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 408(4) of the Companies Act 2006 the Company is exempt from the requirement to present its
own profit and loss account. The loss for the year ended 31st March 2010 is disclosed in Note 8.
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 they 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 £12,546 (2009: £12,546) and comprised the share based payment expense. There were 4
employees (2009: 4), 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 5 to the Group financial
statements.
44
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2010
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 2010 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.
None of the options have been exercised since the scheme was put into place. Details of the current options
are stated in Note 5 of the consolidated financial statements.
The share-based remuneration expenses amounted to £12,546 for the year (2009: £12,546).
The following information is relevant to the determination of the fair value of the options.
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
2009 and 2010
Binominal Tree
31.5p
31.5p
1.2 years
78.52%
-
4.31%
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.
45
Solid State PLC
4.
INVESTMENTS
Company
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
Cost
1st April 2009
Disposal
31st March 2010
Net book value
31st March 2010
31st March 2009
Subsidiary undertakings
Group
undertakings
£
2,464,056
(10,000)
________
2,454,056
________
2,454,056
________
2,464,056
________
The principal undertakings in which the Company’s interest at the year end is 20% or more are as follows:
Subsidiary undertakings
Solid State Supplies Limited
Steatite Limited
Proportion of voting
rights and Ordinary
share capital held
Nature of business
100%
100%
Distribution of electronic components
Distribution of electronic components and
manufacture of electronic equipment
In both cases the country of operation and of incorporation or registration is England.
With effect from 1st April 2009 the trade of Wordsworth Technology Limited was transferred to Steatite
Limited and the company became dormant.
5.
DEBTORS
Amounts owed by Group undertakings
6.
CREDITORS: Amounts falling due within one year
Bank overdraft (secured)
Amounts owed to Group undertakings
Other creditors
46
2010
£
2009
£
1,425,091
_______
-
_______
2010
£
27,426
893,040
1,822
_______
922,288
_______
2009
£
-
997,019
1,717
_______
998,736
_______
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2010 (continued)
6.
CREDITORS: Amounts falling due within one year (continued)
The Company has guaranteed bank borrowings of its subsidiary undertakings, Solid State Supplies Limited
and Steatite Limited. At the year end the liabilities covered by those guarantees amounted to £434,201 (2009:
£567,337). 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.
7.
SHARE CAPITAL
Allotted issued and fully paid
6,156,511 ordinary shares of 5p each
2010
2009
£ £
307,826
_______
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 5 of the Consolidated Accounts. At 31st March 2010 the number
of shares covered by option agreements amounted to 634,920 (2009: 634,920).
No options were exercised in the year (2009: nil).
8.
RESERVES
1st April 2009
Profit for the year
Add: Share based expense
Dividend paid
31st March 2010
Share premium Capital redemption Profit & loss
account
reserve
account
756,980
-
_______
756,980
-
_______
756,980
-
________
756,980
________
4,674
-
_____
4,674
-
_____
4,674
-
_____
4,674
_____
395,840
1,918,291
_______
2,314,131
12,546
_______
2,326,677
(184,695)
_______
2,141,982
_______
The profit for the year comprises a dividend received and the share based expense and the loss on disposal of a
dormant subsidiary.
Overheads relating to the audit of the Company and to its listing on the London Stock Exchange are processed
in the accounts of Solid State Supplies Limited.
The cumulative amount of goodwill which has been eliminated against reserves at 31st March 2010 is £30,000
(2009: £30,000).
47
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 1st September 2010 at 11.00am for the following purposes:
ORDINARY RESOLUTIONS
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
To receive and adopt the accounts for the year ended 31st March 2010, together with the reports of the
Directors and auditors thereon. (Resolution 1)
To declare a final dividend of 2p per share. (Resolution 2)
To reappoint John Michael Lavery, who retires by rotation, as a Director of the Company in accordance with
the Company’s Articles of Association. (Resolution 3)
To reappoint William George Marsh, who retires by rotation, as a Director of the Company in accordance with
the Company’s Articles of Association. (Resolution 4)
To reappoint John Lawford Macmichael, who has been appointed as a Director since the last annual general
meeting, as a Director of the Company in accordance with the Company’s Articles of Association (Resolution
5)
To reappoint Anthony Brian Frere, who has been appointed as a Director since the last annual general meeting,
as a Director of the Company in accordance with the Company’s Articles of Association (Resolution 6)
To reappoint Haysmacintyre as auditors of the Company and to authorise the Directors to fix their
remuneration. (Resolution 7)
To pass the following resolution:
That the Company is, pursuant to Section 701 of the Companies Act 2006, hereby generally and
unconditionally authorised to make market purchases (within the meaning of Section 693 of the Companies
Act 2006) 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 5p per ordinary share;
i)
the maximum price which may be paid for the ordinary shares is £1.00 per ordinary share;
ii)
the authority hereby conferred shall expire after a period of 18 months from the passing of this
iii)
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 701;
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 8)
iv)
vi)
v)
BY ORDER OF THE BOARD
P Haining FCA
Director
28th July 2010
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 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.
48
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 Wednesday 1st September 2010 at 11.00am and
at any adjournment thereof.
Resolution
For
Against
1. To receive and adopt the accounts for the year ended 31st March 2010
together with the reports of the Directors and auditors thereon.
2. To declare a final dividend of 2p per share.
3. To re-appoint John Michael Lavery, who retires by rotation, as a Director
of the Company in accordance with the Company’s Articles of Association.
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 John Lawford Macmichael, who has been appointed as a
Director since the last annual general meeting, as a Director of the Company
in accordance with the Company’s Articles of Association.
6. To re-appoint Anthony Brian Frere, who has been appointed as a Director
since the last annual general meeting, as a Director of the Company in
accordance with the Company’s Articles of Association.
7. To re-appoint Haysmacintyre as auditors of the Company and to authorise
the Directors to fix their remuneration.
8. 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