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2023 ReportSOLID STATE PLC s t n u o c c A & t r o p e R l a u n n A 5 1 0 2 r h c a M t s 1 3 www.solidstateplc.com Solid State PLC CONTENTS sresivdA dna yraterceS ,srotceriD tropeR cigetartS dna tnemetatS s’namriahC tropeR ’srotceriD srotiduA tnednepednI eht fo tropeR emocnI evisneherpmoC fo tnemetatS detadilosnoC ytiuqE ni segnahC fo tnemetatS detadilosnoC noitisoP laicnaniF fo tnemetatS detadilosnoC swolF hsaC fo tnemetatS detadilosnoC stnemetatS laicnaniF eht ot setoN teehS ecnalaB ynapmoC stnemetatS laicnaniF ynapmoC eht ot setoN gniteeM lareneG launnA fo ecitoN Page 2 3 7 11 31 41 51 61 81 44 54 94 1 Solid State PLC Directors: DIRECTORS, SECRETARY AND ADVISERS Anthony Brian Frere, Chairman ,hsraM nehpetS yraG ,ACF ,gniniaH reteP John Michael Lavery, Director ,leahcimcaM drofwaL nhoJ Director Chief Executive Officer Finance Director Company Secretary and Registered Office: Peter Haining, FCA Solid State PLC kraP ssenisuB knabsnevaR 2 daoR aredeH hctiddeR YE9 89B Company Number: 00771335 Nominated Adviser: Broker: Auditors: Solicitors: Bankers: Registrars: W H Ireland Limited enaL nitraM 42 RD0 R4CW nodnoL detimiL dnalerI H W eunevA notsloC 4 TS4 1SB lotsirB haysmacintyre erauqS noiL deR 62 GA4 R1CW nodnoL ShakespeareMartineau erauqS eromloC 1 mahgnimriB sdnaldiM tseW AA6 4B Lloyds Bank woR eromloC 521 mahgnimriB sdnaldiM tseW FS3 3B Capita Registrars Limited yrtsigeR ehT daoR mahnekceB 43 mahnekceB tneK UT4 3RB Country of Incorporation of Parent Company: Great Britain Legal Form: Public Limited Company Domicile: Great Britain 2 CHAIRMAN’S STATEMENT AND STRATEGIC REPORT Solid State PLC Highlights in the period include: Financial: revonruT Profit before tax Earnings per share (basic) Gross profit margin Operating margin dnediviD 5102 m65.63£ £3.01m 34.9p 30.5% 8.4% p0.21 4102 m90.23£ £2.15m 25.3p 29.2% 6.9% p5.8 egnahC %41+ +40% +38% +130bps +150bps %14+ Operational: 3yr/£34m offender tagging contract won with MoJ Steatite awarded £1.1m funding towards R&D on next generation lithium batteries for Marine Autonomous Systems (MAS) Development of added value and own brand products in distribution division Acquisition of Ginsbury displays business for £2.125m in April 2015 Commenting on the results, Tony Frere, Chairman of Solid State said: “This is another very pleasing set of results for a year that represents a real step change in the business. “Solid State has made a pleasing start to the new financial year with our order book remaining strong and a backlog of £19.38m as at 31st May 2015 (31st May 2014: £15.11m). “Over the last 13 years we have successfully acquired and integrated eight businesses. We continue to see potential acquisition opportunities, with a number of them being as a direct result of the improving economic climate. We will pursue this acquisitive growth strategy while at the same time seeking to enhance organic growth through developing our export prospects and other product innovation initiatives.” Financial Review I am very pleased to report that the Group has performed strongly this year, delivering our fifth consecutive year of record results. Revenues grew by 14% to £36.56m (2014: £32.09m) despite exiting approximately £2m of very low margin business in the year inherited from the acquisition of 2001 Electronic Components Ltd in December 2013. The Group revenue divisional breakdown was represented by a contribution of £22.75m (62% of Group revenue) from the manufacturing division (Steatite £19.74m and Q-Par £3.01m); with the distribution division under Solid State Supplies contributing £13.81m (38% of Group revenue). Margins vary depending on order size and product mix. However, in overall terms, the Group commands good gross margins owing to the value added nature of its business. Pleasingly, Group gross margins increased to 30.5% (2014: 29.2%). Operating margins increased to 8.4% (2014: 6.9%), with earnings per share rising by 38% benefitting from the low tax charge in the year. The low tax charge is principally the result of significant R&D tax credits which are unlikely to be repeated at these levels in future years. Profit before tax increased by 40% to £3.01m (2014: £2.15m). The continued improvement in retained earnings meant net assets increased by 19% to £12.39m (2014: £10.41m) with the Group’s net gearing levels falling to 20% (2014: 23%). 3 Solid State PLC CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued) Dividends We have continued our stated policy of returning to our shareholders a progressive dividend whilst ensuring we retain a prudent level of dividend cover. Dividends were 2.89 times covered in 2015 owing to the low tax charge (2014: 2.98 times). The Board is recommending a final dividend of 8p. An interim dividend of 4p per share was paid on 7th January 2015 giving a total dividend for the year of 12p per share, a 41% increase on the prior year (2014: 8.5p). The final dividend will be paid on 29th September 2015 to shareholders on the register at the close of business on 4th September 2015. The shares will go ex-dividend on 3rd September 2015. Business Review The Group is focussed on the supply and support of specialist electronics equipment which include high tolerance and tailor made battery packs, specialist electronic components, specialist antennas, industrial/rugged computers and secure communications systems. The market for the Group’s products and services is driven by the need for custom electronic solutions to address complex needs, typically in harsh environments where enhanced durability and resistance to extreme and volatile temperatures is vital. Drivers in our markets include efficiency improvement, cost saving, environmental monitoring and safety. Divisional Review Steatite Steatite is one of the leading UK suppliers of specialist electronic equipment. It designs, manufactures and supplies a range of products and solutions that include bespoke lithium battery packs, rugged mobile computing/radio solutions, secure communications systems, industrial computer hardware and software. Key to its strategy is the ability to design, manufacture and test to customer requirements, and against the most stringent of standards and qualifications, products for use in some of the most difficult and harsh environments. Steatite has continued to build on the progress made in previous years and has performed well in the year, achieving a 9% increase in pre-tax profits on the comparative year. The focus on value added and niche activities continues to improve our market share, whilst additionally introducing opportunities in new and exciting markets within the electronics industry, such as green energy and security solutions. Equally pleasing is the growth in our export sales. This is aided largely by a new range of communications systems enhanced by Steatite which have unique features for the markets they serve. The combination of new product development and new market penetration has delivered healthy organic growth, principally through cross selling initiatives and the application of innovative processes that save our clients time and money. The business is well structured with a strong divisional management team in place. This has enabled us to seize opportunities in the UK such as the Ministry of Justice contract, which is unusual for an SME, and to achieve success in export markets for a variety of new proprietary products at higher margins. Steatite has a tremendous platform to accelerate growth with a strong order backlog and will continue to seek product enhancement opportunities and cost efficiencies to maintain margin and profitability. Ministry of Justice offender tagging contract (MoJ) Steatite was awarded a contract by the MoJ in July 2014 for an initial three year term worth an estimated £34m for the supply and maintenance of offender tagging technology. The development of tagging devices for the UK government is progressing well under a dedicated management team with its own bespoke facility. The contract is progressing with expectations for a strong performance in the second half of the year. Beyond the initial MoJ contract, this new team is developing a range of devices for applications in the medical and home care sectors as well as enhanced justice platforms which we expect to lead to opportunities in new market sectors both in the UK and abroad. 4 Solid State PLC CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued) Q-Par Angus Ltd (Q-Par or Steatite Antennas) Q-Par is in the forefront of antenna design and manufacture. It excels in the research, design and manufacture of commercial grade and bespoke microwave antennas, subsystems and associated microwave components. Since its acquisition in 2013, the management team has been strengthened and the business continues to flourish. Order intake has grown and pre-tax profits are up some 142% compared to the prior year. The Group as a whole continues to benefit from good margins generated by the antenna division. Q-Par continues to focus on research and development within key market sectors and providing a service to its network of agents throughout the world. Further investment will be made in the year ahead with new purpose built facilities planned, along with significant investment in test and measurement facilities that will bring benefits to the whole Group. Q-Par is well placed to continue its growth and to become an industry leader in antenna design and manufacture. Solid State Supplies (Including 2001 Electronic Components Ltd) Solid State Supplies is a distributor of specialist components to the UK OEM community; selling semiconductors, related components and modules for embedded processing, control and communications switches, power management units and LED lighting. The 2014/15 financial year saw the successful completion of the integration of the 2001 Electronics business into Solid State Supplies. The companies are now trading successfully as a single entity from the Redditch headquarters. After adjusting for the previously reported exit from the very low margin commodity LED business, the enhanced customer base and product ranges available have delivered organic growth of approximately 4%. This is above the industry average for the sector (as reported by our industry association, AFDEC). Additionally, a continued focus on gross margins has resulted in a 1.6% improvement over the previous year. The company’s move towards a range of own-brand products continued throughout the year, with the introduction of a number of high output LED modules enabling lighting companies with little or no experience of electronics and thermal management to benefit directly from high power LEDs. The value added services operation provided a useful contribution to the increase in gross margin throughout the year and a minor capital investment resulted in the award of a £1 million contract for programmed devices from a major UK innovator in the field of Metrology. On 1st April 2015 Solid State Supplies acquired Signregion Limited and its subsidiary Ginsbury Electronics, a value added distributor of displays and power products. This acquisition greatly enhances the range of products available for sale to the existing customer base of Solid State Supplies and, in reverse, the range of embedded products available to the customers of Ginsbury. In the short period to date, cross selling has already started with some small but notable successes. Due to the specialist nature of the value added services at Ginsbury, it will continue to trade as a separate entity as part of the distribution division, whilst taking advantage of access to the sales force at Solid State Supplies. Divisional Summary The companies in the Solid State group have distinct characteristics in their market places. A depth of technical understanding and a collaborative approach to client relationships have always promoted an integrated process of product design and supply. The degree of co-operation has always been appreciated by our clients and we believe it is of significant commercial value both to us and our customers. Solid State will continue to pursue this approach and to extend it into new relationships where appropriate. Our stated strategy is to supplement organic growth with selective acquisitions within the electronics industry which will complement our existing Group companies and enable us to achieve improved operating margins through the employment of operational efficiencies, scale and distribution. 5 Solid State PLC CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued) Outlook Solid State has made a pleasing start to the new financial year with our order book remaining strong and a backlog of £19.38m as at 31st May 2015 (31st May 2014: £15.11m). Over the last 13 years we have successfully acquired and integrated eight businesses. We continue to see potential acquisition opportunities, with a number of them being as a direct result of the improving economic climate. We will pursue this acquisitive growth strategy while at the same time seeking to enhance organic growth through developing our export prospects and other product innovation initiatives. Finally, I would like to thank my fellow Directors and all our staff for their continued support in delivering another strong Group performance this year. We look forward with confidence to the year ahead. Tony Frere Chairman 7th July 2015 6 DIRECTORS’ REPORT For the year ended 31st March 2015 Solid State PLC The Directors submit their report together with the audited financial statements of the Group in respect of the year ended 31st March 2015. 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 and Strategic Report. The Group does not comment on environmental matters. Directors The Directors of the Company during the year were: A B Frere G S Marsh G L Comben (resigned 31.12.14) P Haining, FCA J M Lavery J L Macmichael W G Marsh (resigned 31.12.14) Tony Frere (dob 15/10/1947), Chairman 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 sitting on the executive council of the ECSN (the electronic component supply network trade association), and in 2013 was appointed as Deputy Chairman, and was appointed as chairman in April 2014. 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 2011 following the acquisition of Rugged Systems Ltd he was appointed Chief Executive Officer of the Group. Peter Haining FCA, (dob 05/09/1956), Finance Director and Company Secretary 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 Finance Director and Company Secretary, Peter Haining has specific responsibility for reviewing and advising on the Group’s budgets and financial affairs. 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 Steatite Limited. and Q-Par Angus Limited. on behalf of Solid State plc. 7 Solid State PLC DIRECTORS’ REPORT For the year ended 31st March 2015 (continued) 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 2011. He presently runs the operations of Solid State Supplies Limited on behalf of Solid State PLC. 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. Corporate Governance The Board confirms that the Group has had regard, throughout the accounting period, with the provisions set out in the UK Corporate Governance Code which was issued by the Financial Reporting Council in September 2014. 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 A B Frere who acts 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 A B Frere. 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 one Non-executive Director 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 Group 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 up to 15% of the issued ordinary shares under authority given by a resolution at the Annual General Meeting on 20th August 2014.This authority expires on 20th February 2016. Financial Instruments Details of the use of financial instruments by the Company and its subsidiaries are contained in Note 19 of the financial statements. Post Balance Sheet Event On 1st April 2015 the Group acquired 100% of the ordinary shares in Signregion Limited and its wholly owned subsidiary Ginsbury Electronics Limited for a cash consideration of £2.125m subject to a net asset adjustment once completion accounts have been finalised. This investment will be incuded in the Group’s balance sheet at its fair value at the date of acquisition. Ginsbury Electronics specialises in the supply of high quality display components, monitors panels, signage and power components to the commercial, retail, industrial and military markets throughout the UK and Europe. Further details of this acquisition are stated in Note 28 to the financial statements. 8 Solid State PLC DIRECTORS’ REPORT For the year ended 31st March 2015 (continued) Internal Control In respect of internal controls, the Directors 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 adequate accounting records that are sufficient to show and explain the Group’s and Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company to enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. In addition, the Directors are responsible the maintenance and integrity of the corporate and financial information included in the Company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. The Directors, as listed, are also responsible for preparing the Strategic Report, Directors’ Report and 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 Under company law the directors must not approve the financial statements unless they are satisfied that they present fairly the financial position, financial performance and cash flows of the Group for that period. In preparing the financial statements the Directors are required to: select suitable accounting policies in accordance with IAS 8 Accounting Policies, changes in Accounting Estimates and Errors and then apply them consistently. 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, and state that the group has complied with IFRS, subject to any material departures disclosed and explained in the financial statements. 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 the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. make judgements and accounting estimates that are reasonable and prudent. 9 Solid State PLC DIRECTORS’ REPORT For the year ended 31st March 2015 (continued) 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 corporate and financial information group’s website is the responsibility of the Directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein. The work carried out by the auditors does not include consideration of the maintenance and the integrity of the website and accordingly the auditor accepts no responsibility for any changes that have occurred to the financial statements when they are presented on the website. Renewal of authority to purchase the Company’s shares and authorities to issue 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 at the end 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 1,249,741 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 determined by reference to current market prices. 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. Resolutions are also being proposed at the Annual General Meeting with regard to the issue of further shares. One resolution will authorise the company to issue new shares up to a third of the current issued share capital by way of a rights issue and the second resolution will authorise the company to issue new shares up to 20% of the current issued share capital without rights of pre-emption for existing shareholders, and to the extent that new shares are issued under the second resolution the limit on the first resolution will be reduced such that the total number of new shares issued cannot exceed one third of the current share capital. Your Directors consider that the resolutions to be proposed at the meeting are 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 722,364 Ordinary shares, representing 8.7% of the Company’s issued Ordinary share capital. Auditors Each of the persons who are Directors at the time when this Directors’ Report is approved has confirmed that: so far as that Director is aware , there is no relevant audit information of which the company’s auditors are unaware, and that Director has taken all steps that ought to have been taken as a Director in order to be aware of any information needed by the auditors in connection with preparing their report and to establish that the company’s auditors are aware of that information. 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 7th July 2015 Registered Office: 2 Ravensbank Business Park, Hedera Road, Redditch, B98 9EY 10 REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF SOLID STATE PLC Solid State PLC We have audited the financial statements of Solid State PLC for the year ended 31st March 2015 which comprise the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Changes in Equity, the Consolidated Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company Balance Sheet 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 Chapter 3 of Part 16 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 9 and 10, 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 and express an opinion on 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 A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate. 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 2015 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 Article 4 of the IAS Regulations as it regards the Group financial statements. Opinion on other matter prescribed by the Companies Act 2006 In our opinion the information given in the Directors’ Report and the Strategic 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. George Crowther (Senior statutory auditor) for and on behalf of haysmacintyre, Statutory Auditor 7th July 2015 26 Red Lion Square London WC1R 4AG 11 Solid State PLC Notes REPORT OF THE INDEPENDENT AUDITORS TO THE SHAREHOLDERS OF SOLID STATE PLC (continued) 1. The maintenance and integrity of the group’s website is the responsibility of the directors, the work carried out by the auditors does not involve consideration of those matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the financial statements since they were initially presented on the website. 2. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 12 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 31st March 2015 Solid State PLC euneveR selas fo tsoC TIFORP SSORG stsoc noitubirtsiD sesnepxe evitartsinimdA SNOITAREPO MORF TIFORP stsoc ecnaniF NOITAXAT EROFEB TIFORP esnepxe xaT YTIUQE OT ELBATUBIRTTA TIFORP TNERAP EHT FO SREDLOH OTHER COMPREHENSIVE INCOME Translation differences on overseas operations TOTAL COMPREHENSIVE INCOME FOR THE YEAR setoN 2 3 6 7 2015 £ 772,955,63 )596,593,52( _________ 285,361,11 )138,004,3( )106,007,4( _________ 2014 £ 234,580,23 )936,827,22( _________ 397,653,9 )505,348,2( )356,782,4( _________ 051,260,3 536,522,2 )114,84( _________ )629,17( _________ 937,310,3 907,351,2 )230,221( _________ )046,772( _________ 707,198,2 _________ 960,678,1 _________ - _________ - _________ 2,891,707 _________ 1,876,069 _________ ERAHS REP SGNINRAE cisaB detuliD 8 8 p9.43 p9.33 p3.52 p2.52 The notes on pages 18 to 48 form part of these financial statements. 13 Solid State PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 31st March 2015 erahS latipaC erahS latipaC deniateR noitpmedeR muimerP evreseR sgninraE evreseR dleh serahS yrusaerT ni latoT Balance at 31st March 2013 348,602 1,073,404 4,674 4,854,353 - 6,281,033 Total comprehensive income For the year ended 31st March 2014 - - Issue of new shares 62,934 2,555,344 Share based payment expense sdnediviD - - - - - - - - 1,876,069 - 235,056 )333,306( - - - - 1,876,069 2,618,278 235,056 )333,306( Balance at 31st March 2014 411,536 3,628,748 4,674 6,362,145 - 10,407,103 _______ ________ _______ ________ _______ ________ Total comprehensive income For the year ended 31st March 2015 serahs wen fo eussI Share based payment expense sdnediviD Repurchase of own shares into treasury - 440,5 - - - - - - - - - - - - - 2,891,707 - 210,653 )004,018( - - - - 2,891,707 440,5 210,653 )004,018( - (313,073) (313,073) _______ ________ _______ ________ _________ _______ Balance at 31st March 2015 416,580 _______ 3,628,748 ________ 4,674 _______ 8,654,105 ________ (313,073) 12,391,034 _________ _______ The notes on pages 18 to 48 form part of these financial statements. 14 CONSOLIDATED STATEMENT OF FINANCIAL POSITION at 31st March 2015 setoN £ £ £ £ 2015 2014 Solid State PLC Company Number: 00771335 STESSA STESSA TNERRUC-NON tnempiuqe dna tnalp ,ytreporP stessa elbignatnI TOTAL NON-CURRENT ASSETS STESSA TNERRUC seirotnevnI selbaviecer rehto dna edarT elbaviecer xat noitaroproC stnelaviuqe hsac dna hsaC STESSA TNERRUC LATOT STESSA LATOT SEITILIBAIL SEITILIBAIL TNERRUC tfardrevo knaB selbayap rehto dna edarT sgniworrob knaB seitilibail xat noitaroproC TOTAL CURRENT LIABILITIES NON CURRENT LIABILITIES selbayap rehto dna edarT ytilibail xat derrefeD seitilibail rof noisivorP TOTAL NON-CURRENT LIABILITIES SEITILIBAIL LATOT STESSA TEN LATOT 01 11 41 51 61 71 81 02 12 110,342,1 392,004,5 ________ 6,643,304 684,950,1 005,539,4 ________ 5,994,986 265,104,5 746,378,8 244,921 325,737,1 ________ 095,475,4 951,834,01 587,54 104,586 ________ 471,241,61 _________ 874,587,22 _________ 539,347,51 _________ 129,837,12 _________ 799,002,4 025,338,5 - 578,4 ________ 917,498,1 299,984,7 857,341,1 699,793 ________ 10,039,392 10,926,465 615,8 635,643 - ________ 962,11 480,422 000,071 ________ 355,052 _________ 444,493,01 _________ 430,193,21 ________ 085,614 847,826,3 476,4 501,456,8 )370,313( ________ 405,353 _________ 818,133,11 _________ 301,704,01 ________ 635,114 847,826,3 476,4 541,263,6 - ________ CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY TNERAP EHT FO SREDLOH latipac erahS evreser muimerp erahS evreser noitpmeder latipaC sgninrae deniateR yrusaert ni dleh serahS 22 32 32 32 42 YTIUQE LATOT 301,704,01 ________ The financial statements were approved by the Board of Directors and authorised for issue on 7th July 2015 and were signed on its behalf by: 430,193,21 ________ G S Marsh, Director P Haining, Director The notes on pages 18 to 48 form part of these financial statements. 15 Solid State PLC CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31st March 2015 SEITIVITCA GNITAREPO noitaxat erofeb tiforP Adjustments for: noitaicerpeD noitasitromA Loss on disposal of property, plant and equipment esnepxe tnemyap desab erahS stsoc ecnaniF segnahc erofeb snoitarepo morf tiforP snoisivorp dna latipac gnikrow ni seirotnevni ni )esaercnI( Decrease/(increase) in trade and other receivables (Decrease)/increase in trade and other payables snoisivorp ni esaercni/)esaerceD( snoitarepo morf detareneg hsaC diap sexat emocnI derevocer sexat emocnI seitivitca gnitarepo morf wolf hsaC SEITIVITCA GNITSEVNI Purchase of property, plant and equipment erawtfos retupmoc fo esahcruP Proceeds of sales from property, plant and equipment Consideration paid on acquisition of subsidiaries Cash with subsidiaries over which control deniatbo neeb sah Expenditure on development costs SEITIVITCA GNICNANIF serahs yranidro fo eussI Invoice discounting finance (net movement) diap tseretnI Dividend paid to equity shareholders Purchase of own shares for holding in treasury (DECREASE)/INCREASE IN CASH AND CASH STNELAVIUQE 2015 2014 £ £ £ £ 907,351,2 784,342 091,501 1,593 650,532 629,17 ________ 169,018,2 )471,795( ________ 787,312,2 )014,161( ________ 773,250,2 937,310,3 716,792 859,591 5,676 356,012 114,84 _______ 450,277,3 )279,628( 1,564,512 (1,659,225) )000,071( ________ )038,226( (1,197,887) 1,053,543 000,071 ________ )586,190,1( ________ 963,086,2 )341,225( 587,54 _______ )037,981( 023,82 _______ )853,674( ________ 110,402,2 (524,918) )036,751( 38,100 - - (503,121) _______ (403,487) )527,7( 98,152 (2,974,029) 490,156 - _______ )965,741,1( ________ )599,536,2( _______ 244,650,1 )816,385( 440,5 (1,143,758) )114,84( (810,400) (313,073) _______ 872,816,2 (1,169,746) )629,17( (603,333) - _______ )895,013,2( ________ )651,452,1( ________ 372,377 _______ 556,981 _______ The notes on pages 18 to 48 form part of these financial statements. 16 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 31st March 2015 (continued) Cash and cash equivalents comprise: Solid State PLC 2015 £ 2014 £ stnelaviuqe hsac dna hsac ni esaercni/)esaerced( teN )651,452,1( 556,981 raey fo gninnigeb ta stnelaviuqe hsac dna hsaC raey fo dne ta stnelaviuqe hsac dna hsaC There were no significant non-cash transactions. dnamed no elbaliava hsaC stfardrevO )813,902,1( ________ )379,893,1( ________ )474,364,2( ________ )813,902,1( ________ 2015 £ 2014 £ 325,737,1 )799,002,4( ________ 104,586 )917,498,1( ________ )474,364,2( ________ )813,902,1( ________ 17 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 1. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS 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 statement of comprehensive income 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. Goodwill is capitalised as an intangible asset with any impairment in carrying value being charged to the statement of comprehensive income. Any gains on acquisition are recognised in the statement of comprehensive income on the date of acquisition. Impairment tests on goodwill are undertaken annually at 31st March as it is not amortised. 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 statement of comprehensive income, 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. 18 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 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 statement of comprehensive income. Software is amortised over its useful economic life of 5 years and other intangible assets over their useful economic life of 10 years. 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. In the case of mobilisation contracts with defined milestones, revenue and related costs are recognised once the attainment of a particular milestone has been agreed with the customer. Retentions which are contingent on future events are only recognised when the customer has agreed that those future criteria have been met and the retention is thus payable. 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. 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 statement of comprehensive income on a straight-line basis over the lease term. Where substantially all the risks and rewards of ownership have passed to the Group (a “ finance lease “) the assets are capitalised as tangible fixed assets and are depreciated over the shorter of the lease term and their useful lives. The capital elements of future obligations under the leases are included as liabilities in the consolidated statement of financial position. The interest element of the rental obligation is charged to the consolidated statement of comprehensive income over the period of the lease and represents a constant proportion of the balance of the capital outstanding. Assets held under hire purchase agreements are treated as assets held under finance leases for accounting purposes. The land and buildings elements of property leases are considered separately for the purposes of lease classification. 19 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 1. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued) 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. 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 statement of comprehensive income. On consolidation, the statement of financial position of overseas operations are translated into sterling at rates approximating to those ruling at the statement of financial position 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 available for use or sold; adequate technical, financial and other resources are available to complete the development; there is an intention to complete and sell or use the product; there is an ability for the Group 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 statement of comprehensive income. Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the statement of comprehensive income as incurred. 20 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 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 statement of financial position at fair value with changes in fair value recognised in the statement of comprehensive income. 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 statement of financial position at fair value with changes in fair value recognised in the statement of comprehensive income. 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 statement of financial position “Interest expense” in this context includes initial transaction costs and premia payable on redemption, as well as any interest while the liability is outstanding. Treasury Shares Shares in Solid State PLC purchased for holding in treasury are held at cost as a separate negative reserve in the capital section of the consolidated statement of financial position. Any dividends paid in relation to these shares are cancelled. 21 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (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 statement of comprehensive income over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each statement of financial position 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 charge 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 statement of comprehensive income over the remaining vesting period. Standards and amendments and interpretations to published standards not yet effective Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the group’s accounting periods beginning on or after 1st April 2015 or later periods and which the group has decided not to adopt early are: IFRS 9 Financial Instruments (effective for accounting periods beginning or after 1st January 2018). Amendments to IFRS 10 Consolidated Financial Statements (effective for accounting periods beginning on or after 1st January 2016) IFRS 15 Revenue from Contracts with Customers (effective for accounting periods beginning on or after 1st January 2017) Amendments to IAS 16 Property, Plant and Equipment (effective for accounting periods beginning on or after 1st January 2016) Amendments to IAS 34 Interim Financial Reporting (effective for accounting periods beginning on or after 1st January 2016) Amendments to IAS 38 Intangible Assets (effective for accounting periods beginning on or after 1st January 2016) The implementation of these standards is not expected to have any material effect on the Group’s financial statements. 2. REVENUE Revenue arises from: sdoog fo elaS secivres fo noisivorP 2015 £ 2014 £ 832,884,63 930,17 _________ 431,879,13 892,701 _________ 772,955,63 _________ 234,580,23 _________ 22 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 3. PROFIT FROM OPERATIONS This has been arrived at after charging/(crediting): )4 eton ees( stsoc ffatS )stsoc ffats ni dedulcni( stsoc noitanimret tnemyolpmE tnempiuqe dna tnalp ,ytreporp fo noitaicerpeD Amortisation of computer software and other intangible assets tnempiuqe dna tnalp ,ytreporp fo lasopsid no ssoL :noitarenumer ’srotiduA seef tiduA Audit of accounts of associates of the company pursuant to legislation secivres yrosivda noitaxat :seef tidua noN secivres yrosivda rehto: :services relating to corporate finance transactions :slatner esael gnitarepO yrenihcam dna tnalP rehtO stsoc tnempoleved dna hcraeseR secnereffid egnahcxe ngieroF snwod etirw kcotS 2015 £ 916,587,5 829,33 716,792 195,958 676,5 057,2 51,000 005,2 005,4 - 593,87 947,192 691,634 )853,971( 000,432 _______ 2014 £ 074,363,5 454,601 784,342 105,190 395,1 000,6 52,250 056,5 - 22,850 483,16 105,722 798,484 312,34 000,372 _______ The foreign exchange differences have been treated as an adjustment to cost of sales rather than as an overhead. Details of transactions with businesses associated with the Directors are given in Note 5. 4. STAFF COSTS Staff costs for all employees during the year, including the executive Directors, were as follows: seiralas dna segaW stsoc ytiruces laicoS stsoc noisnep rehtO 2015 £ 227,240,5 250,975 548,361 ________ 916,587,5 ________ 2014 £ 095,957,4 256,845 822,55 ________ 074,363,5 ________ Wages and salaries include termination costs of £33,928 (2014: £106,454) The average monthly number of employees during the year, including the three executive Directors, was as follows: noitubirtsid dna gnilleS gnirutcafunaM noitartsinimda dna tnemeganaM 23 2015 Number 2014 Number 94 54 25 ___ 641 ___ 63 94 35 ___ 831 ___ Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (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 £ Bonuses £ Benefits in kind £ Total emoluments £ Pension contributions £ Total £ 31st March 2015 W G Marsh (to 31/12/14) G S Marsh J M Lavery J L Macmichael P Haining G 31/12/14) A B Frere Comben L (to Total 31st March 2014 W G Marsh G S Marsh J M Lavery J L Macmichael P Haining G L Comben A B Frere Total 19,000 154,000 143,000 114,000 60,000 19,000 - - - - - - 15,000 30,000 30,000 21,000 - 6,000 12,000 ______ - ______ - ______ 521,000 ______ - ______ 102,000 ______ 34,000 184,000 173,000 135,000 60,000 25,000 12,000 ______ 623,000 ______ 50,000 162,000 150,000 120,000 60,000 50,000 12,000 ______ - 30,000 70,000 - - - - ______ 20,000 25,000 21,000 19,000 - 14,000 - ______ 604,000 ______ 100,000 ______ 99,000 ______ 70,000 217,000 241,000 139,000 60,000 64,000 12,000 ______ 803,000 ______ - 34,000 7,000 191,000 9,000 182,000 7,000 142,000 60,000 25,000 - - - ______ 12,000 ______ 23,000 ______ 646,000 ______ - 70,000 1,000 218,000 8,000 249,000 3,000 142,000 60,000 64,000 12,000 ______ - - - ______ 12,000 ______ 815,000 ______ The principal benefits in kind relate to the provision of company cars. In addition to the above, fees totalling £51,400 (2014: £40,518) arose during the year in respect of accountancy services provided by The Kings Mill Practice, a firm of which P Haining is the proprietor. A balance of £18,366 (2014: £7,440) was due to The Kings Mill Practice at 31st March 2015. Fees totalling £46,977 (2014: £39,249) arose during the year in respect of the services of A B Frere provided by Condev Limited. A balance of £4,968 (2014: £3,825) was due to Condev Limited at 31st March 2015. Fees totalling £23,200 (2014: £Nil) arose during the period from 1st July 2014 to 31st December 2014 in respect of the services of G L Comben provided by G L Comben Consultancy Limited. A balance of £3,867 (2014: £Nil) was due to G L Comben Consultancy Limited at 31st March 2015. Fees totalling £19,000 (2014: £Nil) arose during the period from 1st July 2014 to 31st December 2014 in respect of the services of W G Marsh provided by W G Marsh Consultancy Limited. A balance of £3,167 (2014: £Nil) was due to W G Marsh Consultancy Limited at 31st March 2015. The executive Directors have service contracts with the Company which are terminable by the Company, or the relevant Director, on one year’s notice. 24 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 5. DIRECTORS’ EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS (continued) The Directors of the Company on 7th July 2015 and at the statement of financial position date, and their interest in the issued ordinary share capital of the Company at that date, at 31st March 2015 and 31st March 2014 or date of appointment if later, were as follows: hsraM S G yrevaL M J gniniaH P J L Macmichael ererF B A 07.07.15 31.03.15 31.03.14 654,344 348,96 005,25 100,565 000,65 654,344 348,96 005,25 100,565 000,65 318,115 669,834 005,25 142,096 000,601 Details of the options over the Company’s shares granted under the Enterprise Management Incentives Scheme are as follows: snoitpO ta dleh 41.40.10 42,000 36,400 31,600 42,000 36,400 31,600 42,000 36,400 31,600 desicrexE despaL (41,626) - - (40,861) - - (18,397) - - (374) - - (1,139) - - (23,603) - - snoitpO ta dleh 51.30.13 - 36,400 31,600 - 36,400 31,600 - 36,400 31,600 G S Marsh J M Lavery J L Macmichael esicrexE ecirp fo etaD tnarg esicrexE doirep 5p 5p 5p 5p 5p 5p 5p 5p 5p 07.08.13 07.08.13 07.08.13 07.08.13 07.08.13 07.08.13 07.08.13 07.08.13 07.08.13 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 August 2014 to August 2023 The market price of the shares at 31st March 2015 was £6.33 (2014: £3.44), with a quoted range during the year of £3.51 to £8.70 All the options at 31st March 2015 are subject to performance criteria based on the years ended 31st March 2015 and 31st March 2016 respectively, although the options are non cumulative. They vest in two tranches based on performance criteria over the two years. The market value at the date of grant was £2.38. For G S Marsh the criteria are based on the pre-tax profit of the group, for J M Lavery on the pre-tax profit of the manufacturing division and for J L Macmichael on the pre-tax profit of the distribution division. The aggregate gain on exercise of share options in the year was £597,737. 6. FINANCE COSTS sgniworrob knaB tseretni gnitnuocsid eciovnI tseretni rehtO 2015 £ 108,43 562,7 543,6 ______ 48,411 ______ 2014 £ 103,14 517,92 019 ______ 71,926 ______ 25 Solid State PLC 7. TAX EXPENSE Current tax expense NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) raey eht rof sessol ro stiforp no xat noitaroproc KU sdoirep roirp fo tcepser ni tnemtsujdA Deferred tax charge Total tax charge 2015 £ 2014 £ 578,4 )592,5( ______ (420) 122,452 _______ 122,032 _______ 517,562 )983,62( _______ 239,326 38,314 _______ 277,640 _______ 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: xat erofeb tiforP Expected tax charge based on the standard rate of )%32 – 4102( %12 fo KU eht ni xat noitaroproc Effect of: sesoprup xat rof elbitcuded ton sesnepxE Deductible expenses not charged in Group accounts Difference between depreciation for the year and capital allowances Tax relief on exercise of share options at less than market value feiler lanigraM Enhanced relief on research and development expenditure etar xat fo egnahc no gnisira tiderc xat derrefeD raey roirp ni noisivorp ot tnemtsujdA kcab deirrac ssol no etar decnahnE egrahc xat latoT 8. EARNINGS PER SHARE The earnings per share is based on the following: sgninraE serahs fo rebmun egareva dethgieW serahs fo rebmun detuliD erahs rep sgninraE erahs rep sgninrae detuliD 2015 £ 2014 £ 937,310,3 _______ 907,351,2 _______ 588,236 353,594 542,46 (7,237) (5,773) (125,525) )442( (429,877) )302,5( )358( )683( _______ 230,221 _______ 2015 £ 707,198,2 _________ 405,692,8 212,245,8 p9.43 p9.33 563,42 (7,926) (1,002) (63,752) )008,1( (166,031) )765,1( - - _______ 046,772 _______ 2014 £ 960,678,1 _______ 343,214,7 768,134,7 p3.52 p2.52 Earnings per ordinary share has been calculated using the weighted average number of shares in issue during the year. The weighted average number of equity shares in issue was 8,296,504 (2014: 7,412,343). The diluted earnings per share is based on 8,542,212 (2014: 7,431,867) ordinary shares which allow for the exercise of all dilutive potential ordinary shares. 26 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 9. DIVIDENDS Final dividend paid for the prior year of 5.75p per share (2014: 5.25p) )p57.2 :4102( erahs rep p4 fo diap dnedivid miretnI yrusaert ni dleh serahs no sdnedivid dellecnaC Final dividend proposed for the year 8p per share (2014: 5.75p) Solid State PLC 2015 £ 479,067 462,333 )139,1( _______ 810,400 _______ 662,667 _______ 2014 £ 376,988 543,622 - _______ 603,333 _______ 473,267 _______ The proposed final dividend has not been accrued for as the dividend will be approved by the shareholders at the annual general meeting. 27 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 10. PROPERTY, PLANT AND EQUIPMENT Year ended 31st March 2014 tsoC 3102 lirpA ts1 snoitiddA seiraidisbus fo noitisiuqcA slasopsiD 4102 hcraM ts13 noitaicerpeD 3102 lirpA ts1 raey eht rof egrahC lasopsid nO 4102 hcraM ts13 eulav koob teN 4102 hcraM ts13 Year ended 31st March 2015 tsoC 4102 lirpA ts1 snoitiddA slasopsiD 5102 hcraM ts13 noitaicerpeD 4102 lirpA ts1 raey eht rof egrahC lasopsid nO 5102 hcraM ts13 eulav koob teN 5102 hcraM ts13 trohS dlohesael ytreporp rotoM selcihev stnemevorpmi sgnittiF dna tnempiuqe sretupmoc £ £ £ latoT £ 992,703 009,2 - )008,11( _______ 162,806 159,173 231,81 )167,142( _______ 009,033,1 636,82 051,66 )057,11( _______ 064,642,2 784,304 282,48 )113,562( ________ 993,892 _______ 385,657 _______ 639,314,1 _______ 819,864,2 ________ 291,06 832,03 )008,11( _______ 603,552 732,901 )611,051( _______ 310,610,1 210,401 )056,3( _______ 115,133,1 784,342 )665,561( ________ 036,87 _______ 724,412 _______ 573,611,1 _______ 234,904,1 ________ 967,912 _______ 651,245 _______ 165,792 _______ 684,950,1 ________ 993,892 163,711 - _______ 385,657 311,732 )934,511( _______ 639,314,1 444,071 - _______ 819,864,2 819,425 )934,511( ________ 067,514 _______ 752,878 _______ 083,485,1 _______ 793,878,2 ________ 036,87 570,93 - _______ 724,412 247,061 )366,17( _______ 573,611,1 008,79 - _______ 234,904,1 716,792 )366,17( ________ 507,711 _______ 605,303 _______ 571,412,1 _______ 683,536,1 ________ 550,892 _______ 157,475 _______ 502,073 _______ 110,342,1 ________ At 31st March 2015, the assets included a motor vehicle held under a finance lease. The net book value was £9,889 (2014: £ 13,185) and the depreciation charge for the year was £3,296 (2014: £700) 28 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) no lliwdooG retupmoC NU tnempoleveD noitadilosnoc erawtfos stsoC secneciL £ £ £ Solid State PLC Other elbignatni stessa £ latoT £ - - _______ 008,9 _____ 990,651 527,7 _______ 872,602,2 993,203,1 ________ 116,215,2 434,041 889,346,2 468,333,1 ________ _______ - _______ 008,9 _____ 428,361 _______ 776,805,3 ________ 995,651,5 892,474,1 ________ _______ - - _______ - - _____ 087,37 567,23 ______ - - ________ 921,24 524,27 909,511 091,501 ________ _______ - _______ - _____ 545,601 ______ - ________ 455,411 990,122 ________ _______ - _______ 008,9 _____ 972,75 ______ 776,805,3 ________ 005,539,4 447,953,1 ________ _______ - 121,305 _______ 008,9 - _____ 428,361 036,751 _______ 776,805,3 - ________ 995,651,5 892,474,1 157,066 ________ _______ - 503,121 _______ 9,800 _____ 321,454 _______ 3,508,677 ________ 1,474,298 5,817,350 ________ _______ - - _______ - - _____ 545,601 825,84 ______ - - ________ 990,122 455,411 034,741 859,591 ________ _______ - _______ - _____ 370,551 ______ - ________ 489,162 750,714 ________ _______ 503,121 _______ 9,800 _____ 166,381 ______ 3,508,677 ________ 1,212,314 5,400,293 ________ _______ 11. INTANGIBLE ASSETS Year ended 31st March 2014 tsoC 3102 lirpA ts1 snoitiddA 4102 hcraM ts13 noitasitromA 3102 lirpA ts1 raey eht rof egrahC 4102 hcraM ts13 eulav koob teN 4102 hcraM ts13 Year ended 31st March 2015 tsoC 4102 lirpA ts1 snoitiddA 31st March 2015 noitasitromA 4102 lirpA ts1 raey eht rof egrahC 5102 hcraM ts13 eulav koob teN 31st March 2015 The cost of other intangible assets comprise the estimated net present value of customer relationships of Rugged Systems Limited and Q-Par Angus Limited and customer and supplier relationships of 2001 Electronic Components Limited at the date of acquisition. The development costs relate to the cost of developing a new electronic monitoring unit to enable the Group to extend the operations of its manufacturing division into this new growth area. No amortisation has been charged in the year as the products are still at the development stage and it is anticipated that it will be fully operational for the 2016/17 financial year. 29 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 12. GOODWILL AND IMPAIRMENT Details of the carrying amount of goodwill allocated to cash generating units (CGUs) is as follows: detimiL etitaetS detimiL sugnA raP-Q detimiL seilppuS etatS diloS Goodwill carrying amount 2015 £ 2014 £ 872,602,2 233,42 760,872,1 872,602,2 233,42 760,872,1 ________ ________ 3,508,677 ________ 3,508,677 ________ 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% (2014: 15%) has been used based on the weighted 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 (2014: 0.84). The recoverable amount exceeds the carrying amount by £24,605,000 (2014: £10,176,000). 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% 13. SUBSIDIARIES The subsidiaries of Solid State PLC, 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 Nature of business Solid State Supplies Limited Great Britain detimiL etitaetS niatirB taerG Q-Par Angus Limited Great Britain 2001 Electronic Components Limited Great Britain 100% %001 100% 100% Distribution of electronic components. stnenopmoc cinortcele fo noitubirtsiD and manufacture of electronic equipment. Manufacture of microwave and RF equipment Non trading entity Wordsworth Technology (Kent) Limited Great Britain 100% Non trading entity Rugged System Limited Great Britain 100% Non trading entity E-merge Electronics Limited Great Britain 100% Non trading entity In all cases the country of operation and of incorporation is England. 30 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 14. INVENTORIES elaser rof sdoog dna sdoog dehsiniF ssergorp ni kroW Solid State PLC 2015 £ 451,693,4 804,500,1 ________ 5,401,562 ________ 2014 £ 605,668,3 480,807 ________ 4,574,590 ________ There is no material difference between the replacement cost of inventories and the amount stated above. 15. TRADE AND OTHER RECEIVABLES selbaviecer edarT selbaviecer rehtO stnemyaperP 2015 £ 771,213,7 148,18 926,974,1 ________ 2014 £ 717,588,9 545,951 798,293 _________ 8,873,647 ________ 10,438,159 _________ Group trade receivables include £Nil (2014: £1,500,000) 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 2% over bank base rate and an administration fee of 0.175% of the gross value of the debts per month. At 31st March 2015 borrowing under the agreement of £Nil (2014: £1,500,000) was available of which £Nil (2014: £1,143,758) was taken up. Interest charges in the year amounted to £7,265 (2014: £24,332) and administration fees to £5,475 (2014: £21,156). The invoice discounting agreement ceased on 31st July 2014. 16. TRADE AND OTHER PAYABLES (CURRENT) selbayap edarT sexat ytiruces laicos dna sexat rehtO stnemeerga esahcrup erih rednu eud stnuomA selbayap rehtO slaurccA emocni derrefeD 2015 £ 524,046,3 935,837 357,2 066,502 382,285 068,366 ________ 5,833,520 ________ 2014 £ 574,434,5 398,571,1 564,2 761,431 421,814 868,423 ________ 7,489,992 ________ 31 Solid State PLC 17. BANK BORROWINGS NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) sretnuocsid eciovni ot eud stnuomA 2015 £ 2014 £ - _______ 857,341,1 ________ 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 £1,425,631 (2014: £1,407,192). 18. TRADE AND OTHER PAYABLES (NON CURRENT) stnemeerga esahcrup erih rednu eud stnuomA 19. FINANCIAL INSTRUMENTS 2015 £ 2014 £ 615,8 _____ 962,11 ________ 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 on the next page: 32 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 19. FINANCIAL INSTRUMENTS (continued) Solid State PLC 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 statement of financial position as shown in note 15 and in the statement of financial position. The amount of the exposure shown in note 15 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 euros. 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 Group maintains its cash reserves at reputable banks. The maximum exposure to credit risk at the reporting date was: Current financial assets selbaviecer rehto dna edarT stnelaviuqe hsac dna hsaC 33 Loans and Receivables 2014 £ 2015 £ 746,378,8 325,737,1 _________ 951,834,01 104,586 _________ 071,116,01 _________ 065,321,11 _________ Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 19. FINANCIAL INSTRUMENTS (continued) The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was: KU KU noN Carrying value 2015 £ 131,226,6 640,096 ________ 7,312,177 ________ 2014 £ 475,970,9 341,608 ________ 9,885,717 ________ 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 £140,695 (2014: £30,109) which represented 0.38% (2014: 0.09%) of revenue. This provision is included within the management and administration costs in the Consolidated Statement of Comprehensive Income. Trade receivables ageing by geographical segment Geographical area 5102 KU KU noN latoT snoisivorP :sseL latoT 4102 KU KU noN Total £ Current £ 647,717,6 791,307 ________ 759,100,6 201,745 ________ 30 days past due £ 532,416 338,011 _______ 60 days past due £ 90 days past due £ 238,13 963,91 ______ 227,96 398,52 ______ 349,024,7 950,945,6 860,527 102,15 516,59 )667,801( ________ - ________ - _______ )151,31( ______ )516,59( ______ 771,213,7 ________ 950,945,6 ________ 860,527 _______ 050,83 ______ - ______ 696,612,9 341,608 ________ 862,672,8 159,636 ________ 948,207 227,32 _______ 576,771 552,8 ______ 409,95 512,731 ______ latoT snoisivorP :sseL 938,220,01 )221,731( 912,319,8 175,627 039,581 911,791 )221,731( latoT ________ ________ _______ ______ ______ 717,588,9 ________ 912,319,8 ________ 175,627 _______ 039,581 ______ 799,95 ______ 34 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 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: ecnalab gninepO snoisivorp ni sesaercnI snoisivorp tsniaga ffo nettirW ecnalab gnisolC 2015 £ 221,731 596,041 )150,961( _______ 667,801 _______ 2014 £ 909,901 901,03 )698,2( _______ 221,731 _______ 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 2015 trade receivables of £763,118 which were past their due date were not impaired (2014: £972,498). All of these were less than 90 days past their due date. Liquidity risk Current financial liabilities selbayap rehto dna edarT sgniworrob knaB tfardrevo knaB Non current financial liabilities srotiderc esahcrup eriH Financial liabilities measured at amortised cost 2015 £ 2014 £ 025,338,5 - 799,002,4 _________ 299,984,7 857,341,1 917,498,1 _________ 10,034,517 _________ 10,528,469 _________ 615,8 _____ 962,11 ______ 35 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 19. FINANCIAL INSTRUMENTS (continued) The following are maturities of financial liabilities, including estimated contracted interest payments. lautcartnoC gniyrraC tnuoma wolf hsac shtnom 6 ssel ro 21 – 6 shtnom erom ro 1 sraey 2015 Secured bank loans Bank overdrafts Amounts due to invoice sretnuocsid Trade and other payables Hire purchase creditors 2014 Secured bank loans Bank overdrafts Amounts due to invoice discounters Trade and other payables Hire purchase creditors - 4,200,997 - 4,200,997 - 4,200,997 - - - - - 5,830,767 11,269 _________ - 5,830,767 11,269 - - 1,565 _________ _________ _______ - 5,830,767 1,188 - - 8,516 _______ 330,340,01 _________ 259,230,01 330,340,01 565,1 _________ _________ _______ 615,8 _______ - 1,894,719 - 1,894,719 - 1,894,719 1,143,758 7,487,527 13,734 _________ 1,143,758 7,487,527 13,734 1,143,758 7,487,527 1,188 1,277 _________ _________ _______ - - - - - 11,269 _______ 10,539,738 _________ 10,539,738 10,527,192 1,277 _________ _________ _______ 11,269 _______ 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. On 1st August 2014 Lloyds Bank plc took over the role of Group bankers from HSBC plc. The Group bank overdraft with Lloyds Bank plc incurs interest at the rate of 2.0% over the Lloyds Bank base rate. The Group is affected by changes in the UK interest rate. Details of interest payable under the former invoice discounting agreement are stated in Note 15. The US Dollar overdraft facility bears the interest rate of 1.0% over the Lloyds Bank US dollar reference 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 ruling base rate had been 1% higher throughout the year the level of interest payable would have been £19,364 (2014: £14,750) higher and if 1% lower throughout the year the level of interest payable would have been lower by the same amount. 36 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 19. FINANCIAL INSTRUMENTS (continued) 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 statement of financial position date. The following table shows the net liabilities exposed to exchange rate risk that the Group has at 31st March 2015: selbaviecer edarT stnelaviuqe hsac dna hsaC tfardrevo knaB selbayap edarT 2015 £ 2014 £ 463,158,1 765,621 - )010,246,1( ________ 308,494,5 279,011 )656,091( )992,768,2( ________ 335,921 ________ 2,547,820 ________ There were also net assets of £21,444 in euros (2014: net assets of £95,398). 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 statement of financial position 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 statement of financial position date would have resulted in an estimated net increase in pre-tax profit for the year and an increase in net assets of approximately £36,000 (2014: £264,000) and the effect of a weakening of 10% in the rate of exchange in the currencies against sterling at the statement of financial position date would have resulted in an estimated net decrease in pre-tax profit for the year and a decrease in net assets of approximately £36,000 (2014: £(264,000)). There were no forward purchase agreements in place at 31st March 2014 or 31st March 2015. 37 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 19. FINANCIAL INSTRUMENTS (continued) 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 2015 is shown below: stnelaviuqe hsac dna hsaC stfardrevo knaB ecnavda gnitnuocsid eciovnI ecnanif esahcrup eriH latipac erahS tnuocca muimerp erahS sgninrae deniateR evreser noitpmeder latipaC yrusaert ni dleh serahS oitar gniraeG 20. DEFERRED TAX 2015 £ )325,737,1( 799,002,4 - 962,11 ________ 2,474,743 ________ 085,614 847,826,3 501,456,8 476,4 )370,313( ________ 2014 £ )104,586( 917,498,1 857,341,1 437,31 ________ 2,366,810 ________ 635,114 847,826,3 541,263,6 476,4 - ________ 12,391,034 ________ 10,407,103 ________ 02.0 ________ 32.0 ________ 2015 £ 2014 £ Accelerated capital allowances, capitalised development costs and goodwill on acquisition of subsidiaries: 4102 lirpA At 1st seiraidisbus fo noitisiuqca no gnisira xat derrefeD raey eht rof egrahC egnahc etar xat fo tceffE 5102 hcraM ts13 tA 480,422 - 556,721 )302,5( ______ 635,643 ______ 824,15 243,431 747,63 765,1 ______ 480,422 _____ Deferred tax rates are at 20% (2014: 21%) being the rate substantially enacted. 38 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 21. PROVISION FOR LIABILITIES Provision for liabilities on the termination of two building leases. The provision at 31st March 2014 represented the expected economic outflow on the termination of the two leases. Both were paid or released to the statement of comprehensive income in the year ended 31st March 2015. noisivorp gninepO raey ni diaP Released to statement of comprehensive income noisivorp gnisolC 22. SHARE CAPITAL 000,071 )320,361( (6,977) _______ liN£ _______ diap ylluf dna deussi dettollA 8,331,606 (2014: 8,230,722) ordinary shares of 5p each 2015 £ 416,580 ______ 2014 £ 411,536 ______ On 6th August 2014, Mr J L Macmichael exercised share options over 18,397 ordinary shares which were issued at an exercise price of 5p. On 6th August 2014, Mr G S Marsh exercised share options over 41,626 ordinary shares which were issued at an exercise price of 5p. On 6th August 2014, Mr J M Lavery exercised share options over 40,861 ordinary shares which were issued at an exercise price of 5p. 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 2015 the number of shares covered by option agreements amounted to 204,000 (2014: 330,000). 23. RESERVES Full details of movements in reserves are set out in the consolidated statement of changes in equity on page 14. The following describes the nature and purpose of each reserve within owners’ equity. evreseR esopruP dna noitpircseD Share premium Capital redemption Retained earnings Shares held in treasury Amount subscribed for share capital in excess of nominal value. Amounts transferred from share capital on redemption of issued shares. Cumulative net gains and losses recognised in the consolidated income statement. Shares held by the Group for future staff share plan awards 24. TREASURY SHARES On 28th November 2014 the group purchased 53,903 shares in Solid State PLC. In January 2015 5,632 were awarded under the All Employee Share Plan. At 31st March 2015 the group held 48,271 shares in treasury with a cost of £313,073. No shares have been cancelled. The shares were purchased at a price of £6.49 per share. 39 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 25. LEASING COMMITMENTS The future aggregate minimum lease payments under non-cancellable operating leases are as follows: raey 1 naht retal oN sraey 5 naht retal on dna raey 1 naht retaL sraey 5 naht retaL 26. SHARE BASED PAYMENT 2015 £ 089,882 739,188 005,313 ________ 2014 £ 057,353 360,050,1 005,135 ______ The Group operates an approved Enterprise Management Incentive Scheme whereby Mr G S Marsh, Mr J M Lavery and Mr J L Macmichael have been granted options to purchase shares in Solid State PLC at a subscription price of 5p per share. The options in place at 31st March 2015 all have exercise periods of any time after finalisation of the accounts for the year on which the performance criteria are based. Full details are set out in Note 5 on pages 24 and 25. The fair value of the options is based on the market value at the date of grant of the number of shares for which the performance criteria have been met for the year less the exercise price of 5p per share. The market value per share at the date of grant was £2.38. The share based remuneration expenses amount to £210,653 for the year (2014: £235,056). 40 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 27. 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 comprises Solid State Supplies Limited and the manufacturing division includes Steatite Limited and Q-Par Angus Limited. Year ended 31st March 2015 euneveR lanretxE Profit/(loss) before tax esnepxe xaT Balance sheet Assets seitilibaiL Net assets/(liabilities) Other erutidnepxe latipaC - Tangible fixed assets - Intangible fixed assets Depreciation, amortisation and other non cash expenses diap tseretnI Distribution noisivid £ Manufacturing noisivid £ Head eciffo £ latoT £ 649,608,31 ________ 133,257,22 _________ - ________ 772,955,63 _________ 660,961 263,041 ________ 3,388,357 095,682 ________ (1,035,579) )029,403( ________ 3,013,739 230,221 ________ 7 ,994,948 035,301,2 _________ 5,891,418 _________ 179,958 81,693 208,087 728,21 ________ 13,162,179 657,437,3 ________ 1,628,351 851,655,4 ________ 22,785,478 444,493,01 ________ 9,427,423 ________ (2,927,807) ________ 12,391,034 ________ 344,960 579,058 285,488 485,53 ________ - - 210,653 - ________ 524,918 660,751 704,228 114,84 ________ 41 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 27. SEGMENT INFORMATION (continued) Year ended 31st March 2014 euneveR lanretxE ynapmocretnI Profit/(loss) before tax esnepxe xaT Balance sheet Assets seitilibaiL Net assets/(liabilities) Other erutidnepxe latipaC - Tangible fixed assets - Intangible fixed assets Depreciation, amortisation and other non cash expenses diap tseretnI Distribution noisivid £ Manufacturing noisivid £ Head eciffo £ latoT £ 699,498,9 996,91 ________ 596,419,9 ________ 397,419 692,08 634,091,22 - _________ 634,091,22 - - ________ 234,580,23 996,91 _________ - 131,501,23 _________ ________ _________ 2,898,649 255,434 (1,142,359) )802,732( 2,153,709 046,772 ________ ________ ________ ________ 8,563,535 )060,487,2( _________ 5,779,475 _________ 13,129,946 )579,261,7( ________ 45,440 )387,483,1( _______ 21,738,921 )818,133,11( ________ 5,966,971 ________ (1,339,343) _______ 10,407,103 ________ 123,622 2,194,303 94,403 483,43 ________ 364,147 514,506 251,333 293,13 ________ - - 338,475 051,6 ________ 487,769 2,708,809 684,211 629,17 ________ yb eunever lanretxE remotsuc fo noitacol 2014 £ 2015 £ yb stessa latoT stessa fo noitacol 2014 2015 £ £ 32,267,416 28,258,799 22,766,036 21,738,921 - 2,733,195 - 849,410 - 577,458 - 58,010 - 56,173 - 17,615 _________ _________ _________ _________ 1,977,575 671,633 1,051,151 51,919 10,213 64,142 - - - - - - Net tangible capital noitacol yb erutidnepxe stessa fo 2015 £ 524,918 - - - - - - _______ 2014 £ 487,769 - - - - - - _______ United Kingdom Rest of Europe Asia North America Australasia Africa South America 129,837,12 630,667,22 234,580,23 772,955,63 _________ _________ _________ _________ 819,425 _______ 967,784 _______ All the above relate to continuing operations. 42 Solid State PLC NOTES TO THE FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 28. POST BALANCE SHEET EVENT On 1st April 2015 the Group acquired 100% of the ordinary shares in Signregion Limited and its wholly owned subsidiary Ginsbury Electronics Limited for a cash consideration of £2.125m subject to a net asset adjustment once completion accounts have been finalised. This investment will be incuded in the Group’s balance sheet at its fair value at the date of acquisition. Ginsbury Electronics specialises in the supply of high quality display components, monitors panels, signage and power components to the commercial, retail, industrial and military markets throughout the UK and Europe. The provisional completion accounts show a breakdown of the assets and liabilities of the acquired companies to be as follows: stessa dexif elbignaT kcotS srotbeD knab ta hsaC srotiderC stessa elbignat teN Excess of cost over net tangible assets noitaredisnoc latoT 000’£ 35 492 146 779 )563( _____ 006,1 525 _____ 521,2£ _____ The consideration paid on completion was £1,600,000 and there will be further payments of £175,000 payable 6, 12 and 18 months after the date of acquisition, subject to a net asset adjustment once the completion accounts have been finalised. Analysis of the excess of cost over net tangible assets will be carried out to ascertain the value of the intangible fixed assets and the value of goodwill on acquisition. The acquisition costs of approximately £14,000 will be written off as overheads in the financial year 2015/16. 43 Solid State PLC Company Number: 00771335 COMPANY BALANCE SHEET at 31st March 2015 STESSA DEXIF stnemtsevnI STESSA TNERRUC srotbeD dnah ni dna knab ta hsaC CREDITORS: Amounts falling due within raey eno )SEITILIBAIL( TNERRUC TEN STESSA TEN SEVRESER DNA LATIPAC latipac erahs pu dellaC tnuocca muimerp erahS evreser noitpmeder latipaC tnuocca ssol dna tiforP yrusaert ni dleh serahS SDNUF ’SREDLOHERAHS setoN 5102 4102 £ £ £ £ 4 5 470,187,5 083,937,5 281,498,1 526,016,1 ________ 879,239,1 - ________ 708,405,3 879,239,1 6 638,586,4 ________ 838,341,3 ________ )920,181,1( ________ 540,006,4 ________ 085,614 847,826,3 476,4 611,368 )370,313( ________ 540,006,4 ________ )068,012,1( ________ 025,825,4 ________ 635,114 847,826,3 476,4 265,384 - ________ 025,825,4 ________ 7 8 8 8 8 The financial statements were approved by the Board of Directors and authorised for issue on 7th July 2015. G S Marsh, Director P Haining, Director The notes on pages 45 to 48 form part of these financial statements. 44 NOTES TO THE COMPANY FINANCIAL STATEMENTS For the year ended 31st March 2015 1. ACCOUNTING POLICIES Solid State PLC 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 2015 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. Share 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. Treasury Shares Shares in Solid State PLC purchased for holding in treasury are held at cost as a separate negative reserve in the capital section of the statement of financial position. Any dividends paid in relation to these shares are cancelled. 2. STAFF COSTS Staff costs amounted £544,095 (2014: £642,073) and comprised the share based payment expense of £210,653 (2014: £235,056) provision for employer’s national insurance on exercise of share options of £29,070 (2014: £32,437) and salary and related costs in respect of Mr G L Comben, Mr W G Marsh, Mr A B Frere, Mr G S Marsh and Mr P Haining. No other remuneration was paid by the Company. Details of directors’ emoluments are given in note 5 to the Group financial statements. 45 Solid State PLC NOTES TO THE COMPANY FINANCIAL STATEMENTS For the year ended 31st March 2015 3. SHARE BASED PAYMENT The Group operates an approved Enterprise Management Incentive Scheme whereby Mr G S Marsh, Mr J M Lavery and Mr J L Macmichael have been granted options to purchase shares in Solid State PLC at a subscription price of 5p per share. The options in place at 31st March 2015 all have exercise periods of any time after finalisation of the accounts for the year on which the performance criteria are based. Full details are set out in Note 5 on pages 24 and 25. The fair value of the options is based on the market value at the date of grant of the number of shares for which the performance criteria have been met for the year less the exercise price of 5p per share. The market value per share at the date of grant was £2.38. The share based remuneration expenses amount to £210,653 for the year (2014: £235,056) 4. INVESTMENTS Company Cost 1st April 2014 noitaredisnoc ot tnemdnemA Disposals 5102 hcraM ts13 Net book value 5102 hcraM ts13 4102 hcraM ts13 Subsidiary undertakings Group undertakings £ 5,739,380 496,14 - ________ 470,187,5 ________ 470,187,5 ________ 083,937,5 ________ The subsidiaries of Solid State PLC are as follows are as follows: sgnikatrednu yraidisbuS detimiL seilppuS etatS diloS detimiL etitaetS Q-Par Angus Limited 2001 Electronic Components Limited Wordsworth Technology (Kent) Limited Rugged System Limited E-merge Electronics Limited gnitov fo noitroporP rights and Ordinary share capital held Nature of business %001 %001 100% 100% 100% 100% 100% Distribution of electronic components stnenopmoc cinortcele fo noitubirtsiD and manufacture of electronic equipment Manufacture of microwave and RF equipment Non trading entity Non trading entity Non trading entity Non trading entity In all cases the country of operation and of incorporation or registration is England. 46 NOTES TO THE COMPANY FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) Solid State PLC 5. DEBTORS sgnikatrednu puorG yb dewo stnuomA srotbed rehtO stnemyaperP 6. CREDITORS: Amounts falling due within one year )deruces( tfardrevo knaB sgnikatrednu puorG ot dewo stnuomA stsoc ytiruces laicos dna sexat rehtO srotiderc rehtO slaurccA 2015 £ 2014 £ 654,678,1 106,61 521,1 _________ 835,788,1 625,44 419 _________ 281,498,1 _________ 879,239,1 ________ 564,554,4 876,921 072,63 328,75 006,6 ________ 638,586,4 ________ 086,703,1 550,957,1 734,23 666,83 000,6 ________ 838,341,3 ________ The Company has guaranteed bank borrowings of its subsidiary undertakings, Solid State Supplies Limited, Steatite Limited and Q-Par Angus Limited. At the year end the liabilities covered by those guarantees amounted to £Nil (2014: £573,246). 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 8,331,606 (2014: 8,230,722) ordinary shares of 5p each 2015 £ 416,580 _______ 2014 £ 411,536 _______ On 6th August 2014, Mr J L Macmichael exercised share options over 18,397 ordinary shares which were issued at an exercise price of 5p. On 6th August 2014, Mr G S Marsh exercised share options over 41,626 ordinary shares which were issued at an exercise price of 5p. On 6th August 2014, Mr J M Lavery exercised share options over 40,861 ordinary shares which were issued at an exercise price of 5p. 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 to the Group financial statements. At 31st March 2015 the number of shares covered by option agreements amounted to 204,000 (2014: 330,000). At 31st March 2015, 48,271 shares were held in treasury (2014: Nil). 47 Solid State PLC 8. RESERVES NOTES TO THE COMPANY FINANCIAL STATEMENTS For the year ended 31st March 2015 (continued) 4102 lirpA ts1 serahs fo eussI raey eht rof tiforP esnepxe desab erahS :ddA diap dnediviD Repurchase of own shares into treasury 5102 hcraM ts13 Share muimerP tnuocca 847,826,3 - - ________ 847,826,3 - ________ 847,826,3 - - ________ 847,826,3 ________ Capital Profit ssol & noitpmeder tnuocca evreser Shares ni dleh yrusaert - - - _______ - - _______ - 265,384 - 103,979 ________ 368,264,1 356,012 ________ 615,376,1 )004,018( - _______ - (313,073) _______ 611,368 _______ )370,313( _______ 476,4 - - _____ 476,4 - _____ 476,4 - - _____ 476,4 _____ The cumulative amount of goodwill which has been eliminated against reserves at 31st March 2015 is £30,000 (2014: £30,000). 9. OWN SHARES HELD IN TREASURY On 28th November 2014 the group purchased 53,903 shares in Solid State PLC and in January 2015 5,632 were awarded under the All Employee Share Plan. At 31st March 2015 the group held 48,271 shares in treasury with a cost of £313,073. No shares have been cancelled. The shares were purchased at a price of £6.49 per share. 48 NOTICE OF ANNUAL GENERAL MEETING Solid State PLC Notice is hereby given that the annual general meeting of Solid State PLC will be held at 2, Ravensbank Business Park, Hedera Road Redditch B98 9EY, on 9th September 2015 at 2.30pm for the following purposes: (1) (2) (3) (4) (5) (6) (7) ORDINARY RESOLUTIONS To receive and adopt the accounts for the year ended 31st March 2015, together with the reports of the Directors and auditors thereon. (Resolution 1) To declare a final dividend of 8p per share. (Resolution 2) To reappoint Anthony Brian Frere, who retires by rotation, as a Director of the Company in accordance with the Company’s Articles of Association. (Resolution 3) To reappoint Gary Stephen Marsh, who retires by rotation, as a Director of the Company in accordance with the Company’s Articles of Association. (Resolution 4) To reappoint haysmacintyre as auditors of the Company. (Resolution 5) To authorise the Directors to fix the auditors’ remuneration, (Resolution 6) To pass the following resolution: That the Directors be generally and unconditionally authorised to allot shares in the Company (Relevant Securities): i) comprising equity securities (as defined by section 560 of the Companies Act 2006) up to an aggregate nominal amount of £137,471.50 (which is 33% of the issued share capital) (such amount to be reduced by the nominal amount of any Relevant Securities allotted under paragraph (ii) below) in connection with an offer by way of a rights issue: ii) (a) to holders of ordinary shares in proportion (as nearly as may be practicable) to their respective holdings; and (b) to holders of other equity securities as required by the rights of those securities or as the Directors otherwise consider necessary, but subject to such exclusions or other arrangements as the Board may deem necessary or expedient in relation to treasury shares, fractional entitlements, record dates, legal or practical problems in or under the laws of any territory or the requirements of any regulatory body or stock exchange; and in any other case, up to an aggregate nominal amount of £83,316.00 (which is 20% of the issued share capital) (such amount to be reduced by the nominal amount of any equity securities allotted under paragraph i) above, provided that this authority shall, unless renewed, varied or revoked by the Company, expire after a period of 18 months from the passing of this resolution or, if earlier, the date of the next annual general meeting of the Company save that the Company may, before such expiry, make offers or agreements which would or might require Relevant Securities to be allotted and the Directors may allot Relevant Securities in pursuance of such offer or agreement notwithstanding that the authority conferred by this resolution has expired. This resolution revokes and replaces all unexercised authorities previously granted to the Directors to allot Relevant Securities but without prejudice to any allotment of shares or grant of rights already made, offered or agreed to be made pursuant to such authorities. (Resolution 7) SPECIAL RESOLUTIONS (8) To pass the following resolution: That the Company is authorised to allot equity securities pursuant to resolution 7 above up to an aggregate nominal amount of £83,316.00, which is 20% of the issued share capital, as if Section 561 of the Companies Act 2006 (existing shareholders – right of pre-emption): i) ii) did not apply to the allotment; or applied to the allotment with such modifications as the Directors may determine provided that this authority shall, unless renewed, varied or revoked by the company, expire after a period of 18 months from the passing of this resolution save that the company may, before such expiry, make offers or agreements which would or might require equity securities to be allotted and the Directors may allot equity securities in pursuance of such offer or agreement not withstanding that the authority conferred by the resolution ahs expired. (Resolution 8) 49 Solid State PLC NOTICE OF ANNUAL GENERAL MEETING (continued) SPECIAL RESOLUTIONS (continued) (9) i) ii) 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; the maximum price that may be paid for such shares is, in respect of a share contracted to be purchased on any day , an amount (exclusive of all expenses) equal to 105 per cent of the average middle market quotations of the ordinary shares of the company as derived from the Daily Official List of the London Stock Exchange on the 10 dealing days immediately preceding the day on which the shares are contracted to be purchased; the authority hereby conferred shall expire after a period of 18 months from the passing of this resolution unless such authority is renewed prior to such expiry; the authority hereby conferred is in substitution for any existing authority to purchase ordinary shares under the said Section 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 9) iii) iv) vi) v) BY ORDER OF THE BOARD P Haining FCA Director 7th July 2015 Registered office: 2 Ravensbank Business Park, Hedera Road, Redditch, B98 9EY NOTES: 1. 2. 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. 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. 50 This page has been left blank intentionally This page has been left blank intentionally www.solidstateplc.com
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