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www.solidstateplc.com
Solid State PLC
CONTENTS
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1
Solid State PLC
Directors:
DIRECTORS, SECRETARY AND ADVISERS
Chief Executive Officer
Anthony Brian Frere, Chairman
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John Michael Lavery, Director
Director
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Matthew Thomas Richards - Director
Director
Company Secretary and
Registered Office:
Peter Haining, FCA
Solid State PLC
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Company Number:
00771335
Nominated Adviser:
Broker:
Auditors:
Solicitors:
Bankers:
Registrars:
W H Ireland Limited
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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
6102
m01.44£
£4.20m
49.9p
31.8%
9.8%
p0.21
5102
m65.63£
£3.01m
34.9p
30.5%
8.4%
p0.21
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%12+
+40%
+43%
+130bps
+140bps
-
Operational:
Settlement of Ministry of Justice (MoJ) contract
Acquisition of Ginsbury Electronics, a specialist displays business, for £2.11m
Acquisition of Creasefield Limited, a specialist battery business, for £1.54m (post period end)
Contract with Renishaw secured for £1m+
Solid State Supplies wins franchises with Luminus Devices Inc for the LED lighting market and Silicon Labs
(low energy microprocessors and radio devices) for IoT applications
Appointment of Matthew Richards to the Board and as MD of Steatite – bringing considerable experience of
the security and defence sectors (post period end)
Cost saving initiative has delivered circa £250k of net savings in the year
31/05/16 Group backlog £17.84m including Creasefield (31/05/15: £14.41m excluding MoJ backlog)
Commenting on the results and prospects, Tony Frere, Chairman of Solid State said:
“Solid State has made two valuable acquisitions in just over 12 months driving integration and cross selling
opportunities between the complementary Group divisions. We are delighted to have reached a quick and
satisfactory settlement with the MoJ and can report that the core Group has continued to progress during the year.
“The Board is optimistic about the prospects for Solid State and believes that the track record of delivery and the
scale of the Group will prove to be an increasingly important competitive driver in its markets.”
Financial Review
I am pleased to present the results for the year ended 31st March 2016 for Solid State plc.
The news in the year was largely dominated by the events surrounding the offender tagging contract with the MoJ
however it is important not to lose sight of the progress that has been made in the core business. We are an
acquisitive business, as can be seen not only from our track record over previous periods but more recently by the
two acquisitions that we have made since the beginning of the 2015/2016 financial year. The addition of
complementary businesses continues to extend the range of products that we can sell to both our existing customer
base and prospective new customers.
In addition to driving growth through acquisition, we have improved our penetration of the existing client base and
won high profile franchises in the Solid State Supplies business and won new contracts with high profile customers
across the Group.
It is evident to us that customers take comfort from the depth of our technical competence and the scale of our
operations. Scale necessitates structure, governance, quality standards and disaster recovery procedures which
smaller competitors can struggle to match.
3
Solid State PLC
CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued)
Financial Review (continued)
Revenue for the year was £44.10m, an increase of 21% (2015: £36.56m). Profit before tax of £4.20m (2015:
£3.01m) includes a one-off profit as a result of the settlement of the MoJ contract. These results provide an
anomalous comparison to the prior year, and will equally provide an anomalous comparison this time next year
when we announce our results for the 2016/2017 year.
Gross profit margin was at 31.8% (2015: 30.5%) and operating margin at 9.8% (2015: 8.4%). Margins benefited
from £250k of net cost savings implemented during the year as part of the previously announced cost saving
initiative.
Earnings per share were 49.9p (2015: 34.9p). This increase is primarily due to the one-off contribution in the year
from the MoJ settlement as described above.
The balance sheet continues to strengthen with net assets increasing to £15.76m (2015: £12.39m).
Net debt at 31st March 2016 was £3.40 million (2015: £2.46m). As at 30th June 2016 the balance sheet shows a net
positive balance of £1.06m.
The Group has a natural USD hedge through the trade-off between its USD sales and its USD product sourcing.
This is further improved through the acquisition of Creasefield and the USD sales that it brings to the Group,
halving our average monthly demand and resulting in a monthly average USD requirement which represents
approximately 3% of the Group’s cost of sales. This considerably limits the Group’s currency risk.
Dividends
The Board is recommending a final dividend of 8p. An interim dividend of 4p per share was paid on 26th February
2016 giving a total dividend for the year of 12p per share (2015: 12p). Dividends were 4.15 times covered in 2016.
The final dividend will be paid on 23rd September 2016 to shareholders on the register at the close of business on
2nd September 2016. The shares will be marked ex-dividend on 1st September 2016.
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
The Group operates through two divisions – manufacturing (including Steatite which incorporates the MoJ contract,
Batteries and Q-Par as a separate company) and distribution (including Solid State Supplies and Ginsbury
electronics).
Steatite
Steatite is one of the leading UK suppliers of specialist electronic equipment for harsh environments and high
reliability applications. It designs, manufactures and supplies a range of products and solutions that include bespoke
lithium battery packs, rugged mobile computing solutions, secure mesh radio 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.
Steatite has achieved a 1.4% increase in sales year on year excluding the MoJ settlement.
The focus continues on value added and niche activities, whilst additionally introducing products in new and
exciting markets such as green energy and security along with fully integrated computer cabinet systems.
4
Solid State PLC
CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued)
Steatite (continued)
We are pleased with the potential for our export sales, principally led by the antenna’s business and our new range
of radio communication systems which have been enhanced by Steatite with the addition of state of the art features
for the markets they serve; predominately the defence and security sectors. We see opportunity for continued
growth at home and overseas for this technology and the potential to expand into adjacent markets including
broadcasting.
The combination of new product development and new market penetration has delivered organic growth despite
more challenging markets in Oil & Gas than we are used to, which has impacted our battery business. This growth
has been achieved principally through cross selling initiatives and an increase in sales through the application of
innovative processes that save our clients time and money. This is best exemplified by the new train ticketing
machines which Steatite was asked to redesign, subject to exacting client specifications, and which are now being
deployed in the field.
Post period end, Matthew Richards was appointed to the Board as Managing Director of Steatite. Matthew has
considerable senior management experience in both private and public companies, most recently as Senior VP and
Managing Director at Nasdaq listed API Technologies Corp, Managing Director for Secure Systems & Technologies
Limited and as Business Unit Director at AIM listed Vislink plc for the defence and security sectors.
Steatite has a platform to accelerate growth, underpinned by a strong order backlog. The business 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. This contract was terminated without blame in February
2016 as the Government changed course and began to pursue a commercial off the shelf solution rather than the
bespoke device for which they had contracted with Steatite. We were able to agree an exit strategy and
compensation package for the work delivered. The settlement agreement is bound by a non-disclosure agreement as
is common in these circumstances.
Assuming the receipt of the settlement and the payment of all sub-contractor liabilities in relation to the MoJ
contract had taken place on 31st March 2016, the Group would have been in a net cash position of approximately
£350,000.
Steatite has been granted a licence to use the intellectual property derived from the development of the technology
as part of the contract. The development of tagging devices will continue on a range of devices for applications in
the enhanced justice platforms and high end medical sectors which we expect to lead to opportunities in new
markets both in the UK and abroad.
Batteries (including Creasefield Limited acquired on 31st May 2016)
The battery business, prior to the acquisition of Creasefield Limited (‘Creasefield’), had been largely focussed on
the Oil & Gas industries. As has been well reported, these sectors have been under investment pressure due to the
crude oil price. The acquisition of Creasefield broadens the industrial focus of the business and allows for a greater
share of engineering and production capability.
Additionally, Creasefield brings us battery chemistries (NiMH/NiCd, Alkaline & Lead Acid) and vertical markets
that will enable us to build a strong battery business with significant presence in the UK that will be further
enhanced when the Oil & Gas market recovers.
Steatite continues to research and develop novel power solutions to increase run times and payloads to support
marine autonomous systems, unmanned military systems for mine clearance, countermeasures and asset protection.
We are confident that the ubiquity of batteries as a primary or secondary source of power in most technology
applications will allow us the opportunity to considerably expand the supply of bespoke battery products to both the
existing Group and prospective customer base.
Q-Par Angus Ltd (Q-Par or Steatite Antennas)
Q-Par is at 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. Q-Par’s
performance was held back due to the delay of a major programme with a European aerospace customer that will
return during the financial year 2016/17.
5
Solid State PLC
CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued)
Steatite (continued)
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 well underway, along with significant investment in test and measurement facilities that will bring benefits
to the whole Group in the later stages of next year.
Solid State Supplies
Solid State Supplies is a distributor of specialist components to the UK electronics OEM community; selling
semiconductors, modules and related products for embedded processing, wireless and wired connectivity, displays,
power management and LED lighting.
The 2015/16 financial year as a whole saw a strengthening of the key metrics of the business with a positive book to
bill ratio and increased backlog going into the 2016/17 financial year. The distribution division ended the year with a
greatly improved stock turn. The operating margin improvements made in the previous year were successfully
continued throughout the 2015/16 year, achieving 6.6% (2015: 5.2%), with the resulting divisional EBIT ahead of
budget.
On 1st April 2015, the Group acquired Ginsbury Electronics, a value added distributor of displays and power
products. This acquisition has greatly enhanced the range of products available to the existing customer base of
Solid State Supplies and equally the range of embedded products available to the customers of Ginsbury. Cross
selling initiatives are now being realised with many customers benefiting from the combined expertise of the two
companies. Particular successes have been achieved in the high growth area of electric vehicle charging and in the
relatively new market area of on-food printing. The company’s technically led approach has enabled these end
customers to get to market more rapidly than would otherwise have been possible. During the year the stores at
Ginsbury were relocated to the Redditch headquarters with some small savings as a consequence.
The company continues to increase its own-brand offering, to include innovations in LED lighting control and
computing. This has been recognised by the industry with a notable success in 2015 being the Ginsbury Genie
single board computer winning the Elektra award for “Excellence in design – industrial”.
Value added services continue to provide a useful enhancement to gross margin and to the strategic importance of
the distribution business to its customer base. This is amply demonstrated by the £1m+ contract won with Renishaw
where Solid State Supplies was commissioned to pre-programme components to be supplied directly to the
production line, thus saving Renishaw engineering time and additional logistics. Further small investments have
taken place in the margin enhancement area allowing the Redditch operation to both further develop its offering and
incorporate the value added operations previously carried out at the Ginsbury premises.
The Division was successful in securing additional franchise lines during the year such as the Luminus Devices Inc
LED franchise and the Silicon Labs franchise for Internet of Things applications.
The outlook for the business remains strong. The business remains highly respected within the industry, being seen
as a leader and an innovator, as evidenced by the winning of the prestigious ‘Distributor of the Year Award’ at the
industry’s Elektra awards ceremony.
Divisional Summary
The Divisions 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.
6
CHAIRMAN’S STATEMENT AND STRATEGIC REPORT (continued)
Solid State PLC
Outlook
Solid State has entered the 2016/2017 financial year with a strong order book and a clear growth strategy. As at 31st
May 2016 the order backlog was £17.84m. On a like for like basis, the 2015 order book at 31st May 2015 was
£14.41m.
We are working hard on cross selling initiatives across both divisions to better drive organic growth in what are
challenging markets. We have a particular focus on our marketing effort and have prioritised an enhanced
marketing budget accordingly.
Following the acquisitions of 2001 Electronic Components in December 2013 and Ginsbury Electronics in April
2015 the enlarged distribution division is now in a stronger market position enabling us to secure significant new
franchises and expand our product portfolio.
The addition of Creasefield to our manufacturing division means we now have approximately 500 account
customers across the Group who spend in excess of £5,000 per year with us, providing a solid base for this initiative
which we can build on over the next 12-24 months.
Equally, we have a pipeline of target acquisitions which creates the potential to further develop our portfolio of
products and services. Our aim is to acquire at least one such target per year. As is increasingly apparent,
customers will extend their component and end product sourcing with trusted suppliers where the opportunity exists,
rather than engage with new suppliers who are not yet tried and tested.
As is common across all of the sectors that we monitor, most of our markets lack absolute visibility due to global
economic influences, and in the specific case of the UK, the consequences of the recent European referendum. We
expect the Oil & Gas market to continue to be slow this fiscal year and next, impacting our component and battery
business, however encouragingly we are beginning to see the first green shoots of recovery in this market.
The outcome of the referendum vote and the subsequent process leading to Brexit, is a situation that the Board has
monitored closely. The Group sells predominately in Sterling to UK based customers. The products are often
intended for international use however the sales channels for Solid State are principally within the UK. As such, the
Board expects the impact of Brexit to be limited however the situation will remain under review.
The Board sees the marriage of the characteristics of the Group and the exacting standards of our client base as a key
factor driving the future growth of the business. There are relatively few competitors in the market that have the
combination of scale, manufacturing accreditations and engineering capability that Solid State can offer.
Tony Frere
Chairman
5th July 2016
7
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2016
The Directors submit their report together with the audited financial statements of the Group in respect of the year
ended 31st March 2016.
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
M T Nutter (appointed 5th January 2016, resigned 29th June 2016)
J L Macmichael
J M Lavery
P Haining, FCA
M T Richards was appointed as a Director post year end on 18th April 2016.
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 he was
appointed Chief Executive Officer of the Group.
Mark Nutter, (dob 19/06/1977), Group Finance Director (resigned 29th June 2016)
Mark Nutter joined the Company in January 2016. A chartered accountant, Mark started his career with Deloitte,
later moving to PricewaterhouseCoopers in Boston, USA. He has since undertaken a number of senior finance
positions in industry, initially at E.ON UK plc, an energy and utilities provider. His roles here included being
responsible for financial planning and analysis, accounting and commercial finance support. In 2013 Mark joined
Delphi Automotive plc, a global automotive technology supplier, as UK Finance Director before then moving to
Solid State plc as Group Finance Director.
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.
8
DIRECTORS’ REPORT
For the year ended 31st March 2016 (continued)
Solid State PLC
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 year’s training with the Institute of Directors for Corporate Governance, before being
appointed Managing Director of Steatite in 1999. Post year-end, following the appointment of Matthew Richards
(below) it has been announced that John will remain as an executive Director until 31st July 2016, at which point he
will take up a non-executive role.
Peter Haining FCA, (dob 05/09/1956), Non-Executive 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.
Matthew Richards, (dob 25/10/1963), Director
Post year-end, in April 2016, Matthew Richards was appointed as Managing Director of Steatite Ltd, succeeding
John Lavery. Matthew comes to the Board with 30 years of experience in the defence electronics industry. He has a
track record of success in both private and public companies, most recently as Senior Vice President and Managing
Director at API Technologies Corp running operations in the UK, Canada and USA, specialising in RF and Security
solutions with a focus on high reliability and harsh environment applications. Prior to that, Matthew held business
development and sales leadership roles with the L3 Corporation. He has extensive experience dealing with the
Government customers at home and abroad having travelled extensively in Europe, the Middle East and Asia.
Matthew started his career installing and commissioning terrestrial and satellite antennas systems for broadcast and
military users before moving into sales in the early 1980s.
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 and P Haining who act to ensure that the financial performance of the
Group is properly recorded and monitored, meet regularly with the auditors and review the reports from the auditors
relating to accounts and internal control systems.
The remuneration committee consists of A B Frere and P Haining. The purpose of the committee is to review the
performance of the full time executive Directors and to set the scale and structure of their remuneration and the basis
of their service agreements with due regard to the interests of the shareholders. It is a rule of the committee that no
Director shall participate in discussions or decisions concerning his own remuneration.
Board of Directors
The Board currently consists of five (four following MT Nutter’s resignation on 29th June 2016) executive
Directors and two Non-executive Directors and meets regularly throughout the year. From 31st July the board
composition will change to three executive Directors and three Non-executive Directors following John Lavery’s
move to become a non-executive Director.
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.
9
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2016 (continued)
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 9th September 2015.This authority expires on 9th
March 2017.
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 31st May 2016 the Group acquired 100% of the ordinary shares in Creasefield Limited for a cash consideration
of £1.54m subject to a net asset adjustment once completion accounts have been finalised. This investment will be
included in the Group’s balance sheet at its fair value at the date of acquisition. Creasefield specialises in the design
and manufacture of custom battery packs to a diverse range of industry sectors principally in the UK, including;
Commercial Aerospace; Oil & Gas; Medical; Subsea; Safety; Water; Rail; Military; Security and Government. The
operations of Creasefield are highly complementary to the existing battery operations at Solid State and will allow
for wider use of IP, design and engineering capability, cross-selling of existing products and development of sales
into new markets.
Further details of this acquisition are stated in Note 29 to the financial statements.
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, including Financial Reporting Standard 102 ‘The financial reporting
standard applicable in the UK and Republic of Ireland'.
10
DIRECTORS’ REPORT
For the year ended 31st March 2016 (continued)
Solid State PLC
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.
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 1,263,302 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.
11
Solid State PLC
DIRECTORS’ REPORT
For the year ended 31st March 2016 (continued)
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 10% 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 715,733
Ordinary shares, representing 8.5% 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 group’s and parent
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
group’s and parent 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
5th July 2016
Registered Office: 2 Ravensbank Business Park, Hedera Road, Redditch, B98 9EY
12
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 2016 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, the Company Statement of Changes in Equity, the Company Statement of Cash Flows 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 including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK
and Republic of Ireland’.
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 31st March 2016 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
26 Red Lion Square, London, WC1R 4AG
Date: 5th July 2016
13
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.
14
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31st March 2016
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
EMOCNI EVISNEHERPMOC REHTO
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
setoN
2
3
6
7
2016
£
162,001,44
)494,270,03(
_________
767,720,41
)948,127,3(
)096,799,5(
_________
2015
£
772,955,63
)596,593,52(
_________
285,361,11
)138,004,3(
)106,007,4(
_________
822,803,4
)280,211(
_________
051,260,3
)114,84(
_________
641,691,4
937,310,3
)918,72(
_________
)230,221(
_________
723,861,4
_________
707,198,2
_________
-
_________
-
_________
4,168,327
_________
2,891,707
_________
ERAHS REP SGNINRAE
cisaB
detuliD
8
8
p9.94
p2.94
p9.43
p9.33
The notes on pages 20 to 47 form part of these financial statements.
15
Solid State PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31st March 2016
erahS
latipaC
erahS
latipaC
deniateR noitpmedeR muimerP
evreseR
sgninraE evreseR
dleh serahS
yrusaerT ni
latoT
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
_________ _______
Total comprehensive income
For the year ended 31st March 2016
serahs wen fo eussI
Share based payment expense
sdnediviD
Transfer of shares to All Employee
nalP pihsrenwO erahS
-
125,4
-
-
-
-
-
-
-
-
-
-
-
-
-
4,168,327
-
173,578
)226,400,1(
-
-
-
-
4,168,327
125,4
173,578
)226,400,1(
-
407,13
407,13
_______
________
_______
________
_________ _______
Balance at 31st March 2016
421,101
_______
3,628,748
________
4,674 11,991,388
________
_______
(281,369) 15,764,542
_________ _______
The notes on pages 20 to 47 form part of these financial statements.
16
Solid State PLC
Company Number: 00771335
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31st March 2016
setoN
£
£
£
£
2016
2015
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
seitilibail xat noitaroproC
01
11
955,563,1
727,282,5
________
6,648,286
110,342,1
392,004,5
________
6,643,304
41
552,435,5
981,564,31 51
-
128,399
________
265,104,5
746,378,8
244,921
325,737,1
________
562,399,91
_________
155,146,62
_________
471,241,61
_________
874,587,22
_________
71
61
002,893,4
562,420,6
655,461
________
799,002,4
025,338,5
578,4
________
TOTAL CURRENT LIABILITIES
10,587,021
10,039,392
NON CURRENT LIABILITIES
selbayap rehto dna edarT
ytilibail xat derrefeD
TOTAL NON-CURRENT LIABILITIES
SEITILIBAIL LATOT
STESSA TEN LATOT
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY
TNERAP EHT FO SREDLOH
latipac erahS
evreser muimerp erahS
evreser noitpmeder latipaC
sgninrae deniateR
yrusaert ni dleh serahS
12
22
22
22
32
YTIUQE LATOT
81
02
344,5
545,482
________
615,8
635,643
________
289,988
_________
900,778,01
_________
245,467,51
________
101,124
847,826,3
476,4
883,199,11
)963,182(
________
245,467,51
________
355,052
_________
444,493,01
_________
430,193,21
________
085,614
847,826,3
476,4
501,456,8
)370,313(
________
430,193,21
________
The financial statements were approved by the Board of Directors and authorised for issue on 5th July 2016 and were
signed on its behalf by:
G S Marsh, Director
The notes on pages 20 to 47 form part of these financial statements.
17
Solid State PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31st March 2016
SEITIVITCA GNITAREPO
noitaxat erofeb tiforP
Adjustments for:
noitaicerpeD
noitasitromA
stnemriapmI
Loss on disposal of property, plant and equipment
esnepxe tnemyap desab erahS
stsoc ecnaniF
rehtO
segnahc erofeb snoitarepo morf tiforP
snoisivorp dna latipac gnikrow ni
seirotnevni ni )esaercni(/esaerceD
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
snoisivorp ni esaerceD
2016
2015
£
£
£
£
641,691,4
593,604
750,522
761,816
1,967
875,371
280,211
407,13
_______
690,567,5
937,310,3
716,792
859,591
-
5,676
356,012
114,84
-
________
450,277,3
336,161
(3,663,357)
(467,788)
-
________
)279,628(
1,564,512
(1,659,225)
)000,071(
________
)215,969,3(
)586,190,1(
________
snoitarepo morf detareneg hsaC
485,597,1
963,086,2
diap sexat emocnI
derevocer sexat emocnI
seitivitca gnitarepo morf wolf hsaC
SEITIVITCA GNITSEVNI
Purchase of property, plant and equipment
stessa elbignatni 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
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 IN CASH AND CASH
STNELAVIUQE
)421,201(
243,821
_______
)341,225(
587,54
_______
812,62
________
208,128,1
)853,674(
________
110,402,2
(900,036)
)901,63(
55,288
(1,760,461)
500,779
_______
(524,918)
)157,066(
38,100
-
-
_______
)313,466,1(
________
)965,741,1(
_______
984,751
244,650,1
125,4
-
)280,211(
(990,832)
-
_______
440,5
(1,143,758)
)114,84(
(810,400)
(313,073)
_______
)393,890,1(
________
)409,049(
________
)895,013,2(
_______
)651,452,1(
_______
The notes on pages 20 to 47 form part of these financial statements.
18
Solid State PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31st March 2016 (continued)
Cash and cash equivalents comprise:
stnelaviuqe hsac dna hsac ni esaerced teN
)409,049(
)651,452,1(
2016
£
2015
£
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
)474,364,2(
________
)813,902,1(
________
)873,404,3(
________
)474,364,2(
________
2016
£
2015
£
128,399
)002,893,4(
________
325,737,1
)799,002,4(
________
)873,404,3(
________
)474,364,2(
________
19
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016
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.
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.
Going concern
The going concern basis of accounting has been used in the preparation of these financial statements. The
directors have not identified any material uncertainties in this regard.
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 (i.e. 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.
20
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Solid State PLC
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.
Compensation payments are recognised as revenue in the period that any related activities are completed, the
amount can be measured reliably and it is probable that future economic benefit will be realised.
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
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.
21
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (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.
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.
22
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
1.
ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS (continued)
Solid State PLC
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 payable in relation to these
shares are cancelled.
23
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (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 2016 or later periods and which the
group has decided not to adopt early are:
IFRS 7 Financial Instruments: Disclosures (effective for accounting periods beginning on or after 1st January
2016)
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 2018)
IFRS 16 Leases (effective for accounting periods beginning on or after 1st January 2019)
Amendments to IAS 1 Presentation of Financial Statements (effective for accounting periods beginning on or
after 1st January 2016)
Amendments to IAS 7 Statement of Cash Flows (effective for accounting periods beginning on or after 1st
January 2017)
Amendments to IAS 12 Income Taxes (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 19 Employee Benefits (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)
With the exception of IFRS 16, the implementation of these standards is not expected to have any material effect
on the Group’s financial statements. The impact that the implementation of IFRS 16 will have on the financial
statements is currently being assessed.
24
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
2.
REVENUE
Revenue arises from sale of goods and compensation.
Revenue analysed geographically between markets was as follows:
modgniK detinU
eporuE fo tseR
aisA
aciremA htroN
dlroW fo tseR
3.
PROFIT FROM OPERATIONS
This has been arrived at after charging/(crediting):
)4 eton ees( stsoc ffatS
Employment termination costs (included in staff costs)
tnempiuqe dna tnalp ,ytreporp fo noitaicerpeD
tnempiuqe dna tnalp ,ytreporp fo tnemriapmI
stessa elbignatni fo noitasitromA
stessa elbignatni fo nwod etirW
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:
:slatner esael gnitarepO
yrenihcam dna tnalP
rehtO
stsoc tnempoleved dna hcraeseR
secnereffid egnahcxe ngieroF
snwod etirw kcotS
2016
£
385,965,73
462,762,3
392,548
478,242,2
742,571
162,001,44
2015
£
614,762,23
591,337,2
014,948
854,775
897,131
772,955,63
2016
£
372,701,6
103,423
593,604
002,78
750,522
769,035
869,1
059,3
58,000
000,1
000,2
794,34
849,882
889,682,4
)416,75(
259,733
_______
2015
£
916,587,5
33,928
716,792
-
859,591
-
676,5
057,2
51,000
005,2
005,4
593,87
947,192
691,634
)853,971(
000,432
_______
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.
25
Solid State PLC
4.
STAFF COSTS
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Staff costs for all employees during the year, including the executive Directors, were as follows:
seiralas dna segaW
stsoc ytiruces laicoS
stsoc noisnep rehtO
2016
£
595,481,5
720,245
156,083
________
372,701,6
________
2015
£
227,240,5
250,975
548,361
________
916,587,5
________
Wages and salaries include termination costs of £103,423 (2015: £33,928)
The average monthly number of employees during the year, including the executive Directors, was as follows:
noitubirtsid dna gnilleS
gnirutcafunaM
noitartsinimda dna tnemeganaM
2016
Number
2015
Number
55
24
46
___
161
___
94
54
25
___
641
___
26
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (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:
Solid State PLC
6102 hcraM ts13
hsraM S G
yrevaL M J
leahcimcaM L J
gniniaH P
ererF B A
M T Nutter (from 05/01/2016, resigned
29/06/2016)
latoT
5102 hcraM ts13
W G Marsh (to 31/12/14)
hsraM S G
yrevaL M J
leahcimcaM L J
gniniaH P
G L Comben (to 31/12/14)
ererF B A
Total
Salary/
Fees
£
Benefits
in kind
£
Total
emoluments
£
Pension
contributions
£
Total
£
706,361
646,331
823,331
000,84
000,21
23,412
714,63
426,23
077,02
-
-
2,437
420,002
072,661
890,451
000,84
000,21
25,849
882,902 462,9
405,981 432,32
898,261 008,8
084,84
000,21
29,699
084
-
3,850
______
______
______
______
______
399,315
______
842,29
______
142,606
______
968,156 826,54
______
______
19,000
000,451
000,341
000,411
000,06
19,000
000,21
______
15,000
000,03
000,03
000,12
-
6,000
-
______
521,000
______
102,000
______
34,000
000,481
000,371
000,531
000,06
25,000
000,21
______
623,000
______
-
34,000
000,191 000,7
000,281 000,9
000,241 000,7
000,06
25,000
000,21
______
-
-
-
______
23,000
______
646,000
______
The principal benefits in kind relate to the provision of company cars, fuel and private healthcare.
In addition to the above, fees totalling £53,262 (2015: £51,400) 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 £nil
(2015: £18,366) was due to The Kings Mill Practice at 31st March 2016.
Fees totalling £49,884 (2015: £46,977) arose during the year in respect of the services of A B Frere provided by
Condev Limited. A balance of £5,418 (2015: £4,968) was due to Condev Limited at 31st March 2016.
Fees totalling £nil (2015: £23,200) 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 £nil (2015: £3,867)
was due to G L Comben Consultancy Limited at 31st March 2016.
Fees totalling £nil (2014: £19,000) 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 £nil (2014: £3,167)
was due to W G Marsh Consultancy Limited at 31st March 2016.
The executive Directors have service contracts with the Company which are terminable by the Company, or the
relevant Director, on one year’s notice, with the exception of Mr M T Richards, whose period of notice is
currently one week.
27
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
5.
DIRECTORS’ EMOLUMENTS, INTERESTS AND SERVICES CONTRACTS (continued)
The Directors of the Company on 5th July 2016 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 2016 and 31st March 2015 or date
of appointment if later, were as follows:
05.07.16
31.03.16
31.03.15
hsraM S G
yrevaL M J
gniniaH P
J L Macmichael
ererF B A
M T Nutter (resigned 29th June 2016)
sdrahciR T M
170,054
854,69
005,25
108,700
400,8
-
-
170,054
854,69
005,25
108,700
400,8
-
-
654,344
348,96
005,25
100,565
000,65
-
-
Details of the options over the Company’s shares granted under the Enterprise Management Incentives Scheme
are as follows:
snoitpO
ta dleh
51.40.10
36,400
31,600
36,400
31,600
36,400
31,600
desicrexE
despaL
(36,400)
-
(36,400)
-
-
-
-
-
(17,609)
-
(18,791)
-
snoitpO
ta dleh
61.30.13
-
31,600
-
31,600
-
31,600
G S Marsh
J M Lavery
J L Macmichael
esicrexE
ecirp
fo etaD
tnarg
esicrexE
doirep
5p
5p
5p
5p
5p
5p
07.08.13
07.08.13
August 2014 to August 2023
August 2014 to August 2023
07.08.13
07.08.13
August 2014 to August 2023
August 2014 to August 2023
07.08.13
07.08.13
August 2014 to August 2023
August 2014 to August 2023
The market price of the shares at 31st March 2016 was £3.65 (2015: £6.33), with a quoted range during the year
of £3.44 to £9.07.
All the options at 31st March 2016 are subject to performance criteria based on the year ended 31st March 2016.
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 £775,709 (2015: £597,737).
6.
FINANCE COSTS
sgniworrob knaB
tseretni gnitnuocsid eciovnI
tseretni rehtO
2016
£
378,011
-
902,1
______
112,082
______
2015
£
108,43
562,7
543,6
______
48,411
______
28
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
7.
TAX EXPENSE
Current tax expense
raey eht rof sessol ro stiforp no xat noitaroproc KU
sdoirep roirp fo tcepser ni tnemtsujdA
Deferred tax (credit) / charge
Total tax charge
Solid State PLC
2016
£
2015
£
655,461
46
______
164,620
(136,801)
_______
27,819
_______
578,4
)592,5(
_______
(420)
122,452
_______
122,032
_______
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
)%12 – 5102( %02 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
Enhanced relief on research and development expenditure
etar xat fo egnahc no gnisira tiderc xat derrefeD
raey roirp ni noisivorp ot tnemtsujdA
rehtO
egrahc xat latoT
8.
EARNINGS PER SHARE
The earnings per share is based on the following:
xat tsop sgninraE
serahs fo rebmun egareva dethgieW
serahs fo rebmun detuliD
erahs rep sgninraE
erahs rep sgninrae detuliD
2016
£
2015
£
641,691,4
_______
937,310,3
_______
922,938
588,236
373,25
(6,892)
17,720
(158,577)
(673,691)
)504,81(
)049,3(
)899,91(
_______
918,72
_______
2016
£
723,861,4
_________
604,543,8
635,474,8
p9.94
p2.94
542,46
(7,237)
(5,773)
(125,525)
(429,877)
)302,5(
)358(
)036(
_______
230,221
_______
2015
£
707,198,2
_______
405,692,8
212,245,8
p9.43
p9.33
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 8,345,406 (2015: 8,296,504).
The diluted earnings per share is based on 8,474,536 (2015: 8,542,212) ordinary shares which allow for the
exercise of all dilutive potential ordinary shares.
29
Solid State PLC
9.
DIVIDENDS
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Final dividend paid for the prior year of 8p per share (2015: 5.75p)
)p4 :5102( erahs rep p4 fo diap dnedivid miretnI
yrusaert ni dleh serahs no sdnedivid dellecnaC
Final dividend proposed for the year 8p per share (2015: 8p)
2016
£
673,761
188,633
)560,5(
_______
1,004,622
_______
670,400
_______
2015
£
479,067
462,333
)139,1(
_______
810,400
_______
662,667
_______
The proposed final dividend has not been accrued for as the dividend will be approved by the shareholders at the
annual general meeting.
30
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
10. PROPERTY, PLANT AND EQUIPMENT
Solid State PLC
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
Year ended 31st March 2016
tsoC
5102 lirpA ts1
snoitiddA
seiraidisbus fo noitisiuqcA
slasopsiD
6102 hcraM ts13
tnemriapmi dna noitaicerpeD
5102 lirpA ts1
raey eht rof egrahC
egrahc tnemriapmI
lasopsid nO
6102 hcraM ts13
eulav koob teN
6102 hcraM ts13
trohS
dlohesael
ytreporp
rotoM
selcihev stnemevorpmi
sgnittiF
dna tnempiuqe
sretupmoc
£
£
£
latoT
£
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
________
067,514
108,62
-
-
_______
752,878
369,923
435,24
)318,381(
_______
083,485,1
591,862
509,5
-
_______
793,878,2
959,426
934,84
)318,381(
________
165,244
_______
149,660,1
_______
084,858,1
_______
289,763,3
________
507,711
063,35
958,17
-
_______
605,303
781,502
-
)855,621(
_______
571,412,1
848,741
143,51
-
_______
683,536,1
593,604
002,78
)855,621(
________
429,242
_______
531,283
_______
463,773,1
_______
324,200,2
________
736,991
_______
608,486
_______
611,184
_______
955,563,1
________
At 31st March 2016, the assets included a motor vehicle held under a finance lease. The net book value was
£7,417 (2015: £9.889) and the depreciation charge for the year was £2,472 (2015: £3,296)
31
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
11.
INTANGIBLE ASSETS
Year ended 31st March 2015
tsoC
4102 lirpA ts1
snoitiddA
5102 hcraM ts13
noitasitromA
4102 lirpA ts1
raey eht rof egrahC
5102 hcraM ts13
eulav koob teN
5102 hcraM ts13
Year ended 31st March 2016
tsoC
5102 lirpA ts1
snoitiddA
Acquisition of subsidiaries
nwod-etirW
6102 hcraM ts13
noitasitromA
5102 lirpA ts1
raey eht rof egrahC
egrahc tnemriapmI
6102 hcraM ts13
eulav koob teN
6102 hcraM ts13
no lliwdooG retupmoC tnempoleveD
noitadilosnoc erawtfos
£
£
stsoC
£
Other
elbignatni
stessa
£
latoT
£
-
121,305
_______
428,361
036,751
_______
776,805,3
-
________
995,651,5 890,484,1
157,066
________ _______
-
121,305
_______
454,123
_______
776,805,3
________
053,718,5 890,484,1
________ _______
-
-
_______
545,601
825,84
______
-
-
________
455,411
990,122
034,741
859,591
________ _______
-
_______
370,551
______
-
________
489,162
750,714
________ _______
121,305
_______
183,661
______
776,805,3
________
392,004,5 411,222,1
________ _______
121,305
-
-
)121,305(
_______
454,123
901,63
4,102
-
_______
776,805,3
-
253,991
-
________
053,718,5 890,484,1
901,63
602,349
)121,305(
________ _______
-
344,256
-
-
_______
566,163
_______
866,267,3
________
786,259,5 453,828,1
________ _______
-
-
-
_______
370,551
202,34
648,72
______
-
-
-
________
489,162
558,181
-
750,714
750,522
648,72
________ _______
-
_______
121,622
______
-
________
938,344
069,966
________ _______
-
_______
445,531
______
866,267,3
________
727,282,5 515,483,1
________ _______
The cost of other intangible assets comprises the estimated net present value of customer and supplier
relationships identified on acquisitions. The development costs relate to the cost of developing a new electronic
monitoring division to enable the company to extend its operations into this new growth area. The assets
developed are no longer deemed to meet the recognition criteria of development costs and have been written
down.
32
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
12.
GOODWILL AND IMPAIRMENT
Details of the carrying amount of goodwill allocated to cash generating units (CGUs) are as follows:
detimiL etitaetS
detimiL sugnA raP-Q
detimiL seilppuS etatS diloS
detimiL scinortcelE yrubsniG
Goodwill carrying amount
2016
£
2015
£
872,602,2
233,42
760,872,1
041,552
________
872,602,2
233,42
760,872,1
-
________
3,763,817
________
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% (2015: 15%) has been
used based on the group’s estimated weighted average cost of capital. A future growth rate of 2.0%
(2015:2.25%) 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 recoverable amount exceeds the carrying amount by £5,283,000 (2015: £24,605,000). 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 2.0% to 1.5%
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
Ginsbury Electronics Limited *
Great Britain
2001 Electronic Components Limited
Great Britain
100%
%001
100%
100%
100%
Distribution of electronic
components.
stnenopmoc cinortcele fo noitubirtsiD
and manufacture of electronic
equipment.
Manufacture of microwave and RF
equipment
Distribution of electronic
components.
Non trading entity
Wordsworth Technology (Kent) Limited
Great Britain
100%
Non trading entity
Rugged System Limited
Great Britain
100%
Non trading entity
detimiL noigerngiS
niatirB taerG
100%
Non trading entity
In all cases the country of operation and of incorporation is England. Shares in subsidiary undertakings marked
(*) are held indirectly through other group companies.
33
Solid State PLC
14.
INVENTORIES
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
elaser rof sdoog dna sdoog dehsiniF
ssergorp ni kroW
2016
£
868,313,4
783,022,1
________
5,534,255
________
2015
£
451,693,4
804,500,1
________
5,401,562
________
Inventory recognised in costs of sales during the year as an expense was £28,653,662 (2015: £23,741,756). An
impairment loss of £337,953 (2015: £378,780) was recognised in cost of sales during the year against inventory
due to slow moving and obsolete items.
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
2016
£
2015
£
035,037,21
964,831
091,695
________
771,213,7
148,18
926,974,1
_________
13,465,189
________
8,873,647
_________
Impairment losses recognised against trade receivables of £8,959 were reversed during the year (2015: charge of
£13,846).
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
2016
£
831,885,2
279,136
370,3
968,793
963,357,1
448,946
________
6,024,265
________
2015
£
524,046,3
935,837
357,2
066,502
382,285
068,366
________
5,833,520
________
34
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
17.
BANK OVERDRAFT
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 £2,095,482 (2015: £1,425,631).
18.
TRADE AND OTHER PAYABLES (NON CURRENT)
stnemeerga esahcrup erih rednu eud stnuomA
19.
FINANCIAL INSTRUMENTS
2016
£
2015
£
344,5
_____
615,8
________
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:
35
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
19.
FINANCIAL INSTRUMENTS (continued)
Credit risk
The Group is exposed to credit risk primarily on its trade receivables, which are spread over a range of
customers and countries, a factor that helps to dilute the concentration of the risk.
It is Group policy, implemented locally, to assess the credit risk of each new customer before entering into
binding contracts. Each customer account is then reviewed on an ongoing basis (at least once a year) based on
available information and payment history.
The maximum exposure to credit risk is represented by the carrying value in the 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.
Liquidity risk
The Group operates a Group overdraft facility common to all its trading companies.
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
Loans and Receivables
2015
£
2016
£
981,564,31
128,399
_________
746,378,8
325,737,1
_________
010,954,41
_________
071,116,01
_________
36
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
19.
FINANCIAL INSTRUMENTS (continued)
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
KU
KU noN
Carrying value
2016
£
379,691,11
755,335,1
________
12,730,530
________
2015
£
131,226,6
640,096
________
7,312,177
________
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 a reversal of £55,224 (2015: charge of £140,695) which represented 0.13% (2015:
0.38%) of revenue. This provision is included within the administrative expenses in the Consolidated Statement
of Comprehensive Income.
Trade receivables ageing by geographical segment
Geographical area
6102
KU
KU noN
latoT
snoisivorP :sseL
latoT
5102
KU
KU noN
latoT
snoisivorP :sseL
latoT
Total
£
Current
£
30 days
past due
£
60 days
past due
£
90 days
past due
£
049,702,11
947,165,1
________
226,426,9
383,322,1
________
314,533,1
986,522
_______
500,848,01 986,967,21
-
________
)951,93(
________
201,165,1
-
_______
500,848,01 035,037,21
________
________
201,165,1
_______
601,222
262,43
______
863,652
-
______
863,652
______
976,44
535,95
______
412,401
)951,93(
______
550,56
______
647,717,6
791,307
________
759,100,6
201,745
________
532,416
338,011
_______
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
______
-
______
37
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
19.
FINANCIAL INSTRUMENTS (continued)
The Group records impairment losses on its trade receivables separately from gross receivables. The movements
on this allowance account during the year are summarised below:
ecnalab gninepO
seiraidisbus fo noitisiuqcA
snoisivorp ni sesaercnI/)sesaerceD(
snoisivorp tsniaga ffo nettirW
ecnalab gnisolC
2016
£
667,801
005
)422,55(
)388,41(
_______
951,93
_______
2015
£
221,731
-
596,041
)150,961(
_______
667,801
_______
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 2016 trade receivables of £1,882,525 which were past their due date
were not impaired (2015: £763,118).
Liquidity risk
Current financial liabilities
selbayap rehto dna edarT
tfardrevo knaB
Non current financial liabilities
srotiderc esahcrup eriH
Financial liabilities
measured at amortised cost
2016
£
2015
£
562,420,6
002,893,4
_________
025,338,5
799,002,4
_________
10,422,465
_________
10,034,517
_________
344,5
_________
615,8
_________
38
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
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
2016
Bank overdrafts
Trade and other payables
Hire purchase creditors
4,398,200
6,021,192
8,516
_________
4,398,200
6,021,192
8,516
-
-
1,579
_________ _________ _______
4,398,200
6,021,192
1,494
-
-
5,443
_______
809,724,01
_________
688,024,01 809,724,01
975,1
_________ _________ _______
344,5
_______
2015
Bank overdrafts
Trade and other payables
Hire purchase creditors
4,200,997
5,830,767
11,269
_________
4,200,997
5,830,767
11,269
-
-
1,565
_________ _________ _______
4,200,997
5,830,767
1,188
-
-
8,516
_______
330,340,01
_________
259,230,01 330,340,01
565,1
_________ _________ _______
615,8
_______
Interest rate risk
The Group finances its business through a bank overdraft facility. During the year the Group utilised this facility
at a floating rate of interest.
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.
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 £44,833 (2015: £19,364) higher and if 1% lower throughout the year the level of interest
payable would have been lower by the same amount.
39
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
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 US dollar exchange rate risk that the Group has at 31st
March 2016:
selbaviecer edarT
stnelaviuqe hsac dna hsaC
slaurcca dna selbayap edarT
2016
£
2015
£
829,744,2
645,373
)793,355,1(
________
463,158,1
765,621
)010,246,1(
________
1,268,077
________
335,921
________
There were also net liabilities of £30,112 in euros (2015: net assets of £21,444).
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. There were two linked forward purchase agreements in place at 31st March 2016 (2015: nil) with
nil net exposure (2015: nil).
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 £138,000 (2015: £36,000) 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 £113,000
(2015: £(36,000)).
40
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (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 2016 is shown below:
stnelaviuqe hsac dna hsaC
stfardrevo knaB
ecnanif esahcrup eriH
latipac erahS
tnuocca muimerp erahS
sgninrae deniateR
evreser noitpmeder latipaC
yrusaert ni dleh serahS
oitar gniraeG
20.
DEFERRED TAX
2016
£
)128,399(
002,893,4
615,8
________
2015
£
)325,737,1(
799,002,4
962,11
________
3,412,895
________
2,474,743
________
101,124
847,826,3
883,199,11
476,4
)963,182(
________
085,614
847,826,3
501,456,8
476,4
)370,313(
________
15,764,542
________
12,391,034
________
22.0
________
02.0
________
2016
£
2015
£
Accelerated capital allowances, capitalised development costs and goodwill on acquisition of subsidiaries:
5102 lirpA
At 1st
seiraidisbus fo noitisiuqca no gnisira xat derrefeD
raey eht rof egrahC
egnahc etar xat fo tceffE
6102 hcraM ts13 tA
635,643
018,47
)693,811(
)504,81(
______
545,482
______
480,422
-
556,721
)302,5(
______
635,643
_____
Deferred tax is calculated based on substantively enacted rate for the period in which the timing difference is
expected to reverse. The main rate of corporation tax reduced from 21% to 20% from 1 April 2015, as enacted
by the Finance Act in July 2013. Following Budget announcements, there will be a further reduction in the
main rate of corporation tax to 19% from 1 April 2017 and 18% from 1 April 2020.
The amount of the net reversal of deferred tax expected to occur next year is £64,388 (2015: £140,444) relating
to the timing differences on tangible fixed assets.
41
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
21.
SHARE CAPITAL
diap ylluf dna deussi dettollA
8,422,015 (2014: 8,331,606) ordinary shares of 5p each
2016
£
421,101
______
2015
£
416,580
______
On 28th July 2015, Mr J L Macmichael exercised share options over 17,609 ordinary shares which were
issued at an exercise price of 5p.
On 28th July 2015, Mr G S Marsh exercised share options over 36,400 ordinary shares which were issued at
an exercise price of 5p.
On 28th July 2015, Mr J M Lavery exercised share options over 36,400 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 2016 the number of shares covered by option
agreements amounted to 94,800 (2015: 204,000).
22.
RESERVES
Full details of movements in reserves are set out in the consolidated statement of changes in equity on page
16.
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
23.
TREASURY SHARES
In January 2016, 6,250 (2015 5,632) shares were awarded under the All Employee Share Plan. At 31st March
2016 the group held 42,021 (2015: 48,271) shares in treasury with a cost of £281,369 (2015: £313,073). No
shares have been cancelled.
42
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
24.
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
25.
SHARE BASED PAYMENT
2016
£
873,092
064,469
000,51
________
2015
£
089,882
739,188
005,313
______
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 2016 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 27 and 28.
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 £173,578 for the year (2015: £210,653).
26.
CAPITAL COMMITMENTS
At 31st March 2016 there were capital commitments for plant and machinery of £234,189 (2015: £nil).
43
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
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 Ginsbury Electronics Limited and the manufacturing division includes Steatite Limited and Q-
Par Angus Limited.
Year ended 31st March 2016
External Revenue
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
£
16,628,104
________
27,472,157
_________
-
________
44,100,261
_________
1,187,415
934,232
________
4,111,626
468,251
________
(1,102,895)
)484,753(
________
4,196,146
918,72
________
11,727,936
415,411,6
_________
5,613,422
_________
295,230
17,623
299,506
726,2
________
18,819,343
218,010,6
________
(3,905,728)
)713,842,1(
________
26,641,551
900,778,01
________
12,808,531
________
(2,657,411)
________
15,764,542
________
329,729
18,486
950,116
454,901
________
-
-
173,578
-
________
624,959
36,109
1,423,200
280,211
________
During the year ended 31st March 2016, greater than 10% of the group’s turnover was derived from one
customer within the Manufacturing division.
44
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
Solid State PLC
27.
SEGMENT INFORMATION (continued)
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
________
yb eunever lanretxE
remotsuc fo noitacol
2015
£
2016
£
yb stessa latoT
stessa fo noitacol
2015
2016
£
£
United Kingdom
Rest of Europe
Asia
North America
Other
37,569,583 32,267,416 26,641,551 22,785,478
-
3,267,264
-
845,293
-
2,242,874
-
175,247
_________ _________ _________ _________
2,733,195
849,410
577,458
131,798
-
-
-
-
Net tangible capital
noitacol yb erutidnepxe
stessa fo
2016
£
624,959
-
-
-
-
_______
2015
£
524,918
-
-
-
-
_______
874,587,22 155,146,62 772,955,63 162,001,44
_________ _________ _________ _________
959,426
_______
819,425
_______
All the above relate to continuing operations.
45
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
28. ACQUISITIONS DURING THE YEAR
On 1st April 2015 the Group acquires 100% of the ordinary shares in Signregion Limited and its wholly owned
subsidiary Ginsbury Electronics Limited, for a cash consideration of £2.1m, with an initial cash transfer of
£1,585,000 followed by a further £525,000 payable in three equal six monthly tranches. Ginsbury 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.
A breakdown of assets and liabilities acquired is as follows:
stessa dexif elbignatnI
stessa dexif elbignaT
kcotS
srotbeD
knab ta hsaC
srotiderC
xaT derrefeD
noitisiuqca no stessa teN
noitisiuqca no lliwdooG
noitaredisnoC
Discharged by:
noitisiuqca no diap hsaC
noitaredisnoc hsac derrefeD
eulaV kooB
000’£
-
94
492
256
779
)583(
)6(
_____
185,1
eulav riaF
tnemtsujdA
000’£
eulav riaF
puorg ot
000’£
843
-
-
-
-
)4(
)96(
_____
572
843
94
492
256
779
)983(
)57(
_____
658,1
452
_____
011,2
_____
585,1
525
_____
011,2
_____
The intangible assets are in relation to customer contacts and relationships. The goodwill recognised
represents expected synergies from combining the operations of Ginsbury with those of the Distribution
division and expected value from incremental sales arising across the combined operation that is not separately
recognisable at the date of acquisition.
In addition to the purchase price, the group incurred £23,000 of acquisition costs that have been included in
administrative expenses.
The revenue and profit after tax for the year included in the Statement of Comprehensive Income arising from
Ginsbury were £3,184,000 and £239,000 respectively.
46
Solid State PLC
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31st March 2016 (continued)
29. POST BALANCE SHEET EVENT
On 31st May 2016 the Group acquired 100% of the ordinary shares in Creasefield Limited for a cash
consideration of £1.54m subject to a net asset adjustment once completion accounts have been finalised. This
investment will be included in the Group’s balance sheet at its fair value at the date of acquisition. Creasefield
specialises in the supply of battery packs to the commercial, retail, industrial and military markets throughout
the UK and Europe.
Completion accounts have not yet been prepared for the acquired company.
The consideration paid on completion was £1,400,000 and there will be a further payment of £140,000, 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 £86,000 will be written off as overheads in the financial year ended
31st March 2017.
47
Solid State PLC
Company Number: 00771335
COMPANY STATEMENT OF FINANCIAL POSITION
at 31st March 2016
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
6102
5102
£
£
£
£
4
5
535,198,7
470,187,5
578,043,3
116,371
________
281,498,1
526,016,1
________
684,415,3
708,405,3
6
647,549,5
________
638,586,4
________
)062,134,2(
________
572,064,5
________
101,124
847,826,3
476,4
121,786,1
)963,182(
________
572,064,5
________
)920,181,1(
________
540,006,4
________
085,614
847,826,3
476,4
611,368
)370,313(
________
540,006,4
________
7
8
8
8
9
The financial statements were approved by the Board of Directors and authorised for issue on 5th July 2016.
G S Marsh, Director
The notes on pages 51 to 55 form part of these financial statements.
48
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31st March 2016
erahS
latipaC
erahS
latipaC
tiforP
ssoL & noitpmedeR muimerP
tnuoccA
evreseR
evreseR
Solid State PLC
dleh serahS
yrusaerT ni
latoT
Balance at 31st March 2014
411,536
3,628,748
4,674
483,562
-
4,528,520
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
-
-
-
-
-
-
-
-
-
-
-
-
-
979,301
-
210,653
)004,018(
-
-
-
-
979,301
440,5
210,653
)004,018(
-
(313,073)
(313,073)
_______
________
_______
________
_________ _______
Balance at 31st March 2015
416,580
_______
3,628,748
________
4,674
_______
863,116
________
(313,073)
4,600,045
_________ _______
Total comprehensive income
For the year ended 31st March 2016
serahs wen fo eussI
Share based payment expense
sdnediviD
Transfer of shares to All Employee
nalP pihsrenwO erahS
-
125,4
-
-
-
-
-
-
-
-
-
-
-
-
-
1,655,049
-
173,578
)226,400,1(
-
-
-
-
1,655,049
125,4
173,578
)226,400,1(
-
407,13
407,13
_______
________
_______
________
_________ _______
Balance at 31st March 2016
421,101
_______
3,628,748
________
4,674
_______
1,687,121
________
(281,369)
5,460,275
_________ _______
49
Solid State PLC
COMPANY STATEMENT OF CASH FLOWS
For the year ended 31st March 2016
SEITIVITCA GNITAREPO
Profit before taxation and dividends received
Adjustments for:
esnepxe tnemyap desab erahS
segnahc erofeb snoitarepo morf tiforP
snoisivorp dna latipac gnikrow ni
srotbed ni esaercnI / )esaerceD(
srotiderc ni esaerceD
2016
2015
£
£
£
£
(955,074)
875,371
_______
)694,187(
)809,351,1(
234,502,1
________
642,603
)787,506,1(
________
425,15
(888,149)
356,012
________
)694,776(
)145,992,1(
________
snoitarepo yb demusnoc hsaC
)279,927(
)730,779,1(
derevocer sexat emocnI
-
________
-
________
seitivitca gnitarepo morf wolf hsaC
)279,927(
)730,779,1(
SEITIVITCA GNITSEVNI
Dividends received from subsidiaries
Consideration paid on acquisition of subsidiaries
SEITIVITCA GNICNANIF
serahs yranidro fo eussI
diap tseretnI
Dividend paid to equity shareholders
Purchase of own shares for holding in treasury
DECREASE IN CASH AND CASH
STNELAVIUQE
Cash and cash equivalents comprise:
Net decrease in cash and cash equivalents
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
dnamed no elbaliava hsaC
stfardrevO
50
2,300,000
(1,760,461)
_______
1,600,000
(41,694)
_______
935,935
________
603,855,1
_______
)334,091(
)137,814(
125,4
-
(990,832)
-
_______
440,5
-
(810,400)
(313,073)
_______
)113,689(
________
)447,671,1(
________
6102
£
(1,176,744)
(2,844,840)
____________
(4,021,584)
___________
116,371
)591,591,4(
___________
)485,120,4(
___________
)924,811,1(
_______
)061,735,1(
_______
5102
£
(1,537,160)
(1,307,680)
____________
(2,844,840)
___________
526,016,1
)564,554,4(
___________
)048,448,2(
___________
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2016
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
These financial statements have been prepared in accordance with applicable United Kingdom Accounting
standards, including Financial Reporting Standard 102 -The Financial Reporting Standard applicable in the
UK and Republic of Ireland (“FRS 102”) and with the Companies Act 2006. The financial statements have
been prepared under the historical cost convention.
This is the first year in which the financial statements have been prepared under FRS 102. Refer to note 10
for an explanation of the transition.
The financial statements are prepared in sterling (£).
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 profit for the year ended 31st March 2016 is disclosed in the Statement of
Changes in Equity.
Going concern
The going concern basis of accounting has been used in the preparation of these financial statements. The
directors have not identified any material uncertainties in this regard.
Foreign currencies
Foreign currency transactions are translated at the rates ruling when they occurred. Foreign currency
monetary assets and liabilities are translated at the rate of exchange ruling at the statement of financial
position date. Any differences are taken to the statement of comprehensive income.
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.
T-he 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.
51
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2016
1.
ACCOUNTING POLICIES (continued)
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 £655,804 (2015: £544,095) and comprised the share based payment expense of
£173,578 (2015: £210,653) provision for employer’s national insurance on exercise of share options of
£23,954 (2015: £29,070) and salary and related costs in respect of Mr G L Comben, Mr W G Marsh, Mr A B
Frere, Mr G S Marsh, Mr M T Nutter (resigned 29 June 2016) 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.
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 2016 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 27 and 28.
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 £173,578 for the year (2015: £210,653)
52
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2016
4.
INVESTMENTS
Company
Cost
1st April 2015
Additions
6102 hcraM ts13
Net book value
6102 hcraM ts13
5102 hcraM ts13
Solid State PLC
Group
undertakings
£
5,781,074
2,110,461
________
535,198,7
________
535,198,7
________
470,187,5
________
Details of the addition are disclosed in note 28 of the group financial statements.
Subsidiary undertakings
The subsidiaries of Solid State PLC are as follows are as follows:
sgnikatrednu yraidisbuS
detimiL seilppuS etatS diloS
detimiL etitaetS
Q-Par Angus Limited
Ginsbury Electronics Limited *
2001 Electronic Components Limited
Wordsworth Technology (Kent) Limited
Rugged Systems Limited
detimiL noigerngiS
gnitov fo noitroporP
rights and Ordinary
share capital held
Nature of business
%001
%001
100%
100%
100%
100%
100%
%001
Distribution of electronic components
stnenopmoc cinortcele fo noitubirtsiD
and manufacture of electronic equipment
Manufacture of microwave and RF
equipment
Distribution of electronic components
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.
Shares in subsidiary undertakings marked (*) are held indirectly through other group companies.
53
Solid State PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2016
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
2016
£
2015
£
396,623,3
997,21
383,1
_________
654,678,1
106,61
521,1
_________
578,043,3
_________
281,498,1
________
591,591,4
607,572,1
457,13
481,683
709,65
________
647,549,5
________
564,554,4
876,921
072,63
328,75
006,6
________
638,586,4
________
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 £203,004 (2015: £nil). 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
8,422,015 (2014: 8,331,606) ordinary shares of 5p each
2016
£
421,101
_______
2015
£
416,580
_______
On 28th July 2015, Mr J L Macmichael exercised share options over 17,609 ordinary shares which were
issued at an exercise price of 5p.
On 28th July 2015, Mr G S Marsh exercised share options over 36,400 ordinary shares which were issued at
an exercise price of 5p.
On 28th July 2015, Mr J M Lavery exercised share options over 36,400 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 2016 the
number of shares covered by option agreements amounted to 94,800 (2015: 204,000).
At 31st March 2016, 42,021 shares were held in treasury (2015: 48,271).
54
NOTES TO THE COMPANY FINANCIAL STATEMENTS
For the year ended 31st March 2016
Solid State PLC
8.
RESERVES
Full details of movements in reserves are set out in the company statement of changes in equity on page 49.
The following describes the nature and purpose of each reserve within owners’ equity.
evreseR
esopruP dna noitpircseD
Share premium
Capital redemption
Profit and loss account
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
9.
OWN SHARES HELD IN TREASURY
At 31st March 2016 the group held 42,021 (2015: 48,271) shares in treasury with a cost of £281,369. No
shares have been cancelled.
10. LEASING COMMITMENTS
The company’s future minimum payments under operating leases are as follows:
raey eno nihtiW
sraey evif dna eno neewteB
sraey evif naht retaL
11. TRANSITION TO FRS 102
2016
£
000,42
000,62
-
2015
£
-
-
-
The company has adopted FRS 102 for the year ended 31st March 2016. The last financial statements,
under previously extant UK GAAP were for the year ended 31st March 2015. The date of transition was 1st
April 2014. A full evaluation has been undertaken and the directors consider that there are no adjustments
that alter the previously disclosed statement of financial position or statement of comprehensive income.
55
Solid State PLC
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the annual general meeting of Solid State PLC will be held at 2, Ravensbank Business Park,
Hedera Road Redditch B98 9EY, on 13th September 2016 at 2.30pm for the following purposes:
ORDINARY RESOLUTIONS
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
To receive and adopt the accounts for the year ended 31st March 2016, 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 John Michael Lavery, who retires by rotation, as a Director of the Company in accordance with
the Company’s Articles of Association. (Resolution 3)
To reappoint John Lawford Macmichael, who retires by rotation, as a Director of the Company in accordance
with the Company’s Articles of Association. (Resolution 4)
To reappoint Matthew Thomas Richards, being a director of the Company appointed since the last annual
general meeting, in accordance with the Company’s Articles of Association. (Resolution 5)
To reappoint haysmacintyre as auditors of the Company. (Resolution 6)
To authorise the Directors to fix the auditors’ remuneration. (Resolution 7)
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 £138,963.25 (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:
(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 £84,220.15 (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.
ii)
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 8)
SPECIAL RESOLUTIONS
(9)
To pass the following resolution:
That the Company is authorised to allot equity securities pursuant to resolution 8 above up to an aggregate
nominal amount of £42,110.08, which is 10% 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 has expired. (Resolution 9)
56
Solid State PLC
NOTICE OF ANNUAL GENERAL MEETING (continued)
SPECIAL RESOLUTIONS (continued)
(10)
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:-
i) the minimum price which may be paid for the ordinary shares is 5p per ordinary share;
ii)
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 10)
iii)
iv)
v)
vi)
BY ORDER OF THE BOARD
P Haining FCA
Secretary
5th July 2016
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.
57
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www.solidstateplc.com