Solid State posts 'comparable' first half profits

The AIM-traded firm said its revenues for the six months ended 30 September totalled £33.1m, down from £33.6m year-on-year, while its adjusted profit before tax was £3.55m, down from £2.67m.

Its reported operating profit margin was up 20 basis points at 7.3%.

The company said its value-added supplies (VAS) division was maintained at £19.5m, against a market which reported a 10.5% decline in the period.

It said its operating cash generation was “strong” at £1.9m, despite a working capital outflow as the company unwound the cash conservation actions it took in the period ended 31 March.

Net cash as at 30 September had increased to £4m, from £3.2m at the start of the period, after the payment of the prior year’s final dividend.

The group said its £7.5m banking facility remained undrawn which, combined with the strong balance sheet, put the group in a position to fund organic and acquisitive growth.

Solid State’s board declared an interim dividend of 5.25p per share, in line with the half-year distribution in the 2019 financial year.

On the operational front, the company said that as a result of the Covid-19 safety protocols and home working, its production and warehouse facilities remained operational throughout the pandemic.

It was awarded Innovate UK grant funding in its manufacturing division during the period, to support and accelerate the development of its 48v battery modules, targeting fossil fuel-replacement powertrain applications.

The company also announced a $4.7m contract for its VAS division with a “major” UK medical equipment manufacturer during the period.

“Significant” progress was reported on its research and development programmes in respect of own-brand computing, security and antenna products, as well as its battery management system (BMS) products.

Solid State said it was seeing Increased cross-group collaboration as well.

Since the period ended, the company said it had started a “significant” capital investment of around £0.75m in electromagnetic compatibility test capabilities and opto-electronic assembly tools, which it said differentiated its offer and supported its drive for continued margin improvements.

Its three-month rolling order intake had strengthened by 8% since the end of the first half, while the board said it had re-engaged with its pipeline of merger and acquisition targets.

“This is my first set of results as chairman of Solid State, and I am very pleased to be announcing a performance that suitably demonstrates the resilience of the business given the disruptions faced this year,” said chairman Nigel Rogers.

“The half-year position compares favorably to our previous record year as a business, which is a great reflection on everyone who has contributed to delivering this outcome.

“We enter the second half with a strong balance sheet to pursue our growth initiatives and a solid order book to underpin our targets for the full year.”

At 1142 GMT, shares in Solid State were down 1.46% at 640.5p.