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Solid State

  • BY: Andrew Hore |
  • POSTED: 27/07/2011 |

Electronic components supplier Solid State more than doubled its pre-tax profit in the year to March 2011.

Revenues were 57% higher at £21.2m, while pre-tax profit jumped 135% to £1.24m. The figures include an initial contribution from recent acquisition Rugged Systems. Profit would still have doubled without its contribution. The dividend has been doubled to 6p a share.

Cash generated from operations was held back by higher stocks of key components which were taken on due to uncertainties about Japanese supply. There was also greater capital spending because of the factory relocation of batteries supplier Steatite. Net debt was £1.31m at the end of March 2011.

Kent-based Solid State is a distributor of electronic components and the UK’s largest supplier of lithium batteries. Key markets include military, aerospace, oil and gas, medical and satellite.

The core electronic components distribution business, whose revenues rose 32%, is expected to continue to grow but at a slower pace. Steatite grew revenues by 29% even though the business was relocated during the year. Growth rates for Steatite may also slow down.

Even so, Solid State has a record order book and first quarter profit has been higher. Solid State recently switched broker from Fox-Davies to WH Ireland. The new broker forecasts a profit of £1.34m in 2011-12.

Solid State has bought four companies in the past nine years and it is looking for more acquisitions. Ideally they should have revenues of £4m-£8m and help to widen the customer and/or product base. Underperforming niche businesses are the focus. Solid State will pay around four to five times pre-tax profit.

At 124p a share, up 6.5p, Solid State is valued at £8.42m. 

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