"The disappointment should be kept in context: nothing's changed in the underlying business," says Solid State (SOLI) finance director John Macmichael, reflecting on the recent sell-off in the specialist electronics company's shares. Given the reason behind the October profit warning - delays to the major £34m prisoner tagging contract with the Ministry of Justice (MoJ) caused by a third party - his defensiveness can be partially forgiven.
Indeed, the division through which Solid State invoices the MoJ has "to date fulfilled its contractual requirements" and recognised £3.5m of revenue in the period. But the rollout of the tagging equipment has stalled, and Solid State now expects no significant deliveries between now and March 2016.
Meanwhile - and despite a general softening in Solid's markets - the company increased first-half revenue to a new high and remains on track to reduce its cost base by £0.5m a year from April. That is when a new franchise contract with Silicon Labs to distribute low energy microprocessors and radio devices should start to enhance revenues in the supplies division.
Brokerage WH Ireland is forecasting pre-tax profit and EPS of £3.1m and 36p for the full year to March 2016, down from £3.2m and 37.4p in 2015.
SOLID STATE (SOLI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 458p | MARKET VALUE: | £38.4m | |
| TOUCH: | 440-465p | 12-MONTH HIGH: | 923p | LOW: 388p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 12 | |
| NET ASSET VALUE: | 158p* | NET DEBT: | 30% | |
| Half-year to 30 Sep | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 17.1 | 1.6 | 16.7 | 4 |
| 2015 | 22.0 | 1.5 | 18.1 | 4 |
| % change | +29 | -4 | +8 | - |
Ex-div: 7 Jan Payment: 26 Feb *Includes intangible assets of £5.9m, or 70p a share | ||||
