Preliminary Results

7 July 2014

Solid State plc

("Solid State", the "Company" or the "Group")

Preliminary Results for the year ended 31 March 2014

Solid State plc (AIM: SSP), the AIM listed supplier of specialist industrial/ruggedised computers, electronic components, secure communications systems and battery power solutions to the electronics market, is pleased to announce its Preliminary Results for the year ended 31 March 2014.

Highlights in the period include:

Financial:

*Before exceptional items of £0.1m in FY12/13

Operational:

· Acquisition of Q-Par Angus Ltd in May 2013 for £1.001m

· £1.8m secure communications contract with MOD

· Acquisition of 2001 Electronic Components Ltd for £1.974m in December 2013

· Oversubscribed placing to raise £2.54m

· Expansion of higher margin ancillary services offering

· Development of proprietary products range

· Open order book at 30 April 2014 of £14.7m (30 April 2013: £10.4m)

Commenting on the results, Tony Frere, Chairman of Solid State said:

"I am pleased to report on a landmark year for Solid State, having made two successful acquisitions and completed an oversubscribed placing to raise £2.54m. These events have added new colleagues, clients and institutional shareholders to the Group who we welcome and look forward to working with going forward.

"Each strategic step strengthens Solid State in niche product areas and ultimately builds scale in our business. This strengthened market position has increasingly presented new products and market opportunities to the Group which is, in turn, driving a strong sales pipeline and building momentum.

"The Board remains confident in the growth strategy and is optimistic about the Group's prospects."

For further information please contact:

Notes to Editors:

Solid State plc (SSP) is a leading value added group of companies providing specialist design-in and manufacturing services to those acquiring industrial/rugged computing products, battery power solutions, secure communications systems and electronic components for use in harsh environments.

Serving niche markets in oil & gas production, medical, construction, security, military and field maintenance, Solid State acts as both a distributor to OEMs and bespoke manufacturer of specialist units to clients with complex requirements.

Headquartered in Redditch, Solid State employs over 140 staff across four sites. Solid State operates through two main divisions: Solid State Supplies and Steatite.

Solid State was established in 1971 and admitted to AIM in June 1996.

CHAIRMAN'S STATEMENT

Financial Review

I would like to start by expressing my thanks on behalf of the Board to Gordon Comben for his leadership as Chairman of Solid State over the last two years. He hands over a business that has a strong management team and I look forward to continuing his good work in driving the business forward.

It gives me great pleasure therefore, in my first annual results statement as Chairman of Solid State, to report that the Group has delivered a fourth consecutive year of record results, demonstrating the success of both our organic and acquisitive growth strategies.

Revenues increased by 2% to £32.09m (2013: £31.50m). The Group benefitted from the additional revenue from acquisitions in May 2013 and December 2013, however we must recognise that the revenue in the period from the acquisition of 2001 Electronic Components Ltd was restricted to three months. On a comparative basis, the financial year 12/13 was flattered by an export order for £3.5m shipped in FY12/13 that did not repeat last year. Future periods will represent a more normalised comparison.

Revenue by division was represented by a contribution of £22.19m by the Steatite division, which includes an 11 month contribution from Q-Par of £2.64m, and £9.9m by the Solid State Supplies division, which includes a three month contribution from 2001 Electronic Components Ltd of £2.12m.

Profit before tax rose by 15% to £2.15m (2013: £1.87m). As reported at the half year stage, there was a second half bias to the results. This is typical for the Group however the acquisition of 2001 Electronic Components Ltd will moderate that effect in future years.

Margins vary with order size and product mix however in overall terms the Group commands good gross margins due to the value added nature of its offering. Pleasingly, Group gross margins increased to 29.2% (2013: 26.1%).

Operating margins increased to 6.9% (2013: 6.2%), with earnings per share rising by 16% to 25.3p (2013: 21.8p) despite an increase in the shares in issue principally as a result of the placing in December 2013.

The balance sheet strengthened significantly during the period following the two acquisitions and the fundraising. Total net assets grew by 66% to £10.4m (2013: 6.3m) with net gearing levels reducing to 23% (2013: 37%).

Dividends

We have continued our stated policy of offering our shareholders a progressive dividend whilst ensuring we retain a prudent level of dividend cover. Dividends were 2.98 times covered in 2014 (2013: 2.73 times). The Board is recommending a final dividend of 5.75p. An interim dividend of 2.75p per share was paid on 31 January 2014 giving a total dividend for the year of 8.5p per share, a 6% increase on the prior year (2013: 8.0p). The final dividend will be paid on 2 September 2014 to shareholders on the register at the close of business on 6 August 2014. The shares will go ex-dividend on 8 August 2014.

Business Review

The Group is focussed on the supply and support of specialist electronics equipment which include high tolerance and tailor made battery packs, specialist electronic components, specialist antennas, industrial/rugged computers and secure communications systems.

The market for the Group's products and services is driven by the need for custom electronic solutions to address complex needs, typically in harsh environments where enhanced durability and resistance to extreme and volatile temperatures is vital. Drivers in our markets include efficiency improvement, cost saving, environmental monitoring and safety.

Divisional Review

Steatite

Steatite is one of the leading UK suppliers of specialist electronic equipment. It designs, manufactures and supplies a range of products and solutions that include bespoke lithium battery packs, rugged mobile computing/radio solutions, secure communications systems, industrial computer hardware and software. Key to its strategy is the ability to design, manufacture and test to customer requirements for use in some of the most difficult and harsh environments against the most stringent of standards and qualifications.

Steatite has performed well during the year delivering a 3% growth in profit margin, continuing the significant progress made over the past few years.

Steatite has benefited from gaining market share in new sectors due to the breadth and technical depth of our business. In addition, the division has continued to attract new supply partners from around the world whilst continuing to focus on new product development and the introduction of new market leading products to the range.

The organic growth in our new range of communications systems has contributed well and will continue to play a key role in the next fiscal period. This is a sector where we see considerable opportunities for developing our range of higher margin proprietary products and growing market share.

The business is well resourced to benefit from the growing pipeline of new opportunities in markets such as Oil & Gas, Transport, Security and from Government agencies, who have publicly stated their strategy of increasing their supply contracts with the SME sector.

Steatite is well positioned to accelerate growth as conditions continue to improve, enhancing its position as one of the leading UK suppliers of electronic equipment and further extending its reach into export markets.

Q-Par Angus Ltd (Q-Par)

Q-Par, acquired in May 2013, is at the forefront of antenna design and manufacture. The company excels in the research, design and manufacture of commercial grade and bespoke microwave antennas, subsystems and associated microwave components.

Since its acquisition, Q-Par has exceeded our expectations. The transition and restructure of the business under new management has resulted in record turnover during its 11 month contribution to this period, which was correspondingly matched by record profits. Q-Par adds significant margin enhancement to the Group due to the high end technical solutions it offers its growing customer base.

The focus on, and development of, key market areas continues to provide opportunities with export markets continuing to perform well through an enhanced network of agents throughout the world. New product introductions and development have positioned Q-Par for another strong period ahead. Further investment will see Q-Par developing its position as an industry leader in antenna design and manufacture.

Solid State Supplies (Including 2001 Electronic Components Ltd)

Solid State Supplies is a distributor of specialist components to the UK OEM community; selling semiconductors, related components and modules for embedded processing, control and communications switches, power management units and LED lighting.

This was another strong year of trading for Solid State Supplies with organic growth outstripping the industry association reported numbers for the fifth year in a row. With all major franchises performing well, the company continues to focus on its key differentiating strengths of providing high levels of engineering support and value added services to its expanding client list. Both of these areas have been further strengthened in the year.

The latter part of FY13/14 saw the company execute on its plan to introduce own brand products with prototype volumes of communications upgrade converters (HART protocol) now in the hands of key customers for evaluation. The company expects to see limited revenues with gross margins above the company average from these products in FY14/15 with the range expanding and sales increasing towards the end of the year.

After several years of looking for a complementary acquisition for the distribution business, the Group completed the acquisition of 2001 Electronic Components Ltd (2K1) on 31 December 2013. This acquisition has added strength and depth to the product offering, the sales team and the engineering support teams. The acquisition positions Solid State Supplies as a midsize distributor now operating in a much less crowded space with a very strong customer focused infrastructure. As a result, Solid State Supplies is already competing for much larger contracts than it had previously seen and is engaging with new companies that have not traded with Solid State Supplies before.

The company enjoyed a particularly strong fourth quarter driven by organic growth and capitalising on the acquisition of 2K1. During this period, 2K1 traded independently under the leadership of the distribution division with organic order intake up more than 50% on the comparable period of the previous year. As of 1 April 2014, 2K1 was successfully integrated into the Solid State Supplies division with both companies trading as a single entity.

Increased sales and realised savings are expected to result in a strong performance for the 2014/15 financial year.

Divisional Summary

The companies in the Solid State group have distinct characteristics in their market places. A depth of technical understanding and a collaborative approach to client relationships have always promoted an integrated process of product design and supply. The degree of co-operation has always been appreciated by our clients and we believe it is of significant commercial value both to us and our customers. Solid State will continue to pursue this approach and to extend it into new relationships where appropriate.

Our stated strategy is to supplement organic growth with selective acquisitions within the electronics industry which will complement our existing Group companies and enable us to achieve improved operating margins through the employment of operational efficiencies, scale and distribution.

Outlook

Having successfully completed seven acquisitions in the last twelve years the Group will continue its stated strategy of both organic and acquisitive growth. We will proactively continue to look for acquisitions that offer both synergy and market opportunities, enhancing our product range and engineering capacity.

Solid State has built a reputation for an innovative approach to product development and client partnerships. This approach presents opportunities for further growing market share, particularly in export markets and niche applications.

The order backlog at 30 April 2014 stood at £14.7m, which compares favourably to the same position last year (30 April 2013: £10.4m), and gives a solid starting position coming into the new financial year.

Our strong pipeline of new designs across a wide range of products and markets enable us to look with confidence to the year ahead.

Tony Frere

Chairman

4 July 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 31st March 2014

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31st March 2014

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31st March 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31st March 2014

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31st March 2014 (continued)

Cash and cash equivalents comprise:

There were no significant non-cash transactions.

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31st March 2014

1. The financial information in the preliminary announcement does not constitute the Company's statutory accounts for the years ended 31 March 2014 or 31 March 2013. The financial information for the year ended 31 March 2013 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their reports and did not contain statements under the Companies Act 2006, s 498 (2) or (3). The financial information for the year ended 31 March 2014 is unaudited. Statutory accounts for that will be finalised on the basis of the financial information presented by the directors in this preliminary announcement and will be delivered to the registrar of Companies following the Company's annual general meeting.

2. ACCOUNTING POLICIES AND CRITICAL ACCOUNTING JUDGEMENTS

The financial information in this preliminary announcement has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The principal accounting policies used in preparing the preliminary announcement are those the Group will apply in its financial statement for the year ended 31 March 2014 and are unchanged from those disclosed in the Group's Report and Financial Statements for the year ended 31 March 2013.

3. EARNINGS PER SHARE

The earnings per share is based on the following:

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 7,412,343 (2013: 6,835,502).

The diluted earnings per share is based on 7,431,867 (2013: 7,166,123) ordinary shares which allow for the exercise of all dilutive potential ordinary shares.

4. DIVIDENDS

The proposed final dividend has not been accrued for as the dividend was declared after the statement of financial position date.

5. 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 includes Solid State Supplies Limited and 2001 Electronic Components Limited and the manufacturing division includes Steatite Limited and Q-Par Angus Limited.

Year ended 31st March 2014

Included with the manufacturing division is turnover of £3,614,864 relating to income from a major company which accounts for more than 10% of the Group's turnover in the year.

Year ended 31st March 2013

All the above relate to continuing operations.

6. TAX EXPENSE

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:

7. The Annual Reportwill be sent to shareholders shortly and made available to the public at the registered office of the Company at 2 Ravensbank Business Park, Hedera Rd, Redditch, B98 9EY and will also be available to download on the Company's website www.solidstateplc.com.