Petards Regulatory News (PEG)

19 Jun 2006 07:01

Petards Group PLC19 June 2006 PETARDS GROUP PLC: PRELIMINARY RESULTS ANNOUNCEMENT Petards Group plc ('Petards'), the AIM quoted developer of advanced surveillancesystems, announces preliminary results for the year ended 31 December 2005. In his statement to shareholders, Tim Wightman, non-executive Chairman, said: "I am pleased to report that during 2005, Petards Group plc made encouragingsteps towards profitability and in positioning itself to take advantage of themany opportunities that exist in the markets that it serves. In the year ended 31 December 2005 Petards Group made an operating profit of£56,000 which represents a significant turnaround from the loss of £3,325,000incurred in the previous year." Financial highlights • Revenue of £21.8m (2004: £22.6m) • Gross profit of £7.0m up 9% (2004: £6.5m) • Total administrative expenses down 28% to £7.0m (2004: £9.8m) • Operating profit of £56,000 (2004: £3,325,000 loss) • Loss before tax of £449,000 (2004: £3,570,000 loss) • Loss per share of 0.06 pence (2004: loss per share 5.46 pence) • Total net borrowings were £4.0m (31 December 2004: £7.4m) • No dividend • £5.1m net cash from placing in January 2005 Other highlights • Acquisition of UK and US network video recording software businesses of PI Vision in August 2005 • Establishment of US operation • Acquired EIMC, specialist supplier of a range of infrared and daylight camera technologies in March 2006 Commenting on outlook, Tim Wightman, non-executive Chairman, said: "As I reported in December, while significant progress has been made by theGroup over the past year, it is taking longer than we expected to overcome theeffect of its past difficulties within some of our markets. In order to exploitthe growing market opportunities available, the Group has invested further inits sales and marketing for the UK, Europe and the US. The Board is confidentthat the benefits of this investment will be seen in the future. "The first six months of 2006 will reflect the impact of the adverse effect onsoftware solutions sales that I have referred to above. However, the Boardexpects to see the Group's recovery continue in the full year with a furtherimprovement in profitability over 2005." Contacts: Petards Group plc Parkgreen Communications Tim Wightman, Chairman Paul McManusAndy Wonnacott, Finance Director Tel: 020 7786 9600Tel: 01932 788 288 Mob: 07980 541 893 CHAIRMAN'S STATEMENT I am pleased to report that during 2005, Petards Group plc made encouragingsteps towards profitability and in positioning itself to take advantage of themany opportunities that exist in the markets that it serves. Results In the year ended 31 December 2005 Petards Group made an operating profit of£56,000 which represents a significant turnaround from the loss of £3,325,000incurred in the previous year. This profit was earned on turnover of £21.8m,which while down 3% on the prior year, generated gross profits of £7.0m, anincrease of 9% over 2004. Margins were up from 29% to 32% reflecting theelimination of the low margin and loss making contracts that Petards Joyce-Loeblhad suffered from in previous years. As I reported in December, administrative expenses have reduced dramatically asa consequence of the action taken to consolidate the Group's operations ontomany fewer sites. Administrative expenses, before exceptional items, werereduced by over 25%. Management is continuing its drive to exploit synergiesbetween its businesses and to realise efficiency savings wherever possible. The Group made a loss before tax of £449,000 (2004: £3,570,000 loss) and theunderlying loss per share was 0.06p (2004: 5.46p loss). A particularly pleasing achievement during the year was the establishment ofPetards Joyce-Loebl as a leading supplier to the rail CCTV market in the UK andEurope, with its eyeTrain(TM) Digital CCTV System. It secured contracts worthover £5m to supply digital CCTV systems to First Group for ScotRail, Alstom forWest Coast Mainline operated by Virgin Trains, and Wabtec for London EasternRailways. It is now well positioned to take advantage of other opportunities inthe rail sector and since the year end has secured a £1.8m contract with ArrivaTrains Wales. These orders follow on from the successful completion of largecontracts for Portuguese customers during the year. An important element of the acquisition in August of the UK and US businesses ofPI Vision is that this provided the Group with an established North Americanpresence. The acquired business made a positive contribution to the Group'sresults returning an operating profit of £281,000 on turnover of £1.8m. Sinceacquisition, as well as winning and executing a £0.8m order for a system runningUVMS(TM) software for a new US casino, UVMS(TM) software has become the firstnetwork video recording software to be approved by Siemens N.V. (Belgium) foroperation with its unique Open Transport Network ("OTN") solution. The suspension of the Company's shares for five months of the year undoubtedlygenerated uncertainty for some of our customers and particularly affected ourability to secure significant orders for Petards' existing software solutionsbusiness during that period. The re-commencement in trading of the Company'sshares on AIM in December removed this uncertainty but in order to regainmomentum for its software solutions sales, the Group has further strengthenedits senior sales team in the UK. This has already led to an encouragingincrease in the level of interest and enquiries for its surveillance solutions. The Group's defence operations performed well during the period and madesubstantial sales of countermeasure dispensing systems and of control systemsfor the Challenger 2 tank. In addition it won a £1.1m contract to supplyspecialist displays for AWACS aircraft to Air France Industries. Post balance sheet events On 8 March 2006 the Company acquired the entire share capital of EuropeanInnovation Manufacturing Centre Limited ("EIMC") for a maximum totalconsideration of £1.8 million. We have paid an initial £225,000 comprising of£25,000 in cash and the balance in 14,285,714 new ordinary shares at 1.4p. Anadditional payment of up to £75,000 in cash will be made on aperformance-related basis for the year ended 31 March 2006. Further payments upto a total aggregate maximum of £1,500,000 will be made on a performance-relatedbasis for the ten months ending 31 December 2006 and the year ending 31 December2007. These further payments will be satisfied by either the issue of loannotes or new Petards shares at the prevailing market price. The vendors of EIMCmay elect whether to opt for loan notes or new Petards Shares for the first£133,500 of the further payment in respect of 2006 and the first £175,000 inrespect of 2007. Petards have the option as to whether the balance of anyfurther payments is satisfied by way of loan notes or new Petards shares. EIMC is a specialist supplier of a range of IR (Infrared) and daylight cameratechnologies that underpin many video and ANPR (Automatic Number PlateRecognition) systems in the UK and Europe and are used in approved systems inthe emerging North American markets. This acquisition of leading edgetechnology in rapidly expanding specialist camera and surveillance equipmentmarkets, strengthens the Group's position within its existing client base andadds new opportunities in the global law enforcement, security service andcommercial sectors. Petards will build on the existing relationships that EIMChas established to supply ANPR solutions worldwide and will have the opportunityto incorporate its core range of digital recording, storage and control roomsolutions (including UVMS(TM) and Advantage.Net+). The acquisition will also enable Petards to accelerate the further developmentof its market leading Provida range of digital video and speed enforcementsystems. New systems will meet the growing demands for greater in-car computerintegration and digital storage. The use of UVMS(TM) as the management tool forthe storage of high volumes of digital evidence will provide further synergiesand sales opportunities. EIMC's special-vehicle installation capability alsooffers Petards an in-house facility whereby both EIMC and Petards systems willbe fitted to a wide variety of covert and overt surveillance vehicles used bysecurity agencies. Dividends The Board is not recommending the payment of a dividend. The Board On 31 May 2006 David Hayes resigned as a director and stepped down as ChiefExecutive. David joined the Group in 2004 and since then he has overseen a majorrestructuring of the business and, through the acquisition of PI Vision inSeptember 2005, established operations in the US. He will continue in aconsulting capacity with the Group, in particular to help develop the Group's USactivities. He has been succeeded as Chief Executive by Bill Conn. Bill joinedthe Group in September 2004 as Managing Director of Petards Joyce-Loebl andunder his stewardship the performance of Petards Joyce-Loebl has improvedsignificantly. After serving as a non executive director for the past four years, Tim Sulivanis retiring by rotation at the Annual General Meeting and will not be seekingre-election as a director. I would like to thank Tim for his contribution sincehe joined the Board in 2002. This leaves the Company with three non executivedirectors which is considered to be an appropriate number at the present time. Staff I would like to take the opportunity to thank all of our people for their hardwork and commitment to develop the Group's future prospects and in making thechanges that have led to a significant improvement in the Group's performanceover the past year. Outlook As I reported in December, while significant progress has been made by the Groupover the past year, it is taking longer than we expected to overcome the effectof its past difficulties within some of our markets. In order to exploit thegrowing market opportunities available, the Group has invested further in itssales and marketing for the UK, Europe and the US. The Board is confident thatthe benefits of this investment will be seen in the future. The first six months of 2006 will reflect the impact of the adverse effect onsoftware solutions sales that I have referred to above. However, the Boardexpects to see the Group's recovery continue in the full year with a furtherimprovement in profitability over 2005. Tim Wightman16 June 2006 PETARDS GROUP PLCCONSOLIDATED PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2005 Year ended Year ended Note 31 December 2005 31 December 2004 £'000 £'000 TurnoverContinuing operations 20,053 22,162Acquisitions 1,786 -Discontinued operations - 443 21,839 22,605Cost of sales (14,793) (16,153)Gross profit 7,046 6,452 Exceptional items - (402)Goodwill amortisation and impairment (31) (25)Other administrative expenses (6,959) (9,350)Total administrative expenses (6,990) (9,777) Operating profit / (loss)Continuing operations (225) (3,272)Acquisitions 281 -Discontinued operations - (53)Total operating profit / (loss) 56 (3,325)Profit on disposal of discontinued operations - 702 Costs of fundamental reorganisation - (724) Profit / (loss) on ordinary activities before 56 (3,347) interest and taxation on ordinary activities before interestNet interest payable (505) (223)Loss on ordinary activities before taxation (449) (3,570)Taxation 115 -Loss on ordinary activities after taxation being (334) (3,570) loss for the financial year Loss per shareBasic and diluted 3 (0.06p) (5.46p) PETARDS GROUP PLCCONSOLIDATED BALANCE SHEETAs at 31 December 2005 31 December 2005 31 December 2004 £'000 £'000Fixed assetsIntangible assets 783 365Tangible assets 887 969 1,670 1,334Current assetsStocks 2,799 3,539Debtors 4,662 4,577Cash at bank and in hand 550 249 8,011 8,365 Creditors: amounts falling due within one year (7,547) (16,278) Net current assets / (liabilities) 464 (7,913) Total assets less current liabilities 2,134 (6,579) Creditors: amounts falling due after more than one (3,964) (25)year Net liabilities (1,830) (6,604) Capital and reservesCalled up share capital 6,224 654Share premium account 23,198 23,660Profit and loss account deficit (31,252) (30,918)Equity shareholders' deficit (1,830) (6,604) PETARDS GROUP PLCCONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2005 Year ended Year ended 31 December 2005 31 December 2004 Note £'000 £'000 £'000 £'000 Net cash outflow from operating activities 4 (674) (1,819) Returns on investments and servicing of financeInterest received - 294Interest paid (179) (503)Finance lease interest paid (6) (14) Net cash outflow from returns on (185) (223) investments and servicing of finance Taxation - - Capital expenditurePurchase of tangible fixed assets (246) (541)Sale of tangible fixed assets 47 97 Net cash outflow from capital expenditure (199) (444) Acquisitions and disposalsPurchase of business (562) -Sale of business - 835 Net cash outflow before financing (1,620) (1,651) FinancingIssue of shares 5,108 -Increase in bank loans 3,266 -Finance lease capital repayments (79) (114) Net cash inflow / (outflow) from financing 8,295 (114) Increase / (decrease) in cash in the year 6,675 (1,765) PETARDS GROUP PLCCONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 December 2005 31 December 2005 31 December 2004 £'000 £'000 Loss for the financial year (334) (3,570) Currency translation difference on foreign currency net investments - (21) Total recognised losses relating to the year (334) (3,591) RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDSFor the year ended 31 December 2005 Year ended Year ended 31 December 2005 31 December 2004 £'000 £'000 Loss for the financial year (334) (3,570) Other recognised gains and losses - (21) New share issue 5,570 - Expenses of share issue (462) - Opening equity shareholders' deficit (6,604) (3,013) Closing equity shareholders' deficit (1,830) (6,604) PETARDS GROUP PLCNOTES TO THE PRELIMINARY RESULTS ANNOUNCEMENTFor the year ended 31 December 2004 1. Basis of preparation These financial statements do not constitute financial statements within themeaning of Section 240 of the Companies Act 1985. The financial information set out above does not constitute the company'sstatutory accounts for the years ended 31 December 2004 or 2005. Statutoryaccounts for 2004 have been delivered to the registrar of companies, and thosefor 2005 will be delivered following the company's annual general meeting. Theauditors have reported on those accounts; their reports were unqualified and didnot contain statements under section 237(2) or (3) of the Companies Act 1985. The financial statements have been prepared in accordance with UK generallyaccepted accounting practice and on the basis of accounting policies consistentwith those applied in previous periods. 2. Dividend The Board of Directors does not recommend the declaration of a dividend for theyear ended 31 December 2005. 3. Loss per share The calculation of the basic loss per share is based on the loss for the year onordinary activities after taxation of £334,000 (2004: loss £3,570,000) dividedby the weighted average number of ordinary 1p shares of 579,691,942 (2004:65,420,709). Due to the group's loss for the year the diluted loss per share isthe same as the basic loss per share. 4. Net cash outflow from operating activities 2005 2004 £'000 £'000 Operating profit / (loss) 56 (3,325) Goodwill amortisation and provision for impairment 31 25 Depreciation of tangible fixed assets 420 387 Profit on sale of tangible fixed assets (6) (15) Cash flows relating to fundamental reorganisation (341) (383) Decrease in stocks and work in progress 770 1,219 Decrease in debtors 356 878 Decrease in creditors (1,960) (596) Exchange differences - (9) Net cash outflow from operating activities (674) (1,819) 5. Analysis of net cash At 1 January Cash flow Other non cash Exchange At 31 2005 changes movement December 2005 £'000 £'000 £ '000 £'000 £'000 Cash at bank and in hand 249 301 - - 550Overdrafts (6,374) 6,374 - - - (6,125) 6,675 - - 550Debt due within 1 year (1,219) 669 - - (550)Debt due after 1 year - (3,950) 15 - (3,935)Finance leases (68) 79 (95) - (84) Total (7,412) 3,473 (80) - (4,019) 6. Acquisition of business On 8 August 2005 the group acquired the trade and certain net assets of PIVision Limited and PI Vision Inc. The maximum total consideration payable is£1,638,000. An initial cash consideration of £476,000 was paid in 2005 and£91,000 of costs incurred associated with the acquisition. In 2006 an amount ispayable equal to the sum by which PI Vision's gross profit exceeds £1,600,000 inthe 12 months following its acquisition, and depending upon the amount payablein 2006, a further conditional sum may be payable in 2007. The payments made in2006 and 2007 cannot exceed £1,000,000 in aggregate and are payable, at thevendors' option, either all in cash or cash and up to 50% in new Petards Groupplc shares at the prevailing market price. The acquisition has been accounted for using the acquisition method ofaccounting. The book values of this acquisition were: £'000 Net assets acquiredTangible fixed assets 38Stock 30Debtors 196Creditors due within 1 year (125)Net assets 139 Goodwill arising on acquisition 449 588 Satisfied byCash consideration 476Cash at bank and in hand acquired (5)Costs associated with acquisition 91 562Deferred consideration 26 588 There have been no fair value adjustments or reorganisation costs provided. 7. Report and accounts Copies of the Report and Accounts will be sent to shareholders in due course. 8. Announcement Copies of this announcement will be available from the Nominated Adviser: Collins Stewart, 9th Floor, Wood Street, London, EC2V 7QR for 14 days from thedate of this announcement. This information is provided by RNS The company news service from the London Stock Exchange