Petards Regulatory News (PEG)

19 May 2005 07:01

Petards Group PLC19 May 2005 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 2004. In his statement to shareholders, Tim Wightman, non-executive Chairman, said: "In the last twelve months we have achieved many of the further steps necessaryto make the Petards Group a successful and profitable company in the future.Inevitably this has been a painful process and the losses incurred in the yearand the effect they have had on the balance sheet cannot be lightly dismissed.The weakness in the balance sheet was rectified after the year-end by means of ashare placing." Financial Highlights •Revenue of £22.6m up 7% (2003: £21.3m) •Gross profit of £7.6m down 13% (2003: £8.7m) - result of the mix of revenue •Operating loss of £2,177,000 (2003: £1,962,000 loss) •Loss before tax of £2,422,000 (2003: £1,958,000 loss) •Loss per share of 3.7 pence (2003: 2.9 pence) •Total net borrowings were £7.4m (31 December 2003: £5.8m) •No dividend £€5.1m net cash from placing in January 2005 (post year end) •New £5m five-year term loan and £1m working capital facility with Bank of Scotland Other highlights •All rationalisation now complete and overheads reduced correspondingly •Name change from Screen PLC to Petards Group plc in February 2005 •David Hayes appointed Chief Executive in March 2005; other board changes Commenting on outlook, Tim Wightman, non-executive Chairman, said: "Following the rationalisation of the Petards division the Group's financialperformance has improved resulting in a small operating profit in the firstquarter of 2005. The outlook for the first six months of the 2005 is encouraging and there arepresently many interesting order prospects. In the markets in which we operate,the timing of order placement for these larger prospects is something over whichwe have little influence. The performance in the second half will depend greatlyon our ability to convert those prospects into orders and then deliver thembefore the year-end. At this stage it is difficult to judge the effects of theseconversions on the year's result. Nevertheless, following the refinancing completed in January this year, theGroup is now on a stronger footing in many aspects of its business and the Boardexpects to see the positive results from this during the remainder of the year." Contacts: Petards Group plc Binns & Co PR Ltd Tim Wightman, Chairman Paul McManusDavid Hayes, Chief Executive Tel: 020 7153 1485Tel: 01932 788 288 Mob: 07980 541 893 CHAIRMAN'S STATEMENT Introduction In the last twelve months we have achieved many of the further steps necessaryto make the Petards Group a successful and profitable company in the future.Inevitably this has been a painful process and the losses incurred in the yearand the effect they have had on the balance sheet cannot be lightly dismissed.The weakness in the balance sheet was rectified after the year-end by means of ashare placing. We have led a hand to mouth existence since the Company breached its bankingcovenants when its shares were suspended in 2002. Although we have had thesupport of our bankers throughout, the lack of capital has severely curtailedour operations and damaged our trading relations. The Board has kept this matterconstantly under review. The Board's preference was to strengthen the balance sheet in conjunction with amerger or acquisition of a company with trading synergies which would providegreater critical mass. In the event, discussions with two suitable businessescame to nothing. The Board therefore decided to raise additional capital and itsproposals were sent to shareholders last December. Following the share placingand restructured banking facilities which were completed in January we begin2005 with a strong financial base. We will continue to search for suitablebusinesses to acquire in our target markets but now it will be from a positionof relative balance sheet strength. We also have a greatly strengthened management team which is made up ofexperienced and technically strong people who are committed to the futuresuccess of the Company. We will need to recruit additional specialist staff toachieve our planned growth but the leadership team is now in place. All therationalisation in the Petards division has been completed and the division isoperating from one location at Sunbury-on-Thames. The overheads have beenreduced correspondingly. Product quality and customer service levels areimproving and this will continue to be an aspect of strong focus. In revenue and profit terms, the 2004 results reflect the costs and disruptionof the changes within the Petards division balanced by the continued strength ofJoyce-Loebl. In cash terms, the losses incurred within the Petards division andthe absorption of working capital at Joyce-Loebl both aggravated the alreadyweak balance sheet position with which we started 2004.Profit and loss account Turnover for the year ended 31 December 2004 was £22.6m, an increase of 7% overthe figure of £21.3m in the previous year. However, gross profit declined by 13%to £7.6m (2003: £8.7m) as a result of the mix of revenue during the year.Administration expenses before exceptional items were lower by 7% at £9.4m(2003: £10.1m). The operating loss for the year amounted to £2,177,000 (2003:£1,962,000 loss). After net finance charges of £223,000 (2003: £4,000 credit)the loss before tax for the year was £2,422,000 (2003: £1,958,000 loss). Theloss per share was 3.7 pence (2003: 2.9 pence). Balance sheet At 31 December 2004 shareholders' funds were in deficit by £0.2m (31 December2003: surplus of £2.2m). Total net borrowings were £7.4m (31 December 2003:£5.8m). The Company wrote to shareholders on 20 December 2004 setting outproposals for an increase in share capital for consideration at an extraordinarygeneral meeting which was held on 24 January 2005. Post balance sheet events On 28 January 2005 the Company announced that it had raised £5.1m of capital(net of expenses) by means of a placing of 557m new ordinary shares. On the samedate it entered into a new £5m five-year term loan and £1m working capitalfacility with its bankers, Bank of Scotland. The proforma balance sheet as at 31December 2004 included in note 6 illustrates the effect of this refinancing. Dividends The Board is not recommending the payment of a dividend. Name change On 10 February 2005 the Company changed its name from Screen PLC to PetardsGroup plc. The Petards brand has been used for the Group's security andsurveillance products for many years and is well known within the industry inthe UK and abroad. We plan to build the business going forward on this name andto retain the Joyce-Loebl name within Joyce-Loebl's traditional defence markets. The Board On 14 September 2004 Geoff Carswell resigned as a director and as ManagingDirector of Joyce-Loebl Limited. He was succeeded as Managing Director ofJoyce-Loebl by Bill Conn who was appointed a director of the Company on 1February 2005. Chris Langridge resigned as a director on 1 February 2005 and wassucceeded as Finance Director by Andy Wonnacott FCA who was appointed on 7 March2005. On 24 March 2005 David Hayes was appointed Chief Executive and I revertedto non-executive Chairman. Staff I should like to express my thanks to all the Group's employees who havecontributed strongly to the changes and improvements which we have seen in theCompany over the last twelve months. Outlook for 2005 Following the rationalisation of the Petards division the Group's financialperformance has improved resulting in a small operating profit in the firstquarter of 2005. The outlook for the first six months of the 2005 is encouraging and there arepresently many interesting order prospects. In the markets in which we operate,the timing of order placement for these larger prospects is something over whichwe have little influence. The performance in the second half will depend greatlyon our ability to convert those prospects into orders and then deliver thembefore the year-end. At this stage it is difficult to judge the effects of theseconversions on the year's result. Nevertheless, following the refinancing completed in January this year, theGroup is now on a stronger footing in many aspects of its business and the Boardexpects to see the positive results from this during the remainder of the year. Tim Wightman19 May 2005 PETARDS GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT For the year ended 31 December 2004 Before Exceptional After exceptional items (note 2) exceptional items items Year ended Year ended Year ended Year ended Note 31 December 31 December 31 December 31 December 2004 2004 2004 2003 £'000 £'000 £'000 £'000 TurnoverContinuingoperations 22,200 - 22,200 18,499Discontinuedoperations 443 - 443 2,754 --------- --------- --------- --------- 22,643 - 22,643 21,253Cost of sales (15,043) - (15,043) (12,535) --------- --------- --------- ---------Gross profit 7,600 - 7,600 8,718 --------- --------- Exceptionalitems 2 - (402) (402) (314)Goodwillamortisationand impairment (25) - (25) (278)Otheradministrativeexpenses (9,350) - (9,350) (10,088) --------- --------- --------- ---------Totaladministrativeexpenses (9,375) (402) (9,777) (10,680) --------- --------- --------- --------- Operating lossContinuingoperations (1,722) (402) (2,124) (2,205)Discontinuedoperations (53) - (53) 243 --------- --------- --------- ---------Totaloperating loss (1,775) (402) (2,177) (1,962) --------- ---------Profit ondisposal ofdiscontinuedoperations 702 -Costs offundamentalreorganisation (724) - --------- ---------Loss onordinaryactivitiesbeforeinterest (2,199) (1,962)Net interest(payable)/receivable (223) 4 --------- ---------Loss onordinaryactivitiesbeforetaxation (2,422) (1,958)Taxation - 144 --------- ---------Loss onordinaryactivitiesafter taxationbeing loss forthe financialyear (2,422) (1,814) ========= ========= Loss per shareBasic anddiluted 4 (3.7p) (2.9p) PETARDS GROUP PLCCONSOLIDATED BALANCE SHEETAs at 31 December 2004 31 December 31 December 2004 2003 £'000 £'000Fixed assets Intangible assets 365 616Tangible assets 969 942 ----------- ------------ 1,334 1,558 ----------- ------------Current assets Stocks 6,815 6,490 Debtors 4,709 5,927 Cash at bank and in hand 249 - ----------- ------------ 11,773 12,417 Creditors: amounts falling due withinone year (13,313) (11,605) ----------- ------------Net current (liabilities) / assets (1,540) 812 ----------- ------------ Total assets less current liabilities (206) 2,370 Creditors: amounts falling due aftermore than one year (25) (158) ----------- ------------Net (liabilities) / assets (231) 2,212 =========== ============ Capital and reserves Called up share capital 654 654 Share premium account 23,660 23,660 Profit and loss account deficit (24,545) (22,102) ----------- ------------Equity shareholders' funds (231) 2,212 =========== ============ PETARDS GROUP PLC CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2004 Year ended Year ended 31 December 2004 1 December 2003 Note £'000 £'000 £'000 £'000 Net cash outflow from operatingactivities 5 (1,819) (2,729) Returns on investments and servicingof financeInterest received 294 288Interest paid (503) (259)Finance lease interest paid (14) (25) ------- ------- Net cash (outflow) / inflow fromreturns on investments and servicingof finance (223) 4 TaxationUK corporation tax - 144 Capital expenditurePurchase of tangible fixed assets (541) (333)Sale of tangible fixed assets 97 16 ------- ------- Net cash outflow from capitalexpenditure (444) (317) Acquisitions and disposalsSale of business 835 - ------- -------- Net cash outflow before financing (1,651) (2,898) FinancingIssue of shares - 1,048Repayment of principal under financeleases (114) (137) ------- ------- Net cash (outflow) / inflow fromfinancing (114) 911 ------- --------Decrease in cash in the year (1,765) (1,987) ======= ======== PETARDS GROUP PLC CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES For the year ended 31 December 2004 31 December 31 December 2004 2003 £'000 £'000 Loss for the financial year (2,422) (1,814) Currency translation difference on foreigncurrency net investments (21) (50) --------- --------- Total recognised losses relating to the year (2,443) (1,864) ========= ========= RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS For the year ended 31 December 2004 Year ended Year ended 31 December 31 December 2004 2003 £'000 £'000 Loss for the financial year (2,422) (1,814) Other recognised gains and losses (21) (50) New share issues - 1,092 Expenses of share issues - (44) Opening equity shareholders' funds 2,212 3,028 ----------- ----------- Closing equity shareholders' funds (231) 2,212 =========== =========== 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 2003 or 2004. Statutoryaccounts for 2003 have been delivered to the registrar of companies, and thosefor 2004 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. Exceptional items 2004 2003Operating exceptional items £'000 £'000 Costs of aborted acquisitions 113 -Warranty costs 289 -Goodwill impairment - 229Reorganisation costs - 314 -------- -------- 402 543 ======== ======== During the year the group incurred professional fees in connection with theacquisition of businesses that did not proceed to completion. In addition, inthe first half year remedial costs were incurred to rectify issues with theoriginal version of the Advantage.Net software at existing customer sites. 2004 2003Non-operating exceptional items £'000 £'000 Profit on disposal of discontinued business (702) -Costs of fundamental restructuring 724 - -------- -------- 22 - ======== ======== In March 2004, the net assets and business of Petards Emergency Services Ltdwere sold for a cash consideration of £866,000. The profit is shown net ofgoodwill of £226,000 and associated costs.The costs of the fundamental reorganisation arose from the integration of sixbusinesses at six locations into one company at one location. 3. DividendThe Board of directors does not recommend the declaration of a dividend for theyear ended 31 December 2004. 4. Loss per shareThe calculation of the basic loss per share is based on the loss for the year onordinary activities after taxation of £2,422,000 (2003 loss £1,814,000) dividedby the weighted average number of ordinary 1p shares of 65,420,479 (2003 -61,777,457). Due to the group's loss for the year the diluted loss per share isthe same as the basic loss per share. 5. Net cash outflow from operating activities 2004 2003 £'000 £'000 Operating loss (2,177) (1,962) Goodwill amortisation and provision for impairment 25 278 Depreciation of tangible fixed assets 387 613 (Profit) / loss on sale of tangible fixed assets (15) 16 Cash flows relating to fundamental reorganisation (383) - Increase in stocks and work in progress (482) (312) Decrease / (increase) in debtors 816 (2,312) Increase in creditors 19 950 Exchange differences (9) - -------- --------Net cash outflow from operating activities (1,819) (2,729) ======== ======== 6. Post balance sheet eventsOn 28 January 2005 the company announced that it had raised £5.1m of capital,net of expenses, by means of a placing of 557m new ordinary shares. On the samedate it entered into a new £5m five-year term loan and a £1m working capitalfacility with its bankers, Bank of Scotland. The table below illustrates theimpact of these transactions as if they were completed on 31 December 2004: As reported at Adjustments Proforma at 31 31 Dec 2004 Dec 2004 £'000 £'000 £'000 Fixed assets 1,334 - 1,334 Net currentassetsexcluding cashand bank loansand overdrafts 5,804 - 5,804Cash 249 2,402 2,651Bank loans andoverdrafts (7,593) 6,593 (1,000) --------- -------- --------Net currentassets /(liabilities) (1,540) 8,995 7,455 --------- -------- --------Creditors:amountsfalling dueafter one year (25) (3,925) (3,950) --------- -------- --------Net assets /(liabilities) (231) 5,070 4,839 ========= ======== ======== Called upshare capital 654 5,570 6,224Share premiumaccount 23,660 (500) 23,160Profit andloss accountdeficit (24,545) - (24,545) --------- -------- --------Equityshareholders'funds (231) 5,070 4,839 ========= ======== -------- 7. Report and accountsCopies of the Report and Accounts will be sent to shareholders in due course. 8. AnnouncementCopies 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