Last checked at 16 Dec 2008 07:02
PETARDS GROUP PLC
INTERIM RESULTS ANNOUNCEMENT
Petards Group plc ('Petards'), the AIM quoted developer of advanced security and surveillance systems, announces interim results for the six months to 30 June 2008, which mark the Group's move into profitability.
Financial Highlights
Turnover £10.5m (2007: £10.3m)
Operating profit increased to £422,000 (2007: £14,000 operating profit)
Profit before tax of £305,000 (2007: £131,000 loss)
Earnings per share of 0.05p (2007: 0.02p loss per share)
Net debt £2.8m (30 June 2007: £4.4m)
Other highlights
Renegotiated £2.1m term loan and committed £1.75m working capital facilities secured into 2010
Emergency Services sales up almost 100% to £2.2m
Several significant defence orders won during the period
Commenting on the current outlook, Tim Wightman, Chairman, said:
"The renegotiated bank funding provides sufficient resources for the Group to fund its operations for the foreseeable future. Nevertheless, in line with several announcements during the current financial year, the Board is intent on maximising shareholder value, and it has reviewed several options including potential offers for the business (in whole or in part). None of these have crystallised satisfactorily, so the Board believes that the Group's objectives will be best advanced by the injection of new equity when practicable. It continues to be in discussions with its advisers concerning an increase in the equity capital base which will increase the Group's ability to take advantage of the growth opportunities that continue to present themselves.
"The Group began 2008 with an order book of £11.5m, 48% up on 2007 and has continued to win significant orders during 2008. The Group has traded profitably during the current year to date and the directors are confident that its future is secure."
Contacts:
| Petards Group plc | www.petards.com |
| Andy Wonnacott, Finance Director | Tel: 0191 420 3000 |
| Collins Stewart Europe Limited | |
| Mark Connelly, Stewart Wallace | Tel: 020 7523 8350 |
| Parkgreen Communications Limited | Tel: 020 7933 8787 |
| Paul McManus | Mob: 07980 541 893 |
| paul.mcmanus@parkgreenmedia.com |
Chairman's Statement
I am pleased to report that Petards Group plc has traded profitably during the first six months of 2008 during which time it has secured a number of significant orders and has satisfactorily renegotiated its term loan and working capital facilities.
Results
During the six months ended 30 June 2008 the Group achieved an operating profit of £422,000 (2007: £14,000) on revenues of £10.5m (2007: £10.3m) and made a profit after interest and tax of £305,000 (2007: £131,000 loss).
Gross margins were lower at 30% (2007: 40%). The reduction in margins arose as the prior year included revenues from the UK software products business that was disposed of in December 2007, which made margins of circa 45% but had a very high associated overhead. In addition, sales of electronic countermeasures equipment, for which Petards is the UK licensee and which attract lower margins, were 60% higher in 2008 than the previous year and accounted for a third of revenues in the six month period.
Administrative expenses have been reduced by one third to £2.8m (2007: £4.1m). The savings made are a result of the disposal of the UK software products business announced in December 2007 and from an overhead reduction programme implemented earlier this year.
Net cash outflow from operating activities was £360,000 (2007: £88,000) reflecting the increased working capital requirement of revenues in the period which were over 40% higher than those in the preceding six months ended 31 December 2007. Cash inflow after investing and financing activities was £21,000 (2007: £204,000 outflow) and net debt at 30 June 2008 was £2.8m (30 June 2007: £4.4m).
Banking
In May 2008 the company renegotiated the repayment terms of its bank term loan and £1.9m of the £2.5m proceeds from the sale of its UK software products business were applied to reduce that loan. The revised loan facility is for £2.1m and is repayable in equal quarterly repayments which do not commence until July 2009 and extend through to the end of 2010. In addition, earlier this month the company also agreed a committed £1.75m working capital overdraft facility with its bankers that extends through into 2010 providing the company with the longer term facilities it requires.
Trading review
The decision of the Board to sell its UK software products business has resulted in the Group being able to focus its resources more tightly upon its remaining target markets of Transport, Defence, and Emergency Services.
Within the Transport sector we have continued to strengthen our core UK business having secured orders for our eyeTrain® on-board digital CCTV systems during the period from Bombardier Transportation, Porterbrook and Arriva Trains Wales. In Europe we were awarded a further order for passenger information displays by Alstom and in Portugal we have recently won a contract for the supply of eyeTrain® to a metro application. We are seeking to grow our European presence and were encouraged by the strong interest expressed in our product offering when we exhibited at the recent InnoTrans exhibition in Berlin.
As I reported last year, we added forward facing cameras to our range and we are pleased by the customer response to the high quality images that these cameras produce and the operational benefits they can bring to our customers businesses. The potential for growth in sales is significant and we believe that over time most of the UK fleet will be fitted with forward facing cameras.
Our defence business performed well during the period and a number of important contracts were secured from our largest customers, the UK MoD and BAE Land Systems. These included two orders worth in the region of £2m to provide a range of electronic equipment in support of the Army's CRARRV battlefield support vehicle fleet and to supply Vehicle Integrated Control for installation on Challenger 2 chassis based vehicles under the MoD's Sustain Programme. These orders continue Petards' tradition of providing ruggedised, reliable electrical and electronic control systems across the range of UK armoured vehicles.
Over recent years the Group has become a major supplier of countermeasures dispensing equipment to the MoD and while we expect orders to reduce somewhat from the exceptional levels placed in the latter part of 2007, we have continued to receive contracts for the supply and support of this equipment in the first half year. The largest of these was for over £1m for the supply of airborne chaff and flare dispensing equipment that forms part of an Integrated Defensive Aids Suite to be installed onto UK rotary wing aircraft and is designed to protect the aircraft from a range of ground launched missiles.
In March we won an extension for the MoD's DCSA Radio Catalogue Supply contract under which we provide the three Armed Services with a facility whereby their radio and ancillary equipment may be procured from an on-line catalogue of approved equipment.
Petards is a leading supplier to the Emergency Services in the UK and Europe of in-car video, speed detection systems and specialist cameras. While sales volumes from these products in 2007 were disappointing, they have recovered strongly in 2008. Revenues are up almost 100% on the same period last year. They included the benefit of a contract worth almost £1m to supply ProVida™ Automatic number Plate Recognition (ANPR) systems to an overseas customer. Orders for our new MiniHawk and Kestrel camera ranges have been encouraging with the Metropolitan Police having placed orders to replace its existing in-car cameras with Kestrels. We still see strong opportunities for these products in the UK and particularly overseas and in support of this we launched our camera range to customers in mainland Europe during the period at the bi-annual Intertraffic exhibition in Amsterdam.
Dividends
The Board is not recommending the payment of a dividend.
Outlook
The renegotiated bank funding provides sufficient resources for the Group to fund its operations for the foreseeable future. Nevertheless, in line with several announcements during the current financial year, the Board is intent on maximising shareholder value, and it has reviewed several options including potential offers for the business (in whole or in part). None of these have crystallised satisfactorily, so the Board believes that the Group's objectives will be best advanced by the injection of new equity when practicable. It continues to be in discussions with its advisers concerning an increase in the equity capital base which will increase the Group's ability to take advantage of the growth opportunities that continue to present themselves.
The Group began 2008 with a strong order book and has continued to win significant orders during 2008. The order book at the half year was £9.9m, 83% up on June 2007. The Group has traded profitably during the current year to date and the directors are confident that its future is secure.
Tim Wightman
16 December 2008
Consolidated Income Statement
for the six months ended 30 June 2008
| Note | Unaudited 6 months ended30 June 2008 | Unaudited 6 months ended30 June 2007 | Audited Year ended31 December 2007 | |||||
| £000 | £000 | £000 | ||||||
| Revenue | 10,460 | 10,294 | 17,680 | |||||
| Cost of sales | (7,281) | (6,143) | (11,104) | |||||
|
|
|
| ||||||
| Gross profit | 3,179 | 4,151 | 6,576 | |||||
| Other operating income - net gain on disposal of business | - | - | 971 | |||||
| Other operating income - other | - | 8 | 8 | |||||
| Other operating income | - | 8 | 979 | |||||
|
|
|
| ||||||
| Administrative expenses | (2,757) | (4,145) | (7,672) | |||||
|
|
|
| ||||||
| Operating profit /(loss) | 422 | 14 | (117) | |||||
| Financial income | 3 | 17 | 18 | |||||
| Financial expenses | (120) | (162) | (388) | |||||
|
|
|
| ||||||
| Profit/(loss) before income tax | 305 | (131) | (487) | |||||
| Income tax | 2 | - | - | 12 | ||||
|
|
|
| ||||||
| Profit/(loss) for the period attributable to equity holders of the company | 305 | (131) | (475) | |||||
|
|
|
| ||||||
| Earnings/(loss) per share | ||||||||
| Basic and diluted | 3 | 0.05p | (0.02p) | (0.07p) | ||||
The above results are derived from continuing operations.
Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2008
| Unaudited 6 months ended 30 June 2008 | Unaudited 6 months ended 30 June 2007 | Audited Year ended 31 December 2007 | |
| £000 | £000 | £000 | |
| Profit/(loss) for period | 305 | (131) | (475) |
| Currency translation on foreign currency net investments | (5) | 2 | 3 |
|
|
|
| |
| Total recognised income and expense | 3 | (129) | (472) |
| Equity settled share based payments | 24 | 24 | 56 |
|
|
|
| |
| Net increase/(decrease) in total equity | 324 | (105) | (416) |
| Total deficit at start of period | (2,285) | (1,869) | (1,869) |
|
|
|
| |
| Total deficit at end of period | (1,961) | (1,974) | (2,285) |
Consolidated Balance Sheet
at 30 June 2008
| Unaudited 30 June 2008 | Unaudited 30 June 2007 | Audited 31 December 2007 | |
| ASSETS | £000 | £000 | £000 |
| Non-current assets | |||
| Property, plant and equipment | 356 | 755 | 446 |
| Goodwill | 401 | 1,011 | 401 |
| Development costs | 131 | 59 | 60 |
| Deferred tax assets | 245 | 233 | 245 |
|
|
|
| |
| Total non-current assets | 1,133 | 2,058 | 1,152 |
|
|
|
| |
| Current assets | |||
| Inventories | 1,646 | 2,466 | 1,415 |
| Other financial assets | - | - | 75 |
| Trade and other receivables | 3,907 | 3,691 | 3,237 |
| Cash and cash equivalents - available for use | 34 | 156 | 267 |
| Cash - not available for use | - | - | 2,400 |
|
|
|
| |
| Total current assets | 5,587 | 6,313 | 7,394 |
|
|
|
| |
| Total assets | 6,720 | 8,371 | 8,546 |
|
|
|
| |
| LIABILITIES | |||
| Non-current liabilities | |||
| Interest-bearing loans and borrowings | (2,222) | (3,532) | - |
| Provisions | - | (49) | - |
|
|
|
| |
| Total non-current liabilities | (2,222) | (3,581) | - |
|
|
|
| |
| Current liabilities | |||
| Bank overdraft | (593) | (532) | (847) |
| Other interest-bearing loans and borrowings | - | (520) | (4,073) |
| Trade and other payables | (5,862) | (5,711) | (5,896) |
| Provisions | - | - | (11) |
| Other financial liabilities | (4) | (1) | (4) |
|
|
|
| |
| Total current liabilities | (6,459) | (6,764) | (10,831) |
|
|
|
| |
| Total liabilities | (8,681) | (10,345) | (10,831) |
|
|
|
| |
| Net liabilities | (1,961) | (1,974) | (2,285) |
|
|
|
| |
| Equity attributable to equity holders of the parent | |||
| Share capital | 6,367 | 6,367 | 6,367 |
| Share premium | 23,255 | 23,255 | 23,255 |
| Retained earnings deficit (including currency translation) | (31,583) | (31,596) | (31,907) |
|
|
|
| |
| Total equity | (1,961) | (1,974) | (2,285) |
Consolidated Cash Flow Statement
for the six month period ended 30 June 2008
| Note | Unaudited 6 months ended30 June 2008 | Unaudited 6 months ended30 June 2007 | Audited Year ended31 December 2007 | |
| £000 | £000 | £000 | ||
| Cash flows from operating activities | ||||
| Profit/(loss) for the period | 305 | (131) | (475) | |
| Adjustments for: | ||||
| Depreciation | 109 | 163 | 325 | |
| Amortisation of intangible assets | 71 | 23 | 47 | |
| Financial income | (3) | (17) | (18) | |
| Financial expense | 120 | 162 | 388 | |
| Loss on sale of property, plant and equipment | 7 | 1 | - | |
| Gain on sale of business and assets | - | - | (971) | |
| Equity settled share-based payment expenses | 24 | 24 | 56 | |
| Income tax expense | - | - | (12) | |
|
|
|
| ||
| 633 | 225 | (660) | ||
| Change in trade and other receivables | (595) | 810 | 571 | |
| Change in inventories | (231) | (121) | 678 | |
| Change in trade and other payables | (30) | (781) | (367) | |
| Change in provisions | (11) | (47) | (110) | |
|
|
|
| ||
| Cash (outflow)/inflow from operations | (234) | 86 | 112 | |
| Interest received | 3 | 17 | 18 | |
| Interest paid | (129) | (191) | (343) | |
|
|
|
| ||
| Net cash outflow from operating activities | (360) | (88) | (213) | |
|
|
|
| ||
| Cash flows from investing activities | ||||
| Capitalised internal development expenditure | (142) | (11) | (37) | |
| Cash previously not available for use following business disposal in 2007 | 4 | 2,400 | - | - |
| Acquisition of property, plant and equipment | (26) | (84) | (129) | |
|
|
|
| ||
| Net cash inflow/(outflow) from investing activities | 2,232 | (95) | (166) | |
|
|
|
| ||
| Cash flows from financing activities | ||||
| Repayment of borrowings | (1,843) | - | - | |
| Payment of finance lease liabilities | (8) | (21) | (33) | |
|
|
|
| ||
| Net cash outflow from financing activities | (1,851) | (21) | (33) | |
|
|
|
| ||
| Net increase/(decrease) in cash and cash equivalents | 21 | (204) | (412) | |
| Cash and cash equivalents at start of period | (580) | (172) | (172) | |
| Effect of exchange rate fluctuations on cash held | - | - | 4 | |
|
|
|
| ||
| Cash and cash equivalents at end of period | (559) | (376) | (580) | |
|
|
|
| ||
| Cash and cash equivalent comprise: | ||||
| Cash and cash equivalents | 34 | 156 | 267 | |
| Bank overdraft | (593) | (532) | (847) | |
|
|
|
| ||
| (559) | (376) | (580) |
Notes
(forming part of the financial statements)
1. Basis of preparation
This interim statement, which is neither audited nor reviewed, has been prepared on the basis of the accounting policies set out in the Group's 2007 annual report. It does not comply with IAS 34 'Interim Financial Reporting' as is permissible under the rules of the AIM Market ("AIM").
The balance sheet at 31 December 2007 and the results for the year then ended do not constitute full financial statements within the meaning of s240 of the Companies Act 1985. The annual report is being filed with the Registrar of Companies; the auditors' opinion on the financial statements was unqualified and did not contain a statement under s237(2) or s237(3) of the Companies Act 1985.
2. Taxation
No provision for taxation has been made in the profit and loss account for the six months to 30 June 2008 based on the estimated tax provision required for the year ending 31 December 2008. No provision was required in the six months to 30 June 2007.
3. Earnings/(loss) per share
Basic earnings per share is calculated by dividing the profit/(loss) for the period attributable to the shareholders by the weighted average number of shares in issue. The calculation of diluted earnings per share assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options.
The calculation of earnings per share is based on the profit/(loss) for the period and on the weighted average number of ordinary shares outstanding in the period.
| Unaudited 6 months ended30 June 2008 | Unaudited 6 months ended30 June 2007 | Audited Year ended 31 December 2007 | |
| Earnings | |||
| Profit/(loss) for the period (£000) | 305 | (131) | (475) |
|
|
|
| |
| Number of shares | |||
| Weighted average number of ordinary shares ('000) | 636,706 | 636,706 | 636,706 |
|
|
|
|
Diluted earnings per share is identical to the basic earnings per share. In 2008 none of the share options are dilutive as the exercise prices are higher than the average market price of the shares. In 2007 any dilution would have reduced the loss per share and therefore the options are treated as non-dilutive.
4. Cash
Following the disposal of the UK software products business on 21 December 2007 an amount of £2,400,000 was held in a separate bank account not available to use by the Group.
This amount was excluded from cash and cash equivalents as disclosed in the cash flow statement for the year ended 31 December 2007 on the basis that it was not available for use at 31 December 2007. In the period ended 30 June 2008 £1,875,000 of these proceeds were used to reduce the bank loan.The £2,400,000 has been recognised as a cash inflow in the 2008 cash flow statement when it was released from escrow.
5. Interim results
These results were approved by the Board of Directors on 15 December 2008.
Copies of this interim statement will be sent to shareholders and will be available on the Company's website (www.petards.com) and from the Company's registered office at 390 Princesway, Team Valley, Gateshead, Tyne and Wear, NE11 0TU.