Petards Regulatory News (PEG)

28 Sep 2007 07:03

Petards Group PLC28 September 2007 28 September 2007 PETARDS GROUP PLC: INTERIM RESULTS Petards Group plc ('Petards'), the AIM quoted developer of advanced surveillancesystems, announces interim results for the six months to 30 June 2007, whichmark a return to operational profitability for the Group. These results havebeen restated under International Financial Reporting Standards (IFRS). Financial Highlights • Turnover of £10.3m (2006: £10.4m) • Gross profit of £4.2m (2006: £3.6m) • Operating profit of £31,000 (2006: £778,000 loss) • Loss before tax of £131,000 (2006: £926,000 loss) • Loss per share of 0.02p (2006: 0.15p loss) • Margins increased to 40% (2006: 35%) • Cash generation from operations of £103,000 (2006: £345,000) • Cash outflow, after interest, investing and financing activities of £204,000 (2006: £670,000) Other highlights • £2m contract to supply and install eyeTrainTM digital CCTV systems for Bombardier on 286 UK trains • Significant interest in new products: Forward facing train cameras and Automatic Passenger Counting • UVMSTM video recording orders won for 8 DLR stations and new Eurostar terminus at St Pancras Station • Electronics defence business still affected by diversion of defence spending - orders in Sept of c. £1m. • US sales up to £0.9m (2006: £0.3m) • UVMSTM installed with Casino customers and prospects of further customer expansion programmes Commenting on outlook, Tim Wightman, Chairman, said: "The growth in demand for security and surveillance systems remains strong,particularly in the US, but the Group is finding that its size and limitedcapital resources are constraining its ability to capitalise on theopportunities. As previously reported, the Board has been appraising thepotential to partner or combine with other businesses to create synergies andcritical mass. It is also considering the financial resources that would benecessary to enable it to fulfil its potential whilst remaining independent.This review has been proceeding well and I hope to report to you further on thisover the coming weeks. "Our on-board rail business, in which we have a leading market position hasreasonable forward visibility, but the timing of order placement for a number ofother significant order prospects, which have shorter lead-times, is uncertain.Whilst we will be able to execute these orders quickly once received, the fullbenefit will not now be realised until next year. This will mean that theoutcome for the current year will fall materially short of our previousexpectations." Contacts: Petards Group plc Parkgreen Communications Tim Wightman, Chairman Paul McManusAndy Wonnacott, Finance Director Tel: 020 7479 7933Tel: 01932 788 288 Mob: 07980 541 893 Email: paul.mcmanus@parkgreenmedia.com Chairman's Statement Petards Group plc announces interim results for the six months ended 30 June2007. The unaudited interim financial information represents the firstpublished financial information prepared on the basis of the recognition andmeasurement requirements of International Financial Reporting Standards '('IFRS') as adopted by the EU ('Adopted IFRS'). IFRS The Alternative Investment Market (AIM) rules require that the next annualconsolidated financial statements of the Group, for the year ending 31 December2007, be prepared in accordance with Adopted IFRS. This interim financial information has been prepared on the basis of therecognition and measurement requirements of Adopted IFRS as at 30 June 2007 thatare effective at 31 December 2007, the Group's first annual reporting date atwhich it is required to use Adopted IFRS. Based on these Adopted IFRS, thedirectors have applied the accounting policies, as set out in the restatementdocument referred to in note 1 of this interim financial information, which theyexpect to apply when the first annual IFRS financial statements are prepared forthe year ending 31 December 2007. However, the Adopted IFRS that will be effective (or available for earlyadoption) in the financial statements for the year ending 31 December 2007 arestill subject to change and to additional interpretations and therefore cannotbe determined with certainty. Accordingly, the accounting policies for thatannual period will be determined finally only when the annual financialstatements are prepared for the year ending 31 December 2007. Results The trading performance in the first half year gave rise to an operating profitof £31,000 (2006: £778,000 loss) on revenues of £10.3m (2006: £10.4m). Margins achieved in the period increased to 40% (2006: 35%) which issignificantly higher than those achieved in first half of 2006. Higher marginson new generation products first delivered last year and the operationalefficiencies arising from the reorganisation undertaken in June 2006 are amongstthe main reasons for this increase. The cash generated from operations was £103,000 (2006: £345,000). Afterinterest, investing, and financing activities, the total cash outflow for theperiod was £204,000 (2006: £670,000). Trading review I reported in June that the Group was well positioned to secure a number ofexciting opportunities within the rail industry for its on-board eyeTrainTMdigital CCTV systems. The first of these came to fruition in late July when wewere awarded the contract by Bombardier Transportation, worth in excess of £2m,for the supply and installation of eyeTrainTM systems that are to be fitted to286 "Networker" vehicles in the UK. These systems include a wireless videocapability that enables download of stored footage and viewing of images fromon-board cameras. Also, we were pleased that included within the scope ofsupply were our new forward facing cameras which are used to capture the viewfrom the driver's cab to assist in the investigation of trackside incidents. Forward facing cameras are one example of products we have developed thatintegrate into and utilise eyeTrain's recording capability. In addition,following the recent launch of our Automatic Passenger Counting (APC) system, wehave already received two orders for the supply of APC systems. Significantinterest is being shown in both of these new products which will help tomaintain our strong position in this market. The transport sector provides opportunities for Petards UVMSTM network videorecording systems which are well suited to the high camera densities at rail andmetro stations. Amongst the UVMS orders won during 2007 are those coveringeight stations on the Docklands Light Railway as well as one for a system at StPancras Station which is to be the new terminus for Eurostar. Our traditional ruggedised electronics defence business has continued to beaffected by the diversion of defence spending to address urgent operationalrequirements in Iraq and Afghanistan. Recently we have seen early signs thatsome funds are being released for projects in which we had expected toparticipate, with orders in September approaching £1m. Petards EIMC contributed £1m of revenues during its first four months in theGroup following its acquisition in March 2006, benefiting from a record orderbook and strong demand for its ANPR (Automatic Number Plate Recognition)cameras. However, order volumes for these cameras in 2007 have not been ashigh, albeit that we see good opportunities in the medium term as we developoverseas markets. Petards EIMC continues to be well regarded by customers forits innovative camera technologies and our new MiniHawk 2i ANPR camera andProVida Kestrel range of in-car cameras have generated interest and orders sincetheir launch this summer. Sales in the US are up on the same period last year at £0.9m (2006: £0.3m). Todate we have concentrated our efforts in the US on marketing and selling ourUVMSTM solutions. However, following interest from a number of customers, wehave started to market on a limited basis our ANPR cameras and solutions with aview to establishing reference sites that would provide a platform from whichthese to be sold in the US market. During the period UVMSTM systems have been installed, expanding the capabilityof two existing casino customers; and a number of smaller projects have alsobeen completed including a system monitoring car parks at Newark LibertyInternational Airport. While we are seeing strong interest in UVMSTM networkvideo recording systems from casino operators in particular, project timescalesare prone to slippage and can be difficult to predict. However, delivery leadtimes are short and we are well placed to secure a number of orders once theseprojects proceed. Our existing casino customers have planned expansionprogrammes and we are confident that we shall benefit from these in the future. Dividends The Board is not recommending the payment of a dividend. Board changes In August Terry Connolly FCA was appointed a non-executive director and I wouldlike to welcome him to the Board. Terry is a consultant specialising instrategic and corporate affairs and was previously Group Managing Director ofChrysalis where he was responsible for taking the company to a public listing. Outlook The growth in demand for security and surveillance systems remains strong,particularly in the US, but the Group is finding that its size and limitedcapital resources are constraining its ability to capitalise on theopportunities. As previously reported, the Board has been appraising thepotential to partner or combine with other businesses to create synergies andcritical mass. It is also considering the financial resources that would benecessary to enable it to fulfil its potential whilst remaining independent.This review has been proceeding well and I hope to report to you further on thisover the coming weeks. Our on-board rail business, in which we have a leading market position hasreasonable forward visibility, but the timing of order placement for a number ofother significant order prospects, which have shorter lead-times, is uncertain.Whilst we will be able to execute these orders quickly once received, the fullbenefit will not now be realised until next year. This will mean that theoutcome for the current year will fall materially short of our previousexpectations. Tim Wightman 27 September 2007 Consolidated Income Statementfor the six months ended 30 June 2007 Unaudited Unaudited Unaudited 6 months 6 months Year ended ended ended Note 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Revenue 10,294 10,422 23,235Cost of sales (6,143) (6,820) (14,839) Gross profit 4,151 3,602 8,396 Administrative expenses - reorganisation costs 6 - (419) (482)Administrative expenses - other (4,120) (3,961) (7,960)Administrative expenses - total (4,120) (4,380) (8,442) Operating profit /(loss) 31 (778) (46)Finance expenses (162) (148) (378) Loss before income tax (131) (926) (424)Income tax 4 - - (12) Loss for the period attributable to equityholders of the company (131) (926) (436) Loss per share - basic anddiluted 5 (0.02p) (0.15p) (0.07p) The above results are derived from continuing operations. Consolidated Statement of Changes in Equityfor the six month period ended 30 June 2007 Unaudited Unaudited Unaudited 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000 Loss for period (131) (926) (436)Currency translation on foreign currency netinvestments 2 - (3) Total recognised income and expense (129) (926) (436)Shares issued - 200 200Share based payments 24 19 44 Net decrease in total equity (105) (707) (195)Total deficit at start of period (1,916) (1,721) (1,721) Total deficit at end of period (2,021) (2,428) (1,916) Consolidated Balance Sheetat 30 June 2007 Unaudited Unaudited Unaudited 30 June 30 June 31 December 2007 2006 2006ASSETS £000 £000 £000Non-current assetsProperty, plant and equipment 755 889 836Intangible assets - goodwill 964 928 965Intangible assets - other 59 91 70Other investments, including derivatives - - 4Deferred tax assets 233 245 233 Total non-current assets 2,011 2,153 2,108 Current assetsInventories 2,466 2,997 2,345Trade and other receivables 3,691 4,383 4,501Cash and cash equivalents 156 26 502 Total current assets 6,313 7,406 7,348 Total assets 8,324 9,559 9,456 LIABILITIESNon-current liabilitiesInterest-bearing loans and borrowings (3,532) (3,651) (3,224)Derivatives (1) (15) -Provisions (49) - (121) Total non-current liabilities (3,582) (3,666) (3,345) Current liabilities Bank overdraft (532) (146) (674) Other interest-bearing loans and borrowings (520) (743) (816) Trade and other payables (5,711) (7,432) (6,537) Total current liabilities (6,763) (8,321) (8,027) Total liabilities (10,345) (11,987) (11,372) Net liabilities (2,021) (2,428) (1,916) Capital and reservesShare capital 6,367 6,367 6,367Share premium 23,255 23,255 23,255Reserves (31,643) (32,050) (31,538) Total deficit attributable to equity holders of thecompany (2,021) (2,428) (1,916) Consolidated Cash Flow Statementfor the six month period ended 30 June 2007 Unaudited Unaudited Unaudited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £000 £000 £000Cash flows from operating activitiesLoss for the period (131) (926) (436)Adjustments for:Depreciation 163 197 467Amortisation of intangible assets 23 179 202Finance expenses 162 148 378Loss/(gain) on sale of property, plant and equipment 1 - (4)Equity settled share-based payment expenses 24 19 44Income tax expense - - 12 Operating profit/(loss) before changes in working capital and provisions 242 (383) 663(Increase)/decrease in inventories (121) 214 871Decrease in trade and other receivables 810 249 168(Decrease)/increase in trade and other payables (781) 236 (829)(Decrease)/increase in provisions (47) 29 121 Cash inflow from operations 103 345 994Interest paid (191) (433) (633)Income tax received - - 70 Net cash (outflow)/inflow from operating activities (88) (88) 431 Cash flows from investing activitiesCapitalised internal development expenditure (11) - (2)Proceeds from sale of property, plant and equipment - - 6Acquisition of subsidiary, net of cash acquired - (187) (188)Acquisition of property, plant and equipment (84) (144) (364) Net cash outflow from investing activities (95) (331) (548) Cash flows from financing activitiesRepayment of borrowings - (222) (546)Payment of finance lease liabilities (21) (29) (59) Net cash outflow from financing activities (21) (251) (605) Net decrease in cash and cash equivalents (204) (670) (722)Cash and cash equivalents at start of period (172) 550 550 Cash and cash equivalents at end of period (376) (120) (172) Cash and cash equivalent comprise:Cash and cash equivalents 156 26 502Bank overdraft (532) (146) (674) (376) (120) (172) Notes(forming part of the financial statements) 1. Basis of preparation The AIM rules require that the next annual consolidated financial statements ofthe Group, for the year ending 31 December 2007, be prepared in accordance withInternational Financial Reporting Standards ('IFRS') adopted for use in the EU('Adopted IFRS'). The preparation of this financial information resulted in changes to theaccounting policies as compared with the most recent annual financial statementsprepared under previous United Kingdom Generally Accepted Accounting Practice ('UK GAAP'). The revised accounting policies have been applied to all periodspresented in this financial information. IFRS 1 - 'First Time Adoption of International Financial Reporting Standards'mandates that most IFRS are applied fully retrospectively, meaning that theopening balance sheet at 1 January 2006 is restated as if those accountingpolicies had always been applied. IFRS 1 permits companies to apply certainexemptions from the full requirements of IFRS during the transition. Details ofthe exemptions applied by the Group are outlined in the restatement documentreferred to below. A detailed review of the changes in our accounting policies and reconciliationsof our financial statements from UK GAAP to IFRS at key dates were published tothe London Stock Exchange on 28 September 2007 and are also available on theGroup's website at www.petards.com. 2. Accounting policies The accounting policies that the Group intend to apply to the year ending 31December 2007 are set out in the IFRS restatement document referred to in note1. Status of financial information The comparative figures for the year ended 31 December 2006 are not the Group'sstatutory financial statements for that year. Those financial statements, whichwere prepared under UK GAAP, have been reported on by the Group's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain statements under section 237(2) or (3) of theCompanies Act 1985. The interim information for the half years ended 30 June 2007 and 30 June 2006is unaudited. This information does not constitute statutory accounts withinthe meaning of the Companies Act 1985. In relation to the financial statementsfor the year ended 31 December 2006, the comparative information has beenextracted from an unaudited restatement of the financial information taken fromthe audited Group's statutory financial statements for that year details ofwhich are given in the IFRS restatement document referred to in note 1. Taxation No provision for taxation has been made in the profit and loss account for thesix months to 30 June 2007 based on the estimated tax provision required for theyear ending 31 December 2007. No provision was required in the six months to 30June 2006. Loss per share The calculation of earnings per share is based on the loss for the period and onthe weighted average number of ordinary shares outstanding in the period. Unaudited Unaudited Unaudited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Loss for the period (£000) (131) (926) (436)Weighted average number of ordinary shares ('000) 636,706 631,418 634,084Loss per share (0.02p) (0.15p) (0.07p) Diluted loss per share is identical to the basic loss per share as dilutivepotential shares are not treated as dilutive since they would reduce the lossper share. Reorganisation costs The reorganisation expenses in 2006 arose on the centralisation of the Group'sproduction, finance and administrative functions. Interim results These results were approved by the Board of Directors on 27 September 2007. Copies of the interim statement will be sent to shareholders. Further copieswill be available from the Company's registered office at Petards House, 8Windmill Business Village, Brooklands Close, Sunbury on Thames, Middlesex TW167DY for the next 14 days. 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