Petards Regulatory News (PEG)

7 Dec 2005 08:35

Petards Group PLC07 December 2005 7 December 2005 The Petards Group PLC Interim Results released today are for the six months ended 30 June 2005 and not as originally shown. All other details remain unchanged. PETARDS GROUP PLC: INTERIM RESULTS Petards Group plc ('Petards'), the AIM quoted developer of advanced surveillancesystems, announces interim results for the six months ended 30 June 2005, aperiod in which the company made a small operating profit. Financial Highlights • Revenue up 23% to £13.0m (2004: £10.3m) • Gross profit up 9% to £4.3m (2004: £3.9m) • Operating profit of £272,000 (2004: £1,340,000 loss) • Loss before tax of £68,000 (2004: £1,156,000 loss) • Loss per share of 0.01 pence (2004: 1.77 pence loss) • Significantly improved balance sheet and debt position • No dividend Other highlights • Turnover increase relates to defence orders won in 2004 including countermeasure systems for the MoD and the design and build of control systems of the Challenger 2 tank • £1.64m acquisition of PI Vision, a leader in scaleable networked digital video recording systems • £5.6m worth of orders for on-board CCTV systems for trains - majority of sales will fall in 2006 • First sales of COFDM version of the Swift rapid deployment camera • First significant orders received for the new Provida product range Commenting on outlook, Tim Wightman, Chairman, said: "The markets in which the Group operates provide significant opportunities. Therecent terrorist events in London have further highlighted to governmentagencies at home and abroad the critical role that advanced security andsurveillance systems can play in tackling such threats. The Group has made goodprogress over recent months. However, it is taking longer than we expected toovercome the effect of its past difficulties within some of our markets. "I reported in May that the performance of the Group in the second half woulddepend upon our ability to convert opportunities into orders and then deliverthem before the year end. In the event, while we have been successful insecuring a number of orders and establishing our strong position in the marketswe serve, many are not deliverable before the year end. We therefore expect theoutcome for the year to be a considerable improvement over prior years, but tofall short of market expectations. The Board is confident, however, that withthe current strong order book, the momentum of improvement in profitability willbe maintained in 2006. "The Board continues to seek to enhance shareholder value. The Directors, withour advisors, are undertaking a strategic review of all of the options availableto enable the Group to maximise its many strengths." Contacts: Petards Group plc Binns & Co PR Ltd David Hayes, Chief Executive Paul McManusAndy Wonnacott, Finance Director Tel: 020 7786 9600Tel: 01932 788 288 Mob: 07980 541 893 CHAIRMAN'S STATEMENT Results I am pleased to report that following the actions taken by the Board, the Groupmade a small operating profit for the six months ended 30 June 2005. The trading performance in the first half year showed a significant improvementover the prior year. Turnover for the six months to 30 June 2005 increased 23%to £13.0m (2004: £10.6m). The majority of this increase related to the defenceorders won in 2004, including countermeasure dispensing systems for the UK MOD,and the design and build of control systems for the Challenger 2 tank. Gross profit grew by 9% to £4.3m (2004: £3.9m). Margins were diluted by theincreased turnover from the defence contracts referred to above, and the overallgross margin achieved for the period was 33% (2004: 36%). The benefit of the action taken at the end of last year to consolidate theGroup's operations on to two sites has been seen in the first half. Inaddition, in the first quarter of 2005, management implemented a number ofoperational improvements at its Gateshead site, which resulted in a reduction inthe headcount. The associated redundancy costs of £76,000 have been borne withinadministrative expenses. Total administrative expenses, before exceptionalitems, were £4.0m, 19% lower than last year (2004: £5.0m). The operating profit for the period was £272,000, compared with an operatingloss of £1,340,000 incurred in 2004. After net finance charges of £340,000(2004: £88,000 credit) the loss before tax for the period was £68,000 (2004:£1,156,000 loss). The loss per share was 0.01 pence (2004: 1.77 pence loss). Operations The Group has continued to make progress against its objectives. Since the lastyear end the Group has strengthened its position within its public landtransportation market, winning a number of significant orders totalling £5.6m.These are with Alstom for West Coast Main Line operated by Virgin Trains, FirstGroup for ScotRail and Wabtec for London Eastern Railways. These contracts willutilise the new technology that has been developed to increase the functionalityof the Group's existing product range for on-board CCTV systems for use ontrains. While there are some deliveries in 2005, the majority of the sales fromthese contracts will fall in 2006. Following the purchase of the business of PI Vision Limited and PI Vision Inc(together "PI Vision") on 8 August, the Group has started to realise the benefitof the synergies from this acquisition. Further details of the businessacquired and consideration payable are set out below under post balance sheetevents. The UK operations of PI Vision have been relocated to our Sunbury siteand the Group now has a US base from which it can begin to exploit thesignificant opportunities that the North American market offers. Theacquisition will enable us to cross-sell our Advantage suite of software intonew markets and into the many valuable reference sites that PI Visionestablished. Order intake since acquisition has been encouraging and includes a$1.4m order to supply hardware and UVMSTM software to a new casino in the US. During the first half the Group made it's first sales of the COFDM version ofits Swift rapid deployment camera that was launched in the final quarter of2004. In addition, the first significant orders have been received for some ofthe new Provida product that we have introduced. We are continuing to developthe market leading Provida range and will be commencing sales of the Provida500, which utilises our PolicePilot technology for speed detection, in early2006. We have successfully completed an order for our new traffic management productfor use in vehicle surveillance, journey-time analysis and fully automated buslane enforcement and are now seeking other opportunities with customers toexploit this software. We have also increased the level of software maintenancecontracts albeit at a slower rate than we had originally anticipated. Balance sheet The Group's balance sheet was significantly strengthened following the raisingof additional net equity of £5.1m, approved by shareholders at an ExtraordinaryGeneral Meeting held on 24 January 2005. At that time the Group also enteredinto a new £5m five-year term loan and a £1m working capital facility with itsbankers, Bank of Scotland. Consequently, while Group continues to have netliabilities, the profile of the Group's balance sheet and debt has significantlyimproved. Net current assets at 30 June 2005 were £1.2m compared with netcurrent liabilities of £7.9m at 31 December 2004. Borrowings at 30 June 2005were £3.1m (Dec 2004: £7.4m) net of cash balances held of £2.0m (Dec 2004:£0.2m). Cash flow The operating cash outflow for the period was £432,000 (2004: £3,338,000outflow), which included an outflow of £341,000 for the balance of costsrelating to the fundamental reorganisation undertaken in 2004. The net inflow from financing activities was £9.0m, which included the netproceeds from the equity fund raising and the replacement of overdraftborrowings with a term loan. Post balance sheet events As reported above, on 8 August 2005 the Group acquired the business and certainassets of PI Vision Limited and PI Vision Inc for a maximum total considerationof £1.64 million. We have paid an initial cash consideration of £470,000. Afurther cash amount of up to £170,000 will be paid, conditional upon securingcertain orders in 2005. In 2006 an amount is payable equal to the sum by whichPI Vision's Gross Profit exceeds £1.6 million in the twelve months following itsacquisition, and depending upon the amount payable in 2006, a furtherconditional sum may be payable in 2007. The payments to be made in 2006 and2007 cannot exceed £1 million in aggregate and are payable, at the vendors'option, either all in cash or cash and up to 50% in new Petards shares at theprevailing market price. PI Vision's Universal Video Management System ("UVMSTM") was introduced in 2004,and is a leading software in scaleable networked digital video recordingsystems. It features advanced IP and analogue camera recording, distributedarchitecture, camera mapping and image replay functions which form the backboneto new or existing CCTV systems. UVMSTM will integrate closely with Petards'Advantage.Net command and control software for complex CCTV installations andprovide extended functionality. It also provides the opportunity for Petards toaccess the rapidly growing network video recording market. We believe that theUVMSTM product has the potential to become a leading industry platform. Theacquisition confirms the Board's stated intention of reinforcing ourtechnologies in core areas. Dividends The Board is not recommending the payment of a dividend. Outlook The markets in which the Group operates provide significant opportunities. Therecent terrorist events in London have further highlighted to governmentagencies at home and abroad the critical role that advanced security andsurveillance systems can play in tackling such threats. The Group has made goodprogress over recent months. However, it is taking longer than we expected toovercome the effect of its past difficulties within some of our markets. I reported in May that the performance of the Group in the second half woulddepend upon our ability to convert opportunities into orders and then deliverthem before the year end. In the event, while we have been successful insecuring a number of orders and establishing our strong position in the marketswe serve, many are not deliverable before the year end. We therefore expect theoutcome for the year to be a considerable improvement over prior years, but tofall short of market expectations. The Board is confident, however, that withthe current strong order book, the momentum of improvement in profitability willbe maintained in 2006. The Board continues to seek to enhance shareholder value. The Directors, withour advisors, are undertaking a strategic review of all of the options availableto enable the Group to maximise its many strengths. Tim Wightman 6 December 2005 Group Summary Profit and Loss Account Restated (see note 6) Unaudited Unaudited Audited 6 months ended 30 6 months ended 30 Year ended 31 June 2005 June 2004 December 2004 Note £'000 £'000 £'000 Turnover Continuing operations 13,003 10,593 22,162Discontinued operations - 443 443 13,003 11,036 22,605 Cost of sales 2 (8,723) (7,111) (16,153) Gross profit 4,280 3,925 6,452 Administrative expenses (3,996) (4,962) (9,350)Exceptional items - (289) (402)Goodwill amortisation (12) (14) (25) Total administrative expenses 2 (4,008) (5,265) (9,777) Operating profit / (loss)Continuing operations 2 272 (1,287) (3,272)Discontinued operations 2 - (53) (53)Total operating profit / (loss) 272 (1,340) (3,325) Profit on disposal of discontinued - 702 702operationsCosts of fundamental reorganisation - (606) (724) Profit / (loss) on ordinary activities 272 (1,244) (3,347)before interest Net interest payable and similar charges (340) (206) (517)Other interest receivable and similar - 294 294income Loss on ordinary activities before (68) (1,156) (3,570)taxation Taxation on loss on ordinary activities - - - Loss for the period (68) (1,156) (3,570) Loss per share - basic and diluted (pence) 4 (0.01) (1.77) (5.46) Group Balance Sheet Restated (see note 6) Unaudited Unaudited Audited as at as at as at 30 June 2005 30 June 2004 31 December 2004 £'000 £'000 £'000 Fixed assetsIntangible assets 353 375 365Tangible assets 961 795 969 1,314 1,170 1,334Current assetsStocks 2,372 4,483 3,539Trade debtors 3,788 4,441 3,649Other debtors 712 43 928Cash at bank 2,019 1 249 8,891 8,968 8,365Creditors: amounts falling due within one yearBank overdraft and loans (1,000) (8,306) (7,593)Other creditors (6,673) (5,888) (8,685) Net current assets / (liabilities) 1,218 (5,226) (7,913) Total assets less current liabilities 2,532 (4,056) (6,579) Creditors: amounts falling due after more than one year (4,096) (66) (25) Net liabilities (1,564) (4,122) (6,604) Capital and reservesCalled up share capital 6,224 654 654Share premium account 23,198 23,660 23,660Profit and loss deficit (30,986) (28,436) (30,918) Equity shareholders' deficit (1,564) (4,122) (6,604) Group Cash Flow Unaudited Unaudited Audited 6 months ended 6 months ended Year ended 31 December 30 June 2005 30 June 2004 2004 £'000 £'000 £'000 Net cash outflow from operating activities (432) (3,338) (1,819) Net cash (outflow)/inflow from returns on (212) 88 (223)investments and servicing of finance Taxation - - - Net cash outflow from capital expenditure (184) (102) (444) Net cash inflow from disposals - 658 835 Net cash outflow before financing (828) (2,694) (1,651) Net cash inflow / (outflow) from financing:Issue of equity shares net of expenses 5,108 - -Net receipts from loans 3,820 - -Net increase / (decrease) in finance leases 44 (42) (114) Increase / (decrease) in cash in the period 8,144 (2,736) (1,765) Notes 1. Non Statutory Accounts The interim results which are unaudited, have been prepared in accordance withapplicable United Kingdom Accounting Standards using accounting policiesconsistent with those set out in the accounts for the year ended 31 December2004. These statements do not constitute financial statements within the meaning ofsection 240 of the Companies Act 1985. These statements have not been audited.No financial statements will be filed for the six months ended 30 June 2005. The financial information for the year ended 31 December 2004 has been extractedfrom the revised statutory accounts for that period, which are being filed withthe Registrar of Companies. The auditors' report on those accounts wasunqualified and did not contain any statement under section 237(2) or (3) of theCompanies Act 1985. 2. Group Summary Profit and Loss Account All operations are continuing as at 30 June 2005. At 30 June 2004 and 31December 2004 the analysis of continuing and discontinued activities was asfollows: Unaudited Audited 6 months ended 30 June 2004 Year ended 31 Dec 2004 Cont'ing Discont'd Cont'ing Discont'd £'000 £'000 £'000 Turnover 10,593 443 22,162 443Cost of sales (6,793) (318) (15,835) (318) _______ ______ ______ _______Gross profit 3,800 125 6,327 125Total administrative expenses (5,087) (178) (9,599) (178) _______ ______ ______ _______Operating loss (1,287) (53) (3,272) (53) 3. Taxation No provision for taxation has been made in the profit and loss account for thesix months to 30 June 2005. No provision was required in the six months to 30June 2004. 4. Loss per share The calculation of the basic loss per share is based on the loss for the periodon ordinary activities after taxation of £68,000 (2004: loss £1,156,000) dividedby the weighted average number of ordinary 1p shares of 540,299,162 (2004:65,420,479). 5. Recognised gains and losses There were no recognised gains or losses in the period other than the loss forthe six months to 30 June 2005. Other recognised gains and losses in priorperiods related to currency translation on foreign current net investmentsamounting to a gain of £48,000 in the six months to 30 June 2004, and a loss of£21,000 in the year to 31 December 2004. 6. Prior period adjustment The prior period adjustment relates to fundamental errors arising as a result ofa breakdown in accounting controls at one of the company's subsidiaryundertakings, Petards Joyce-Loebl Limited. Those errors concerned theaccounting for costs incurred on long-term contracts, and the recording of workin progress and advance payments from customers over a number of years. The June 2004 comparative figures have also been restated to reflect areclassification of a non-operating exceptional item for that period, whichrelated to the costs of the fundamental reorganisation of the business. The prior period adjustment and reclassification of the non operatingexceptional item have the following impact on the profit and loss account forthe 6 months ended 30 June 2004: As previously reported Prior period As restated adjustment £'000 £'000 £'000 Turnover 10,985 51 11,036Cost of sales (6,848) (263) (7,111) Gross profit 4,137 (212) 3,925Exceptional items (895) 606 (289)Other administrative expenses (4,976) - (4,976) Operating loss (1,734) 394 (1,340) Profit on disposal of discontinued operations 702 - 702Costs of fundamental reorganisation - (606) (606)Net interest receivable 88 - 88 Loss before taxation (944) (212) (1,156) The prior period adjustment impacts the following 2004 balance sheet captions: As Prior previously period reported adjustment As restated £'000 £'000 £'000 Stocks 6,780 (2,297) 4,483Debtors 4,796 (312) 4,484Creditors due within one year (11,366) (2,828) (14,194) Net current assets / (liabilities) 210 (5,437) (5,227) 7. Further copies 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. Audit Committee Report The Audit Committee consists of the Non-Executive Deputy Chairman, Mr IanTaylor; the Non-Executive Chairman, Mr Tim Wightman; and the Non-ExecutiveDirector, Mr Tim Sulivan. It reviews the Group's financial controls, accountingpolicies and financial reporting. The Audit Committee has reviewed the unaudited interim financial statements andis satisfied that they have been prepared using accounting policies consistentwith those adopted by Petards Group plc in its financial statements for the yearended 31 December 2004. The Committee in the course of its review has notbecome aware of any material modifications that should be made to the interimfinancial statements as presented. This information is provided by RNS The company news service from the London Stock Exchange