Last checked at 8 Sep 2014 07:00
8 September 2014
Pennant International Group plc
Interim Results for the six months ended 30 June 2014
A good half-year performance producing strong cash generation and increased margins;
Pennant International Group plc ("Pennant" or "the Group"), the AIM quoted supplier of integrated logistic support solutions, products and services, principally to the defence, rail, aerospace and naval sectors and to Government Departments, announce Interim Results for the six months ended 30 June 2014.
Commenting on the Group's performance, Chairman Christopher Powell said:
"I am pleased to report another period of good profits and cash flow and an increase in the interim dividend declared. During the period all trading divisions were profitable, a number of tenders for significant packages of work were submitted and solid progress was made on all of our existing major contracts"
Highlights: Financial
· Group revenues for the period of £9.6million (2013: £9.8million);
· Profit before tax of £1.18million (2013: £1.14million);
· Profit for the period attributable to shareholders of £0.91million (2013: £0.87million);
· Basic earnings per share of 3.47p (2013: 3.31p);
· Cash generated from operations of £1.4million (2013: £0.55million expended)
· Net cash at period end of £1.9million (2013: £1.2million); Nil borrowings;
· Interim dividend declared of 0.9p per share (2013: 0.8p)
Highlights: Operational
· New contract with value of approx £1.3million for supply of ab-initio training aids to Oman Military Training College;
· Successful delivery and installation of two maintenance trainers for AW159 Wildcat under contract with Agusta Westland;
· Good progress towards renewal of contract with Canadian Department of National Defence for OmegaPS software suite with potential value of CAD 20million over 5 years;
· Continuing work on major contract with BAE Systems Australia Limited to supply and support a suite of training aids for Australian Defence Force;
On current trading and prospects, Mr. Powell added:
"The pipeline is active and there has been significant on-going dialogue with a broad spread of potential customers on a number of significant opportunities, particularly in the defence and rail sectors. The Group's good customer relationships and strong balance sheet provide a firm position from which to continue to build and realise opportunities as they arise."
Enquiries:
Pennant International Group plc Tel: 01452 714914
Chris Snook, Chief Executive
John Waller, Finance Director
www.pennantplc.co.uk
Winningtons Financial Tel: 0117 985 8989
Paul Vann/Tom Cooper Mob: 07768 807631
WH Ireland Tel: 0117 945 3470
Mike Coe
Pennant International Group plc
Interim Report for the six months ended 30 June 2014
Chairman's Statement
I am pleased to report another period of good profits and cash flow and an increase in the interim dividend.
During the period all trading divisions were profitable, we submitted a number of tenders for significant packages of work and made solid progress on all our existing major contracts.
Results and dividend
Revenues for the period were £9.6 million (Interim 2013: £9.8m). Operating margins improved to 12.35% (interim 2013: 11.6%) giving operating profits of £1.18 million (Interim 2013: £1.14 million). Profit for the period after tax was £914,277 (Interim 2013: £874,049). Basic earnings per share rose to 3.47p (Interim 2013: 3.31p).
Cash generated from operations was £1.4 million (Interim 2013: cash used £0.55 million). The cash balance at the end of the period was £1.9 million (Interim 2013: £ 1.2 million).
Your Board is declaring a 12.5% increase in the interim dividend to 0.9p per share (Interim 2013: 0.8p) .The interim dividend will be paid on 3 October 2014 to shareholders on the register at close of business on 19 September 2014. The ex- dividend date is expected to be 17 September 2014.
Highlights
· A new contract with a value of approximately £1.3 million for the supply of ab -initio training aids to the Oman Military Training College.
· Successful delivery and installation of two maintenance trainers for the AW159 Wildcat helicopter under a contract with Agusta Westland. Negotiation is at an advanced stage for an additional contract with a value of £1.7 million to update the trainers to the latest specification of the helicopter.
· Positive progress towards the renewal of the contract with the Canadian Department of National Defence (DND) to maximise the use of Pennant's OmegaPS suite of software within the DND to manage the through-life costs of complex assets. The existing contract has been extended while negotiations continue. The new contract is expected to have a potential value of approximately CAD 20 million over 5 years.
· Continued successful progress on the major contract with BAE Systems Australia Limited to supply and support a suite of training aids for the Australian Defence Force. During the period the focus has been on in-country support, delivery of media for inclusion in computer aided instruction modules, and the manufacture of two Generic Flying Controls Trainers (Genfly) and two Integrated Avionics Maintenance Trainers for delivery in 2015.
· Sales of new licences for the use of the Group's Integrated Logistic Support Software product, OmegaPS, to a number of customers world-wide.
Outlook
The pipeline is active and there has been significant on-going dialogue with a broad spread of potential customers on a number of significant opportunities particularly in the defence and rail sectors. While the timing of these opportunities is generally outside our control, the Group's good relationships with its customers and its strong balance sheet provide a firm position from which to build and realise the opportunities as they arise.
C C PowellChairman
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2014
Notes | Six months ended 30 June 2014 | Six months ended 30 June 2013 | Year ended 31 December 2013 | |
Unaudited | Unaudited | Audited | ||
£ | £ | £ | ||
Revenue | 9,574,431 | 9,827,811 | 18,676,969 | |
Cost of sales | (6,076,492) | (6,532,155) | (12,226,023) | |
Gross profit | 3,497,939 | 3,295,656 | 6,450,946 | |
Administrative expenses | (2,315,806) | (2,152,635) | (4,195,236) | |
Operating profit | 1,182,133 | 1,143,021 | 2,255,710 | |
Finance costs | (5,922) | (5,181) | (11,733) | |
Finance income | 2,066 | 2,209 | 2,651 | |
Profit before taxation | 1,178,277 | 1,140,049 | 2,246,628 | |
Taxation | 2 | (264,000) | (266,000) | (550,830) |
Profit for the period | 914,277 | 874,049 | 1,695,798 | |
Earnings per share | 3 | |||
Basic | 3.47p | 3.31p | 6.43p | |
Diluted | 3.41p | 3.27p | 6.33p |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2014
Six months ended 30 June 2014 | Six months ended 30 June 2013 | Year ended 31 December 2013 | ||
Unaudited | Unaudited | Audited | ||
£ | £ | £ | ||
Profit attributable to equity holders of the parent |
914,277 |
874,049 |
1,695,798 | |
Other comprehensive income: | ||||
Exchange differences on translation of foreign operations |
(22,947) |
1,251 |
(189,217) | |
Comprehensive income attributable to equity holders of the parent |
891,330 |
875,300 |
1,506,581 |
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2014
30 June 2014 | 30 June 2013 | 31 December 2013 | |
Unaudited | Unaudited | Audited | |
£ | £ | £ | |
Non-current assets | |||
Goodwill | 952,315 | 970,735 | 946,749 |
Other intangible assets | 127,289 | 93,087 | 128.174 |
Property plant and equipment | 1,926,365 | 1,831,311 | 1,910,187 |
Available-for-sale investments | 3,700 | 3,700 | 3,700 |
Deferred tax asset | 34,186 | 36,392 | 33,490 |
Total non-current assets | 3,043,855 | 2,935,225 | 3,022,300 |
Current assets | |||
Inventories | 4,000 | 13,340 | 4,000 |
Trade and other receivables | 5,251,638 | 5,797,189 | 5,750,546 |
Cash and cash equivalents | 1,886,979 | 1,171,500 | 1,156,950 |
Total current assets | 7,142,617 | 6,982,029 | 6,911,496 |
Total assets | 10,186,472 | 9,917,254 | 9,933,796 |
Current liabilities | |||
Trade and other payables | 2,794,846 | 3,013,127 | 3,010,744 |
Current tax liabilities | 302,467 | 593,652 | 243,930 |
Obligations under finance leases | 6,548 | 4,418 | 8,171 |
Deferred revenue | 282,418 | 319,236 | 326,116 |
Total current liabilities | 3,386,279 | 3,930,433 | 3,588,961 |
Net current assets | 3,756,338 | 3,051,596 | 3,322,535 |
Non current liabilities | |||
Obligations under finance leases | 37,069 | 47,567 | 36,229 |
Deferred revenue | - | 5,470 | - |
Deferred tax liabilities | 126,854 | 110,340 | 121,866 |
Total non-current liabilities | 163,923 | 163,377 | 158,095 |
Total liabilities | 3,550,202 | 4,093,810 | 3,747,056 |
Net assets | 6,636,270 | 5,823,444 | 6,186,740 |
Equity | |||
Share capital | 1,401,400 | 1,400,000 | 1,400,000 |
Share premium | 5,600 | - | - |
Capital redemption reserve | 200,000 | 200,000 | 200,000 |
Treasury shares | (459,288) | (390,382) | (459,288) |
Retained earnings | 5,363,114 | 4,274,967 | 4,897,637 |
Translation reserve | 125,444 | 338,859 | 148,391 |
Total equity | 6,636,270 | 5,823,444 | 6,186,740 |
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 June 2014
Notes | Six months ended 30 June 2014 | Six months ended 30 June 2013 | Year ended 31 December 2013 | |
Unaudited | Unaudited | Audited | ||
£ | £ | £ | ||
Net cash generated from/(used in) operating activities | 4 |
1,411,072 |
(549,950) |
165,319 |
Investing activities | ||||
Interest received | 2,066 | 2,209 | 2,651 | |
Proceeds of sale of property, plant and equipment | - | 1,000 | 1,000 | |
Purchase of intangible assets | (41,271) | (22,310) | (94,603) | |
Purchase of property plant and equipment | (144,388) | (108,253) | (298,089) | |
Net cash used in investing activities | (183,593) | (127,354) | (389,041) | |
Financing activities | ||||
Proceeds from issue of 'B' shares | 7,000 | - | - | |
Dividends paid | (473,800) | (369,797) | (581,110) | |
Purchase of own shares for treasury | - | - | (68,906) | |
Proceeds of sale of treasury shares | - | 4,125 | 4,125 | |
Net (repayment of)/funds from obligations under finance leases | (783) | 22,782 | 15,197 | |
Net cash used in financing activities | (467,583) | (342,890) | (630,694) | |
Net increase/(decrease) in cash and cash equivalents |
759,896 |
(1,020,194) |
(854,416) | |
Cash and cash equivalents at beginning of period | 1,156,950 | 2,173,237 | 2,173,237 | |
Effect of foreign exchange rates | (29,867) | 18,457 | (161,871) | |
Cash and cash equivalents at end of period |
1,886,979 |
1,171,500 |
1,156,950 |
PENNANT INTERNATIONAL GROUP plc
STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2014
Share capital | Share premium | Capital redemption reserve | Treasury shares | Retained earnings | Translation reserve | Total equity | |
£ | £ | £ | £ | £ | £ | £ | |
At 1 January 2013 | 1,400,000 | - | 200,000 | (402,690) | 3,771,398 | 337,608 | 5,306,316 |
Total comprehensive income for the year | - | - | - | - | 1,695,798 | (189,217) | 1,506,581 |
Recognition of share based payment | - | - | - | - | 19,734 | - | 19,734 |
Purchase of own shares for treasury | - | - | - | (68,906) | - | - | (68,906) |
Sale of treasury shares to satisfy share options | - | - | - | 4,125 | - | - | 4,125 |
Loss on sale of treasury shares transferred to retained earnings | - | - | - | 8,183 | (8,183) | - | - |
Dividends paid | - | - | - | - | (581,110) | - | (581,110) |
At 31 December 2013 | 1,400,000 | - | 200,000 | (459,288) | 4,897,637 | 148,391 | 6,186,740 |
Issue of 'B' shares | 1,400 | 5,600 | - | - | - | - | 7,000 |
Total comprehensive income for the half year | - | - | - | - | 914,277 | (22,947) | 891,330 |
Recognition of share based payment | - | - | - | - | 25,000 | - | 25,000 |
Dividends paid | - | - | - | - | (473,800) | - | (473,800) |
At 30 June 2014 | 1,401,400 | 5,600 | 200,000 | (459,288) | 5,363,114 | 125,444 | 6,636,270 |
PENNANT INTERNATIONAL GROUP plc
NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2014
1. Basis of preparation
This condensed set of financial statements has been prepared using accounting policies expected to be adopted for the year ending 31 December 2014. These are anticipated to be consistent with those applied in the Group's latest annual audited financial statements for the year ended 31 December 2013. These accounting policies are drawn up in accordance with International Accounting Standards and International Financial Reporting Standards as issued by the International Accounting Standards Board and adopted by the EU.
The comparative figures for the year ended 31 December 2013 set out in this Interim Report are not statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or s498(3) of the Companies Act 2006.
AIM-listed companies are not required to comply with IAS34 'Interim Financial Reporting' and the company has taken advantage of this exemption.
2. Taxation
The taxation charge for the period is based on the estimated rate of tax that is likely to be effective for the full year to 31 December 2014.
3. Earnings per share
Basic earnings per share are calculated by dividing the profit for the period attributable to the shareholders by the weighted average number of shares in issue. The calculation of diluted earnings per share takes into account the potentially diluting effect of share options.
Six months ended 30 June 2014 | Six months ended 30 June 2013 | Year ended 31 December 2013 | |
£ | £ | £ | |
Earnings | |||
Net profit attributable to equity shareholders |
914,277 |
874,049 |
1,695,798 |
Number of shares | Number | Number | Number |
Weighted average number of ordinary shares |
26,322,261 |
26,389,136 |
26,382,834 |
Diluting effect of share options | 488,956 | 316,443 | 391,185 |
Weighted average number of ordinary shares for the purpose of dilutive earnings per share |
26,811,217 |
26,705,579 |
26,774,019 |
4. Cash generated from operations
Six months ended 30 June 2014 | Six months ended 30 June 2013 | Year ended 31 December 2013 | |
£ | £ | £ | |
Profit for the period | 914,277 | 874,049 | 1,695,798 |
Finance income | (2,066) | (2,209) | (2,651) |
Finance costs | 5,922 | 5,181 | 11,733 |
Income tax expense | 264,000 | 266,000 | 550,830 |
Depreciation of property, plant and equipment | 129,131 | 96,399 | 206,098 |
Amortisation of other intangible assets | 41,881 | 34,345 | 71,269 |
Profit on disposal of property, plant and equipment | - | (435) | (435) |
Share-based payment | 25,000 | 7,500 | 19,734 |
Operating cash flows before movement in working capital | 1,378,145 | 1,280,830 | 2,552,376 |
Decrease/(increase) in receivables | 498,908 | (1,878,452) | (1,831,809) |
Decrease in inventories | - | - | 9,340 |
(Decrease)/increase in payables | (215,898) | 137,437 | 135,054 |
Decrease in deferred revenue | (43,698) | (28,561) | (27,151) |
Cash generated from/(used in) operations |
1,617,457 |
(488,746) |
837,810 |
Tax paid | (200,463) | (56,023) | (660,758) |
Interest paid | (5,922) | (5,181) | (11,733) |
Net cash generated from/(used in) operations |
1,411,072 |
(549,950) |
165,319 |
5. Copies of this statement
Copies of this statement will be available on the Group's website (www.pennantplc.co.uk) and from Pennant International Group plc, Pennant Court, Staverton Technology Park, Cheltenham, GL51 6TL.