Pennant International Regulatory News (PEN)

6 Sep 2006 07:01

Pennant International Group PLC06 September 2006 Pennant International Group plcInterim results for the six months ended 30 June 2006 Profit before tax, EPS and Dividend up; Gearing down; Pennant International Group plc ("Pennant" or the "Company"), the AIM listedsupplier of technology solutions to the defence and industrial sectors,including simulation and training systems, technical data services and datamanagement systems, announces Interim Results for the six months ended 30 June2006. In his Statement to shareholders, Chairman Christopher Powell said: "Pennant is pleased to announce a substantial increase in profit before tax. Alloperating divisions were profitable, the order book is strong and there are goodprospects for the medium term" Highlights: • Group profit before tax up to £322,000 (2005: £25,000).• Earnings per share (basic) up 600% to 0.96p (2005: 0.16p)• Increased interim dividend of 0.20p per share (2005: 0.13p).• Strong cash generation with net debt down to £233,000; Gearing further reduced to 5% (2005: 21%) at period end.• Completion of sale of Southampton freehold site expected shortly, generating profit of £300,000• Consolidation of market position in naval defence sector; significant short to medium term prospects in the international rail market. On current trading and prospects, Mr Powell added: "The Board is pleased and encouraged with progress during the period andcontinues to position Pennant to take further advantage of the potential in itscurrent markets including its recent entry into the naval sector. The balancesheet is strong and relationships with major customers are excellent, bringinggood prospects of new and repeat business for the future. For further information contact: Pennant International Group plc Tel: 01452 714881Chris Snook, Chief ExecutiveJohn Waller, Finance Director W.H. Ireland Tel: 0121 616 2101Tim Cofman Winningtons Financial Tel: 0117 920 0092 or 07768 807631Paul Vann Pennant International Group PlcInterim results for the period ended 30 June 2006 6 September 2006 CHAIRMAN'S STATEMENT Pennant International Group plc ('Pennant') is pleased to announce a substantialincrease in profit before tax compared with the corresponding period last yearTurnover increased by 11% and net operating expenses fell 14%. All operatingdivisions were profitable, cash flow was positive, the order book is strong andthere are good prospects for the medium term. The proposed interim dividendrepresents an increase of 53% over 2005. RESULTS AND DIVIDEND On group turnover of £5.78 million, profit on ordinary activities beforetaxation amounted to £322,000 (June 2005: £25,000). Basic earnings per share rose to 0.96p (June 2005: 0.16p) During the period cash generated from operations was £327,000 (June 2005: cashabsorbed was £208,000). Net debt reduced to £223,000 (June 2005: £769,000) withgearing at the period-end standing at 5% (June 2005: 21%) Your Board is declaring an increased interim cash dividend of 0.20p per share(June 2005: 0.13p). The dividend will be paid on 20 October 2006 to shareholderson the register at the close of business on 29 September 2006. The shares areexpected to go ex dividend on 27 September 2006. This increased dividendreflects your Board's confidence in the future. CURRENT TRADING AND PROSPECTS Current trading in Pennant's traditional markets has been strong. In addition,Pennant has secured significant work in the naval sector where previously it hadlimited presence. The forward order book gives a firm foundation for 2007 andbeyond. The UK Defence Industrial Strategy has confirmed new "platform" opportunitiesfor the near future in Pennant's existing and recently entered markets in air,land and sea. Pennant also has opportunities for work in significant overseasprogrammes where new "platforms" are being acquired in the defence and railtransportation markets. Joint Venture Company (Pennant Sonovision -ITEP Ltd) The financial performance of our Joint Venture Company, engaged in the provisionof technical documentation and engineering services to Airbus UK Limited, wasaffected by delays to the Airbus A380 programme. Trading is expected to improveduring the second half. OTHER FINACIAL MATTERS Sale of Southampton Property As reported in my last statement to shareholders, in February 2006 Pennantexchanged conditional contracts for the sale of property in Southampton. Thesale is conditional upon the purchaser being able to obtain planning permissionwithin nine months of the date of exchange. The purchaser registered a planningapplication on 28 June 2006 and a decision from the planning authority isexpected in the near future. If, as expected, the transaction is completed itwill realise a profit of approximately £300,000 and a cash inflow ofapproximately £700,000. Cancellation of Deferred Shares The cancellation of the deferred shares in accordance with the specialresolution passed at the AGM on 4 May 2006 has been confirmed by the High Court.It is expected that the conditions attaching to the confirmation will besatisfied in the second half and as a result the distributable reserves of theCompany will be increased by £1,445,400 at the year end. CONCLUSION The Board is pleased and encouraged with progress during the period andcontinues to position Pennant to take further advantage of the potential in itscurrent markets including its recent entry into the naval sector. The balancesheet is strong and relationships with major customers are excellent bringingfurther prospects of new and repeat business for the future. C C PowellChairman6 September 2006 Pennant International Group plcCONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2006 2005 2005 Notes (Restated) (Restated) £'000 £'000 £'000TurnoverGroup and share of joint venture 5,867 5,298 10,785Less: Share of joint venture (85) (82) (223)Group turnover 5,782 5,216 10,562 Cost of sales (3,641) (3,138) (6,165) Gross profit 2,141 2,078 4,397 Net operating expenses (1,742) (2,028) (3,900) Group operating profit 399 50 497 Share of joint venture's operating profit (35) 17 5Profit on ordinary activities before 364 67 502interest Interest - Group (38) (42) (86) - Joint Venture (4) - (1) Profit on ordinary activities beforetaxation 322 25 415 Taxation 3 (18) (3) (26) Profit on ordinary activities aftertaxation for group and its share of JointVenture attributable to members of the 304 22 389parent undertaking Earnings per share 4Basic 0.96p 0.16p 1.22pDiluted 0.89p 0.14p 1.12p Group Statement of Total RecognisedGains and LossesProfit for the period 304 22 389Currency translation differences on foreigncurrency net investments (19) 24 35 Total recognized gains and losses relating 285 46 424to the periodPrior year adjustment - - 86 285 46 510 Pennant International Group plcSUMMARISED CONSOLIDATED BALANCE SHEET As at As at As at 30 June 30 June 31 Dec Note 2006 2005 2005 (Restated) (Restated) £'000 £'000 £'000Fixed assetsIntangible assets 830 966 857Tangible assets 2,566 2,598 2,562Investment in joint venture Share of gross assets 86 155 Share of gross liabilities (67) (148) - 19 7Investments 6 6 6 3,402 3,589 3,432Current assetsStocks 640 631 751Debtors 2,406 2,457 2,345Cash at bank and in hand 1,136 770 940 4,182 3,858 4,036 Creditors: amounts falling due within one year (2,517) (2,735) (2,521) Net current assets 1,665 1,123 1,515 Total assets less current liabilities 5067 4,712 4,947 Creditors:amounts falling due after more than one year (848) (995) (920) Interest in net liabilities of joint venture Share of gross assets 145 Share of gross liabilities (177) (32) - -Provisions for liabilities and charges - deferred tax (8) - (16) 4,179 3,717 4,011 Called up share capital 1,600 3,045 3,045Share premium 3,564 3,564 3,564Special reserve 1,445 - -Reserves (2,430) (2,892) (2,598) Shareholders' funds 5 4,179 3,717 4,011 Pennant International Group plcCONSOLIDATED GROUP CASH FLOW Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000 Cash inflow/(outflow) from operating activities 327 (208) 484Returns on investment and servicing of finance (38) (42) (86)Taxation (26) (38) (32)Capital expenditure (99) (31) (71)Investment in joint venture - (5) (5) Equity dividends (98) (87) (128)Cash inflow/(outflow) before financing 66 (411) 162 Financing Repayment of loan and hire purchase (74) (49) (129) Transactions in Treasury Shares (27) - (50) Decrease in net cash (35) (460) (17) Reconciliation of net cash flow to movement in net debt Decrease in net cash (35) (460) (17)Cash to repurchase debt 74 49 129New loans and hire purchase contracts - - (16) Movement in net debt in period 39 (411) 96 Net debt at beginning of period (262) (358) (358)Net debt at end of period (223) (769) (262) Reconciliation of operating profit to cash flow fromoperating activities Operating profit 399 50 497Depreciation 94 106 202Amortisation of intangible assets 27 101 203Profit on sale of fixed assets - (1) (3)Increase in work in progress and debtors (30) (857) (867)Increase/(decrease) in creditors (153) 349 385Other movements (10) 44 67 327 (208) 484 Pennant International Group plcNotes to Interim Statement 1. This interim statement, which is neither audited nor reviewed, hasbeen prepared on the basis of the accounting policies set out in the Group's2005 annual report with the exception of the policy in respect ofshare-based payments. The group will implement the requirements of FRS20 in the 2006 Financial Statements, and this standard has accordingly been adopted in this Interim Statement with the comparative figures restated. This change in accounting policy has resulted in a pre-tax charge of £8000 for the six months ended 30 June 2006, £28000 for the six months ended 30 June 2005 and £36000 for the year ended 31 December 2005. Share-based payments accounting policy: In accordance with FRS 20 'Share - based payment', the Groupreflects the economic cost of awarding shares and share options to employeesby recording an expense in the profit and loss account equal to thefair value of the benefit awarded; fair value being estimated by an independent third party using a proprietary binomial probability model.The expense is recognised in the income statement over the vesting period of theaward. 2. The balance sheet at 31 December 2005 and the results for the yearthen ended have been abridged from the financial statements in the Group'sAnnual Report subject only to re-statement for share-based paymentsexplained in 1. above. They do not constitute full financial statementswithin the meaning of s240 of the Companies Act 1985. The Annual Report has been 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. 3. The taxation charge for the period is based on the estimated rate oftax that is likely to be effective for the full year to 31 December 2006. 4. The calculation of earnings per share is based on the profitattributable to the shareholders and the weighted average number ofshares as set out below: Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2006 2005 2005 (Restated) (Restated) £ £ £ Profit attributable to shareholders 304,000 22,000 389,000 Number Number NumberBasic weighted average number of shares 31,557,786 32,000,000 31,971,463 Employee share options 2,757,500 2,844,500 2,777,500 Diluted weighted average number of shares 34,315,286 34,844,500 34,748,963 per share per share per shareBasic 0.96 0.07 1.22Diluted 0.89 0.06 1.12 5. Movements in Shareholders' Funds in the period were as follows: Share Share premium Profit and Special capital loss account reserve Total £'000 £'000 £'000 £'000 £'000 At 1 January 2006 (Restated) 3,045 3,564 (2,598) 0 4,011Profit for the period 304 304Translation differences on foreigncurrency net investments (19) (19)Transactions in Treasury Shares (27) (27)Share-based payments 8 8Dividends (98) (98)Cancellation of Deferred Shares (1,445) 1,445 0(see below)At 30 June 2006 1,600 3,564 (2,430) 1,445 4,179 At the AGM of the Company on 4 May 2006 the shareholders agreed byspecial resolution to reduce the share capital of the Company by thecancellation of all the Deferred Shares of 15p each in the capital of theCompany. The special resolution was confirmed by the High Court of JusticeChancery Division on 14 June 2006 and registered with the Registrar ofCompanies on 22 June 2006. The High Court required that a sum equalto the amount of the reduction in share capital, £1,445,400, be transferred to a non-distributable Special Reserve. The Company is entitled to release the Special Reserve upon transferring to a blocked trust bank account a sum equal to the amount of the non-consenting creditors of the Company who were (a) creditors of the Company on 14 June 2006 and (b) creditors of the Company at the date of the release ('Relevant Creditors') Such trust bank account to be used solely for discharging the claims of the relevant creditors. The Directors expect to be able to treat the Special Reserve as a distributable reserve in the balance sheet at 31 December 2006 and all Relevant Creditors will be discharged by thatdate. 6. This announcement is being circulated to all shareholders of theCompany and copies will be available to the public at the Company's RegisteredOffice at Pennant Court, Staverton Technology Park, Cheltenham GL51 6TL This information is provided by RNS The company news service from the London Stock Exchange