Last checked at 29 Sep 2008 07:00
29 September 2008
PENNANT INTERNATIONAL GROUP plc
Interim Results for the six months ended 30 June 2008
Pennant International Group plc ('Pennant' or 'the Company'), the AIM listed supplier of integrated logistic support solutions principally to the defence, rail, aerospace and naval markets, and products and services to a number of Government Departments, announces interim results for the 6 months ended 30 June 2008.
Commenting on the results, Chairman Christopher Powell said:
"I am pleased to report that the Group has remained profitable despite the adverse effects of the current economic climate. Importantly, the Group has continued to win new contracts which will provide good revenue streams going forward."
Highlights:
Turnover for the period of £5.4 million (2007: £6.5 million).
Gross margin increased to 37% (2007: 35%).
Operating profit of £108,000 (2007: £437,000).
Pre-tax profit of £55,000 (2007: £375,000).
Earnings per Share (basic) of 0.14 pence (2007: 1.10 pence).
Net Cash at period end of £48,000 (2007: Net Debt of £868,000).
Maintained Interim Dividend per Share of 0.22p (2007: 0.22p).
Major new contract award expected from DND in Canada worth up to C$15 million over 2-5 years.
Further contract renewals/extensions with DWP, HMRC, MoD (Type 45 Destroyer), BAE Systems (Hawk).
New OmegaPS licence sales to Alenia of Italy and Gentex Corporation of US.
On current trading and prospects, Mr. Powell added:
"Although current global economic conditions will continue to have an impact on trading, all operating divisions within the Group are well positioned to take advantage of opportunities as they arise.
"With a positive net cash position and a strong balance sheet, your Board remains confident for the future."
Enquiries:
Pennant International Group plc
Chris Snook, Chief Executive Tel: 01452 714881
W.H. Ireland
Katy Birkin Tel: 0121 265 6330
Winningtons Financial
Paul Vann / Tom Cooper Tel: 0117 920 0092
Chairman's Statement
I am pleased to report that the Group has remained profitable despite the adverse effects of the current global economic climate which, as highlighted in my statement in the 2007 Annual Report, has caused delays to the letting of contracts and pressure on budgets. Importantly, the Group has continued to win new long-term contracts which provide good revenue streams going forward. The Group's balance sheet remains strong and the cash position is positive.
Results and Dividend
Turnover for the period was £5.4million (June 2007: £6.5 million). The gross margin achieved was 37%, a 2% improvement over the first half of 2007. Operating profit was £108,000 (June 2007: £437,000) and earnings were £44,000 (June 2007: £345,000), equating to basic earnings per share of 0.14p (June 2007: 1.10p)
During the period, cash was absorbed into working capital as the result of the timing of certain milestone payments. Cash used in operating activities totalled £477,000, whilst net cash at the end of the period was £48,000 (June 2007: net debt of £868,000). Stage payments and a substantial software maintenance annual renewal payment due in the second half are expected to increase the net cash position by the year end.
Your Board is maintaining the interim cash dividend at 0.22p per share. The dividend will be paid on 7 November 2008 to shareholders on the register at close of business on 10 October 2008. The shares are expected to go ex-dividend on 8 October 2008. Current Trading
Joint Venture
Ongoing difficulties and delays at Airbus continue to adversely affect the joint venture with Sonovision-ITEP which made a loss of £31,000 in the period. Whilst these delays continue to affect performance, other sources of revenue are actively being pursued.
Outlook
Although global economic conditions are expected to continue to have an impact on trading, all operating divisions enjoy good relationships with customers and are well positioned to take advantage of opportunities as they arise from the Group's established pipeline of prospects.
With the foundation of a positive net cash position and a strong balance sheet your Board remains confident for the future.
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2008
| | Notes | Six months ended 30 June 2008 | Six months ended 30 June 2007 | Year ended 31 December 2007 |
| | | £ | £ | £ |
| Revenue | | 5,408,658 | 6,495,123 | 12,349,683 |
| Cost of sales | | (3,357,548) | (4,225,355) | (7,936,361) |
| | | | | |
| Gross profit | | 2,051,110 | 2,269,768 | 4,413,322 |
| | | | | |
| Administrative expenses | | (1,943,226) | (1,832,645) | (3,555,765) |
| Profit on sale of assets held for sale | | - | - | 375,997 |
| | | | | |
| Operating profit | | 107,884 | 437,123 | 1,233,554 |
| | | | | |
| Share of results of Joint Venture | | (31,611) | (20,720) | (33,070) |
| | | | | |
| | | 76,273 | 416,403 | 1,200,484 |
| | | | | |
| Finance costs | | (23,176) | (41,900) | (92,292) |
| Finance income | | 1,790 | 96 | 9,991 |
| | | | | |
| Profit before taxation | | 54,887 | 374,599 | 1,118,183 |
| | | | | |
| Taxation | 2 | (10,489) | (30,000) | (104,924) |
| | | | | |
| Profit for the period | | 44,398 | 344,599 | 1,013,259 |
| | | | | |
| Earnings per share | 3 | | | |
| Basic | | 0.14p | 1.10p | 3.23p |
| Diluted | | 0.13p | 1.02p | 3.02p |
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED BALANCE SHEET as at 30 June 2008
| | 30 June 2008 | 30 June 2007 | 31 December 2007 |
| | £ | £ | £ |
| Non-current assets | | | |
| Goodwill | 901,249 | 902,373 | 909,697 |
| Other intangible assets | 148,717 | 30,115 | 117,731 |
| Property plant and equ ipment | 1,987,525 | 2,102,094 | 2,051,477 |
| Interest in Joint Venture | 5,345 | 69,307 | 16,956 |
| Available-for-sale investments | 6,135 | 6,135 | 6,135 |
| Deferred tax asset | 19,430 | 12,966 | 19,629 |
| Total non-current assets | 3,068,401 | 3,122,990 | 3,121,625 |
| | | | |
| Current assets | | | |
| Inventories | 29,823 | 90,297 | 27,378 |
| Trade and other receivables | 3,644,223 | 3,986,080 | 3,161,595 |
| Cash and cash equivalents | 735,847 | 278,802 | 1,568,620 |
| Assets held for sale | - | 372,522 | - |
| Total current assets | 4,409,893 | 4,727,701 | 4,757,593 |
| | | | |
| Total assets | 7,478,294 | 7,850,691 | 7,879,218 |
| | | | |
| Current liabilities | | | |
| Trade and other payables | 1,412,218 | 1,771,168 | 1,445,520 |
| Current tax liabilities | 10,000 | 24,729 | 104,779 |
| Obligations under finance leases | 836 | 0 | 1,089 |
| Bank overdraft and loan | 156,725 | 454,134 | 147,559 |
| Deferred revenue | 383,086 | 351,393 | 414,838 |
| Total current liabilities | 1,962,865 | 2,601,424 | 2,113,785 |
| | | | |
| Net current assets | 2,447,028 | 2,126,277 | 2,643,808 |
| | | | |
| Non current liabilities | | | |
| Bank loan | 528,736 | 692,770 | 614,430 |
| Obligations under finance leases | 1,691 | 0 | 1,532 |
| Deferred tax liabilities | 32,000 | 32,000 | 32,000 |
| Deferred revenue | 12,890 | 2,598 | 25,781 |
| Total non-current liabilities | 575,317 | 727,368 | 673,743 |
| | | | |
| Total liabilities | 2,538,182 | 3,328,792 | 2,787,528 |
| | | | |
| Net assets | 4,940,112 | 4,521,899 | 5,091,690 |
| | | | |
| Equity | | | |
| Share capital | 1,600,000 | 1,600,000 | 1,600,000 |
| Share premium account | 3,582,329 | 3,582,329 | 3,582,329 |
| Retained earnings | (273,557) | (631,128) | (128,594) |
| Translation reserve | 31,340 | (29,302) | 37,955 |
| Total equity | 4,940,112 | 4,521,899 | 5,091,690 |
PENNANT INTERNATIONAL GROUP plc
CONSOLIDATED CASH FLOW STATEMENT for the six months ended 30 June 2008
| | Notes | Six months ended 30 June 2008 | Six months ended 30 June 2007 | Year ended 31 December 2007 |
| | | £ | £ | £ |
| Net cash (used in)/generated from operating activities | 4 | (477,070) | (502,715) | 563,799 |
| | | | | |
| Investing activities | | | | |
| Interest received | | 1,790 | 96 | 9,991 |
| Proceeds of sale of assets held for sale | | - | - | 748,519 |
| Proceeds from sale of property, plant and equipment | | 959 | - | - |
| Purchase of intangible assets | | (48,900) | (11,576) | (107,542) |
| Purchase of property plant and equipment | | (19,449) | (120,639) | (154,120) |
| Loan to Joint Venture | | (20,000) | (30,000) | 10,000 |
| Net cash used in investing activities | | (85,600) | (162,119) | 506,848 |
| | | | | |
| Financing activities | | | | |
| Dividends paid | | (134,143) | (125,828) | (194,098) |
| Transactions in own shares | | (61,218) | (117,975) | (176,225) |
| Repayment of borrowings | | (76,528) | (71,182) | (143,301) |
| Repayment of obligations under finance leases | | (94) | (2,798) | (177) |
| Increase in bank overdrafts | | - | 312,796 | - |
| Net cash used in financing activities | | (271,983) | (4,987) | (513,801) |
| | | | | |
| Net (decrease)/increase in cash and cash equivalents | | (834,653) | (669,821) | 556,846 |
| | | | | |
| Cash and cash equivalents at beginning of period | | 1,568,620 | 909,609 | 909,609 |
| | | | | |
| Effect of foreign exchange rates | | 1,880 | 39,014 | 102,165 |
| | | | | |
| Cash and cash equivalents at end of period | | 735,847 | 278,802 | 1,568,620 |
| | | | | |
PENNANT INTERNATIONAL GROUP plc
STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2008
| | Share capital | Share premium account | Retained earnings | Translation reserve | Total equity |
| | £ | £ | £ | £ | £ |
| At 1 January 2007 | 1,600,000 | 3,582,329 | (744,302) | (63,905) | 4,374,122 |
| Profit for the year | - | - | 1,013,259 | - | 1,013,259 |
| Dividends paid | - | - | (194,098) | - | (194,098) |
| Transactions in treasury shares | - | - | (176,225) | - | (176,225) |
| Share based payment | - | - | (27,228) | - | (27,228) |
| Currency translation differences on foreign currency net investments | - | - | - | 101,860 | 101,860 |
| At 31 December 2007 | 1,600,000 | 3,582,329 | (128,594) | 37,955 | 5,091,690 |
| Profit for the half year | - | - | 44,398 | - | 44,398 |
| Dividends paid | - | - | (134,143) | - | (134,143) |
| Transactions in treasury shares | - | - | (61,218) | - | (61,218) |
| Share based payment | - | - | 6,000 | - | 6,000 |
| Currency translation differences on foreign currency net investments | - | - | - | (6,615) | (6,615) |
| At 30 June 2008 | 1,600,000 | 3,582,329 | (273,557) | 31,340 | 4,940,112 |
NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2008
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 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.
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 2008.
3. Earnings per share
Basic earnings per share is 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 assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options.
| | Six months ended 30 June 2008 | Six months ended 30 June 2007 | Year ended 31 December 2007 |
| | £ | £ | £ |
| Earnings | | | |
| Net profit attributable to equity shareholders | 44,398 | 344,599 | 1,013,259 |
| | | | |
| Number of shares | | | |
| Weighted average number of ordinary shares | 30,769,156 | 31,426,167 | 31,349,821 |
| Number of dilutive shares under option | 2,250,000 | 2,247,500 | 2,230,000 |
| Weighted average number of ordinary shares for the purpose of dilutive earnings per share | 33,019,156 | 33,673,667 | 33,579,821 |
4. Cash (used in) /generated from operations
| | Six months ended 30 June 2008 | Six months ended 30 June 2007 | Year ended 31 December 2007 |
| | £ | £ | £ |
| Profit for the period | 44,398 | 344,599 | 1,013,259 |
| Share of results of Joint Venture | 31,611 | 20,720 | 33,070 |
| Finance income | (1,790) | (96) | (9,991) |
| Finance costs | 23,175 | 41,900 | 92,292 |
| Income tax expense | 10,489 | 30,000 | 104,924 |
| Share-based payment | 6,000 | 12,378 | (27,228) |
| Depreciation charge | 101,430 | 117,401 | 210,613 |
| Profit on sale of assets | (959) | - | (375,997) |
| | | | |
| Operating cash flows before movement in working capital | 214,354 | 566,902 | 1,040,942 |
| | | | |
| (Increase)/decrease in receivables | (482,628) | (1,191,946) | (367,319) |
| (Increase)/decrease in inventories | (2,445) | 22,642 | 85,561 |
| (Decrease)/increase in payables | (33,302) | 241,164 | (84,484) |
| (Decrease)/increase in deferred revenue | (44,643) | (41,927) | 44,701 |
| Cash (used in)/ generated from operations | (348,664) | (403,165) | 719,401 |
| | | | |
| Tax paid | (105,231) | (57,650) | (63,310) |
| Interest paid | (23,175) | (41,900) | (92,292) |
| | | | |
| Net cash (used in)/generated from operations | (477,070) | (502,715) | 563,799 |
Copies of this statement will be sent to shareholders and 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.