Pennant International Regulatory News (PEN)

6 Sep 2005 07:00

Pennant International Group PLC06 September 2005 PENNANT INTERNATIONAL GROUP PLC ANNOUNCEMENT OF INTERIM RESULTS CHAIRMAN'S STATEMENT Results for the first half are in line with expectations and the year to datehas seen a satisfactory order intake including the recent selection of PennantTraining Systems Limited by BAE Systems for a multi million pound contract todeliver a Computer Aided Learning System to a major customer. As the result of orders received and the rescheduling of previously delayedprogrammes, I am also pleased to report there will be an improvement in thesecond half which should see the Group achieving expectations for 2005 as awhole. RESULTS AND DIVIDEND Group profit on ordinary activities before taxation was £53,000 (June 2004:£279,000). This includes £17,000 being the Group's share of the profits of thejoint venture with Sonovision set up in February 2005. During the period there was a net cash outflow of £460,000 resulting from thefinancing of work in progress. However, this outflow is expected to be reversedin the second half and early in 2006. Net debt at 30 June 2005 was £769,000(June 2004:£930,000) representing gearing of 21% (June 2004: 23%). Basicearnings per share were 0.16p (June 2004: 0.87p). Your Board is declaring a maintained interim cash dividend of 0.13p per share(June 2004: 0.13p). The dividend will be paid on 18 November 2005 toshareholders on the register at the close of business on 21 October 2005. Theshares are expected to go ex dividend on 19 October 2005. STRATEGY Our strategy of concentrating on the core strengths of each of the Group'sbusinesses, finding new customers and working to capitalise on the goodrelationships with existing customers is beginning to prove successful. Thissuccess is manifested in positive ongoing discussions with potential newcustomers and a high level of tendering, particularly in the defence and railsectors. These discussions and the tendering activity have been in respect ofelements of work both for contracts already won by the prime contractors andalso in support of their tenders for longer term major prospects. CURRENT TRADING AND OPERATIONS Pennant Training Systems has traded profitably during the period and has had anumber of successes including: • selection for a multi million pound contract to deliver a Computer Aided Learning System to a major customer; • an extension, by one year with options for a further 2 one year extensions, of the MOD enabling contract that generates significant income from the support of the many Pennant Training devices in use throughout the UK; • the acceptance of two electronic classrooms supplied on time and to budget, as part of the Hawk Lead in Fighter Trainer programme for the South African Air Force. Production of computer based training (CBT) and emulation software continues into the first half of 2006. A follow on contract is expected to bring the training material up to the final technical standard of the aircraft; • a contract to provide additional courseware for the CBT system used by the Royal Australian Air Force for Hawk jet training; • selection, teamed with Carley Corporation, by Northrupp Grumman Corporation for a contract to provide CBT development support to the F-35 Joint Strike Fighter programme; • the award of a contract to supply an Air Weapons Procedures Trainer to an overseas air force. The computer based system will emulate weapons loading procedures on a variety of current aircraft; and • contracts to supply ten additional hand skill trainers to the Royal Air Force and to supply an upgrade to CBT for a Bridge Vehicle for the United States Army. The directors believe that Pennant Training Systems products and services arehighly regarded by end users and that its relationships with customers areexcellent. Technical Data Services has had major contract wins, principally in the railsector. Pennant Information Services Ltd was selected by Kawasaki HeavyIndustries Ltd to produce a full suite of maintenance manuals and trainingsupport in connection with the railcars for Taipei City and by Kawasaki RailCars Inc. to produce technical information manuals for the Boston Blue Linetrain system. It also received an order from Interfleet Technology Limited fortraining related to the Singapore Circle Line rail system. Other contracts won include two e-learning packages for the Department of Workand Pensions, the production of Flight Reference Cards for McAlpine Helicoptersand an extension to the training delivery contract from Powerfield Limited (aRolls Royce company) in support of their Field Electrical Power Sourceequipment. The business continues to be underpinned by sole source and enabling contractswith the MOD and a number of prime contractors Joint Venture - Pennant Sonovision -ITEP Ltd The joint venture's first period of trading, providing technical data servicesto Airbus, has been successful and profitable. Premises have been obtained inFilton, Bristol and the company is building its relationships with Airbus and UKsuppliers to Airbus. Software Services: Product sales have been made to new customers including:Qantas Defence Services, Australian Aerospace Ltd, Oerlikan Contraves AG,Rheinmetal Defence Electronics GmbH, Quorum Logistic Support Limited and BathIron Works (part of General Dynamic's naval operations). In Canada, Pennant continues to provide consultancy and support services inrespect of the use of OmegaPS products throughout the Department of NationalDefence (DND). In this regard a major support contract with DND has beenextended to September 2006 with options for 4 further years. In Australia, the new development of Pennant's OmegaPS, Publisher and Analysersoftware for the Australian Defence Organisation was accepted in March 2005.Since then further paid enhancements have been undertaken. The product will berolled out to Australian Defence Force establishments later in the year. Pennanthas a support contract generating revenues through until 2009. CONCLUSION The Group's performance in the first half has been in line with expectations andthe order intake has been satisfactory underpinning the second half of 2005 andinto 2006. We are working closely with both existing and new customers to securework for the medium term. The Group's cash position remains satisfactory and thebalance sheet is strong. These factors give your Board confidence for thefuture. Christopher PowellChairman Pennant International Group plc CONSOLIDATED PROFIT AND LOSS ACCOUNT Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 Notes £'000 £'000 £'000 Turnover Group and share of joint venture 5,298 6,368 11,551Less: Share of joint venture 2 (82) 0 0Group turnover 5,216 6,368 11,551 Cost of sales (3,138) (3,960) (7,333) Gross profit 2,078 2,408 4,218 Net operating expenses (2,000) (2,090) (4,035) Operating profit 78 318 183 Share of joint venture's operating profit 2 17 0 0 Profit on ordinary activities before interest 95 318 183 Interest (42) (39) (80) Profit on ordinary activities before taxation 53 279 103 Taxation 3 (3) 0 (2) Profit attributable to ordinary shareholders 50 279 101 Ordinary dividends declared (87) (128) (170) Amount transferred to reserves (37) 151 (69) Earnings per share 4 Basic 0.16p 0.87p 0.32pDiluted 0.14p 0.81p 0.29p Statement of Total RecognisedGains and LossesProfit for the period 50 279 101Currency translation differences on foreigncurrency net investments 24 (9) (56) 74 270 45 Pennant International Group plcSUMMARISED CONSOLIDATED BALANCE SHEET As At As at As at As at Note 30 June 30 June 30 June 31 Dec 2005 2005 2004 2004 £'000 £'000 £'000 £'000Fixed assets Intangible assets 966 1,132 1,060Tangible assets 2,598 2,745 2,671Investment in joint venture 2 Share of gross assets 86 Share of gross liabilities (67) 19 0 0Investments 6 6 6 3,589 3,883 3,737Current assets Stocks 631 844 511Debtors 2,457 2,671 1,720Cash at bank and in hand 355 314 815 3,443 3,829 3,046 Creditors: amounts falling due within one year (2,320) (2,601) (2,003) Net current assets 1,123 1,228 1,043 Total assets less current liabilities 4,712 5,111 4,780 Creditors: amounts falling due after more than one year (995) (1,114) (1,050) Provisions for liabilities and charges 0 0 0 3,717 3,997 3,730 Called up share capital and share premium account 6,609 6,609 6,609Reserves (2,892) (2,612) (2,879) Shareholders' funds 3,717 3,997 3,730 Pennant International Group plcCONSOLIDATED GROUP CASH FLOW Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 Notes £'000 £'000 £'000 Cash flow from operating activities (208) (705) (8)Returns on investment and servicing of finance (42) (39) (79)Taxation (38) 0 (19)Capital expenditure (31) (198) (222)Investment in joint venture 2 (5) 0 0Equity dividends (87) (128) (170) Cash Outflow before Financing (411) (1,070) (498) Financing Issue of ordinary share capital 0 0 0 Other financing (49) (582) (652) Decrease in net cash (460) (1,652) (1,150) Reconciliation of net cash flow to movement in net debt Decrease in net cash (460) (1,652) (1,150)Cash to repurchase debt 49 582 652New loans and hire purchase contracts 0 0 0 Movement in net debt in period (411) (1,070) (498) Net debt at beginning of period (358) 140 140Net debt at end of period (769) (930) (358) Reconciliation of operating profit to cash flow fromoperating activities Operating profit 78 318 183Depreciation 106 82 191Amortisation of intangible assets 101 125 207Profit on sale of fixed assets (1) 0 (11)(Increase)/decrease in work in progress and debtors (857) (796) 482Increase/(decrease) in creditors 349 (442) (1,011)Other movements 16 8 (49) (208) (705) (8) Pennant International Group plcNotes to Interim Statement 1. 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 2004 annual report and financial statements, revised to incorporate the provisions of FRS21. As a result the ordinary dividends noted in the consolidated profit and loss account are those declared in the respective periods. The balance sheet at 31 December 2004 and the results for the year then ended have been abridged from the Group's annual report and financial statements which has been filed with the Registrar of Companies: the auditors' opinion on the financial statements was unqualified. 2. On 14 February 2005 the Group invested £5000 to acquire 50% of the ordinary shares of Pennant Sonovision ITEP Limited a joint venture company. The investment has been accounted for using the gross equity basis. The consolidated profit and loss account includes the Group's share of the profits of the joint venture while the Group's share of the gross assets and gross liabilities is shown in the consolidated balance sheet. 3. The taxation charge relates to the Group's share of the profits of the joint venture. There is no charge in respect of the profits of the Group as no charge is expected for the full year. 4. The calculation of earnings per share is based on the profit attributable to the shareholders and the weighted average number of shares as set out below: Six months Six months Year ended ended ended 30 June 30 June 31 Dec 2005 2004 2004 £ £ £ Profit attributable to shareholders 50,000 279,000 101,000 Number Number NumberBasic weighted average number of shares 32,000,000 32,000,000 32,000,000 Employee share options 2,844,500 2,385,500 2,564,500 Diluted weighted average number of shares 34,844,500 34,385,500 34,564,500 p/share p/share p/shareBasic 0.16 0.87 0.32Diluted 0.14 0.81 0.29 This announcement is being circulated to all shareholders of the Company andcopies will be available to the public at the Company's Registered Office atPennant Court, Staverton Technology Park, Cheltenham GL51 6TL For further information contact: Christopher Snook, Chief Executive, Pennant International Group Plc on 01452 714 914 Barrie Newton, Rowan Dartington & Co, Limited on 0117 933 0011 This information is provided by RNS The company news service from the London Stock Exchange