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RNS Number : 1423M
Petards Group PLC
13 September 2012
13 September 2012
PETARDS GROUP PLC
INTERIM RESULTS ANNOUNCEMENT
Petards Group plc ('Petards'), the AIM quoted developer of
advanced security and surveillance systems, reports its interim
results for the six months to 30 June 2012.
Highlights
-- Revenues of GBP4.7m (2011: GBP5.2m)
-- Gross margin 41.3% (2011: 40.5%)
-- Operating profit GBP51,000 (2011: GBP44,000)
-- Profit before tax GBP22,000 (2011: GBP5,000)
-- Basic and diluted earnings per share of 0.35p (2011: 0.08p)
-- Net cash inflow from operating activities of GBP0.9m (2011: GBP0.4m inflow)
-- Net debt of GBP0.8m (30 June 2011: GBP1.8m; 31 December 2011: GBP1.5m)
Commenting on the current outlook, Tim Wightman, Chairman,
said:
"Despite the current economic climate, the Board remains
optimistic about the future. The Group has demonstrated its ability
to secure significant contracts from blue chip international
organisations at a time when there is expected to be an increase in
capital investment by operators in the world-wide rail industry.
The Group is also maintaining its level of activity within
specialist niches of the defence and security industries. We were
also pleased that at the recent General Meeting a majority of
shareholders supported the Board by voting in favour of providing
an authority to raise additional equity, and this matter remains
under review.
In recent weeks we have secured some of the orders that we had
been expecting, although they will not now contribute as much to
2012 revenues as we had hoped. In addition other contracts we have
been expecting to receive in the third quarter now seem likely to
be delayed into 2013. As a result the Board presently expects
revenues in the second half year to be slightly ahead of those for
the first half year and the operating performance to be similar to
that achieved in 2011."
Contacts:
Petards Group plc www.petards.com
Andy Wonnacott, Finance Director +44 (0) 191 420 3000
WH Ireland Limited www.wh-ireland.co.uk
Mike Coe / Marc Davies +44 (0) 117 945 3470
Chairman's Statement
Overview of the Results
Petards Group plc is a developer of advanced security and
surveillance systems. It is a leading supplier to the rail
transport, security and defence industries for the supply of
ruggedized video and sensor surveillance systems for mobile
platforms as well as providing design and support services for
legacy systems.
The financial information contained within this interim report
is based upon the Group's unaudited results
for the six months to 30 June 2012.
While revenues for the first six months of 2012 were down over
10% on the comparable period in 2011 at GBP4.7m (2011: GBP5.2m),
profits were slightly ahead of the prior year. Profit before and
after tax for the period was GBP22,000 (2011: GBP5,000) and
earnings per share were 0.35p (2011: 0.08p).
The reduction in revenues was a reflection of a lower level of
contract deliveries of our eyeTrain products than in H1 2011.
However, we achieved an improvement in our overall gross margin to
41.3% over the period (2011: 40.5%) which together with a reduction
in overheads of over 9% to GBP1.9m (2011: GBP2.1m) gave rise to
these results. The lower overhead was a result of action taken in
the first half of 2011 and while we do not consider there to be
significant scope for any further reductions, overheads continue to
be closely monitored.
Our cash performance in the six months to 30 June 2012 was
exceptional with cash generated from operations totalling GBP0.8m
(2011: GBP0.4m). This reflected the beneficial effect of the net
cash flow profile of projects that were in progress at the half
year, which will unwind as those projects complete in the second
half year, and contributed to lower than anticipated net debt at 30
June 2012 of GBP0.8m (31 December 2011: GBP1.5m). The Group elected
to surrender losses relating to a prior year for a cash payment by
way of Research and Development Relief and a tax refund of GBP162k
was received during the period.
Operating Review
In the first half year the Group continued to make good progress
in marketing eyeTrain to a wider customer base which culminated in
July in the Group being awarded a multi-million pound contract to
supply Petards eyeTrain on-board digital CCTV systems to a new
customer. The contract is worth in the region of GBP8m and although
initial revenues have commenced, the main equipment deliveries are
scheduled to take place from 2014 onwards and to be completed by
2017. Consequently it will not contribute materially to revenues in
2012. However, by securing this order the Group has taken a major
step forward in its development and by demonstrating our expertise
in the delivery of this order it should open up further
opportunities for us to work with this and similar customers in the
future.
While the timescales for securing large projects within the rail
industry tend to be long, the present level of global investment in
major rail projects is very significant. Within the UK the large
number of franchise renewals taking place over the next two or
three years will lead to train refurbishment programmes which are
likely to include the upgrade of on-board systems such as those we
supply. These programmes are in addition to the new rolling stock
being introduced on the UK network that I outlined in my June
statement.
While Ministry of Defence (MOD) budgets remain tight, we were
pleased when in June the MOD exercised its option to extend the
Group's existing enabling contract to supply it with private mobile
radio equipment, ancillaries and engineering services. This
contract will now run until September 2014 and as well as supplying
commercially available equipment, the contract also utilises
Petards design engineering skills to identify and supply solutions
to complex military communications requirements.
Research and Development
During the period we invested GBP0.2m in product development
(2011: GBP0.1m) and net of amortisation, capitalised development
expenditure at 30 June 2012 remained at GBP0.6m (31 Dec 2011:
GBP0.6m).
I reported at the time of the 2011 full year results that the
pace at which the Company's product development programme can
progress is limited by the resources available to it, and as I
indicated in my letter to shareholders of 23 July 2012, any future
additional capital raised would be partly utilised to accelerate
our programme.
Outlook
Despite the current economic climate, the Board remains
optimistic about the future. The Group has demonstrated its ability
to secure significant contracts from blue chip international
organisations at a time when there is expected to be an increase in
capital investment by operators in the world-wide rail industry.
The Group is also maintaining its level of activity within
specialist niches of the defence and security industries. We were
also pleased that at the recent General Meeting a majority of
shareholders supported the Board by voting in favour of providing
an authority to raise additional equity, and this matter remains
under review.
In recent weeks we have secured some of the orders that we had
been expecting, although they will not now contribute as much to
2012 revenues as we had hoped. In addition other contracts we have
been expecting to receive in the third quarter now seem likely to
be delayed into 2013. As a result the Board presently expects
revenues in the second half year to be slightly ahead of those for
the first half year and the operating performance to be similar to
that achieved in 2011..
Tim Wightman
13 September 2012
Condensed Consolidated Income Statement
for the six months ended 30 June 2012
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
Note 2012 2011 2011
GBP000 GBP000 GBP000
Revenue 4,667 5,229 12,127
Cost of sales (2,741) (3,112) (7,706)
Gross profit 1,926 2,117 4,421
Administrative expenses (1,875) (2,073) (4,086)
Operating profit 51 44 335
Financial income - 27 -
Financial expenses (29) (66) (120)
Profit before income tax 22 5 215
Income tax 2 - - 97
Profit for the period attributable
to equity
holders of the company 22 5 312
Earnings per share
Basic and diluted 3 0.35p 0.08p 4.90p
The above results are derived from continuing operations.
Condensed Consolidated Statement of Comprehensive Income
for the six month period ended 30 June 2012
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP000 GBP000 GBP000
Profit for period 22 5 312
Other comprehensive income
Currency translation on foreign
currency net investments - 27 10
Total comprehensive income for
the period 22 32 322
Condensed Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2012
Currency
Share Share Retained translation Total
capital premium earnings differences equity
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January 2011
(audited) 6,367 23,255 (29,342) (224) 56
Profit for the period - - 5 - 5
Other comprehensive income - - - 27 27
Total comprehensive income
for the period - - 5 27 32
Equity-settled share based
payments - - 7 - 7
Capital reorganisation
costs - (25) - - (25)
Balance at 30 June 2011
(unaudited) 6,367 23,230 (29,330) (197) 70
Balance at 1 January 2011
(audited) 6,367 23,255 (29,342) (224) 56
Profit for the year - - 312 - 312
Other comprehensive income - - - 10 10
Total comprehensive income
for the year - - 312 10 322
Equity-settled share based
payments - - 14 - 14
Capital reorganisation
costs - (32) - - (32)
Balance at 31 December
2011 (audited) 6,367 23,223 (29,016) (214) 360
Balance at 1 January 2012
(audited) 6,367 23,223 (29,016) (214) 360
Profit for the period - - 22 - 22
Other comprehensive income - - - - -
Total comprehensive income
for the period - - 22 - 22
Equity-settled share based
payments - - 1 - 1
Balance at 30 June 2012
(unaudited) 6,367 23,223 (28,993) (214) 383
Condensed Consolidated Balance Sheet
at 30 June 2012
Unaudited Unaudited Audited
30 June 30 June 31 December
2012 2011 2011
ASSETS GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 192 149 155
Goodwill 401 401 401
Development costs 575 651 577
Deferred tax assets 669 790 842
1,837 1,991 1,975
Current assets
Inventories 823 1,030 1,237
Trade and other receivables 1,662 2,542 3,087
Cash and cash equivalents -
escrow deposits 77 - 77
Cash and cash equivalents 23 3 21
2,585 3,575 4,422
Total assets 4,422 5,566 6,397
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Share capital 6,367 6,367 6,367
Share premium 23,223 23,230 23,223
Currency translation reserve (214) (197) (214)
Retained earnings deficit (28,993) (29,330) (29,016)
Total equity 383 70 360
Non-current liabilities
Interest-bearing loans and
borrowings - 295 42
Deferred tax liabilities 132 189 144
132 484 186
Current liabilities
Interest-bearing loans and
borrowings 814 1,471 1,459
Trade and other payables 3,093 3,541 4,392
3,907 5,012 5,851
Total liabilities 4,039 5,496 6,037
Total equity and liabilities 4,422 5,566 6,397
Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2012
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period 22 5 312
Adjustments for:
Depreciation 33 45 73
Amortisation of intangible assets 158 155 325
Financial income - (27) -
Financial expense 29 66 120
Equity settled share-based payment expenses 1 7 14
Income tax credit - - (97)
Operating cash flows before movement in
working capital 243 251 747
Change in trade and other receivables 1,425 (134) (679)
Change in inventories 414 (119) (326)
Change in trade and other payables (1,299) 450 1,259
Cash generated from operations 783 448 1,001
Interest paid (29) (66) (125)
Income tax received 162 - -
Net cash from operating activities 916 382 876
Cash flows from investing activities
Acquisition of property, plant and equipment (70) (12) (46)
Capitalised development expenditure (156) (105) (201)
Cash deposits held in escrow - - (77)
Net cash outflow from investing activities (226) (117) (324)
Cash flows from financing activities
Capital reorganisation costs - (25) (32)
Repayment of bank borrowings (210) (250) (503)
Net cash outflow from financing activities (210) (275) (535)
Net increase/(decrease) in cash and cash
equivalents 480 (10) 17
Cash and cash equivalents at start of
period (933) (953) (953)
Effect of exchange rate fluctuations on
cash held (1) - 3
Cash and cash equivalents at end of period (454) (963) (933)
Cash and cash equivalents comprise:
Cash and cash equivalents per balance
sheet 23 3 21
Overdraft (477) (966) (954)
(454) (963) (933)
Notes
1 Basis of preparation
The interim financial information set out in this statement for
the six months ended 30 June 2012 and the comparative figures for
the six months ended 30 June 2011 are unaudited. This financial
information does not constitute statutory accounts as defined in
Section 435 of the Companies Act 2006.
The comparative figures for the financial year ended 31 December
2011 are not the Company's statutory accounts for that financial
year. Those accounts have been reported on by the Company's
auditors and delivered to the Registrar of Companies. The report of
the auditors was (i) unqualified, (ii) did not contain an emphasis
of matter paragraph, and (iii) did not contain a statement under
section 498(2) or (3) of the Companies Act 2006.
This interim statement, which is neither audited nor reviewed,
has been prepared in accordance with the measurement and
recognition criteria of Adopted IFRSs. It does not include all the
information required for the full annual financial statements, and
should be read in conjunction with the financial statements of the
Group as at and for the year ended 31 December 2011. It does not
comply with IAS 34 'Interim Financial Reporting' as is permissible
under the rules of the AIM Market ("AIM").
The accounting policies applied in preparing these interim
financial statements are the same as those applied in the
preparation of the annual financial statements for the year ended
31 December 2011, as described in those financial statements other
than standards, amendments and interpretations which became
effective after 1 January 2012 and were adopted by the Group. These
have had no significant impact on the Group's profit for the period
or equity. The Board approved these interim financial statements on
13 September 2012.
Copies of this interim statement will be available on the
Company's website (www.petards.com) and from the Company's
registered office at 390 Princesway, Team Valley, Gateshead, Tyne
and Wear, NE11 0TU.
2 Taxation
No provision for taxation has been made in the Condensed
Consolidated Income Statement for the six months to 30 June 2012
based on the estimated tax provision required for the year ending
31 December 2012. No provision was required in the six months to 30
June 2011.
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.
The calculation of earnings per share is based on the profit for
the period and on the weighted average number of ordinary shares
outstanding in the period.
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
Earnings
Profit for the period (GBP000) 22 5 312
Number of shares
Weighted average number of ordinary shares
('000) 6,367 6,367 6,367
Diluted earnings per share is identical to the basic earnings
per share. None of the share options are dilutive as the exercise
prices are higher than the average market price of the shares.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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