TIDMPEG
RNS Number : 6709Q
Petards Group PLC
03 September 2014
3 September 2014
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 2014.
Key points:
-- Operational
o Order book remains in excess of GBP20 million giving strong
position for the second half 2014 and future years.
-- Approximately one third of order book is scheduled for
delivery in the second half of 2014
-- Orders secured in first half of 2014 included;
-- Over GBP1.5 million for Petards eyeTrain CCTV systems from
Siemens for new super high-speed trains it is building for the
Turkish State Railway. This was the first order placed under a
framework agreement signed with Siemens in June 2014 for thesupply
ofPetards train related products and services.
-- Over GBP4.5 million for modification programme relating to
countermeasures equipment for the MOD.
-- Financial
o Results for the six months to 30 June 2014
-- Revenues up 101% to GBP7.2 million (2013: GBP3.6 million)
-- Gross margin 27% (2013: 40%), a reflection of higher defence
equipment supplies
-- EBITDA GBP441,000 profit (2013: GBP158,000 loss before
exceptionals)
-- Operating profit GBP346,000 (2013: GBP299,000 loss)
-- Profit after tax GBP273,000 (2013: GBP338,000 loss)
o Finance
-- Cash inflow from operating activities GBP181,000 (2013:
GBP1,029,000 outflow)
-- Cash at 30 June 2014 GBP1.5 million (31 Dec 2013: GBP1.4
million) and no bank debt
-- Basic EPS of 0.79p per share (2013: 3.11p loss per share)
-- Diluted EPS of 0.62p per share (2013: 3.11p loss per
share)
Commenting on the current outlook, Raschid Abdullah, Chairman,
said:
"The second half of 2014 has started well and the Group
continues to trade profitably. The Group's overall order book is in
excess of GBP20 million of which over one third is expected to be
delivered before the end of the current year.
There continues to be opportunities for development and growth
in all of our current product areas and we expect customers to be
placing orders on a number of projects in the coming months which
we believe we are well placed to secure.
The Board is confident about the Group's prospects for the
second half and beyond as whilst there is still work to be done
this year in closing out new business, the present order book
already provides a strong base going forward into 2015."
Contacts:
Petards Group plc www.petards.com
Raschid Abdullah, Chairman Mb: 07768 905004
Andy Wonnacott, Finance Director Tel: 0191 420 3000
WH Ireland Limited, Nomad and www.wh-ireland.co.uk
Joint Broker
Mike Coe, Ed Allsopp Tel: 0117 945 3470
Hybridan LLP, Joint Broker www.hybridan.com
Claire Louise Noyce Tel: 020 3713 4581
claire.noyce@hybridan.com
Chairman's Statement
Corporate Overview
I am pleased to report that having entered the year with a
strong order book the Group has produced a much improved trading
performance in the six months ended 30 June 2014. Revenues totalled
GBP7.2 million and the pre-tax profit was GBP273,000. In addition
the Group has secured a number of significant contracts within both
the rail and defence industries and has a strong order book.
The financing transactions completed in the latter part of 2013
coupled with positive cash flows on the larger projects currently
flowing through the business have put the Company in a much
stronger position with no bank debt and cash balances of GBP1.5
million as at 30 June 2014.
Operating Review
The Group continued to make progress on a number of fronts with
the award of some key projects during the period.
Petards' strategic position within the new train build market
was strengthened with a five year framework agreement being entered
into with Siemens' rail vehicle business to supply Petards train
related products and services. The first order under that agreement
was placed to supply Petards eyeTrain on-board digital CCTV systems
for the new super high-speed Velaro type trains that Siemens are
building for the Turkish State Railway.
The project is currently worth in excess of GBP1.5 million and
has the potential to increase in size over time providing that
Siemens is successful in winning additional train orders from the
Turkish State Railway which has announced plans to procure up to a
further 90 high speed trains.
The UK rail market offers a number of near term order
opportunities for Petards eyeTrain systems for fitment onto new
build trains for rolling stock for which orders have been placed on
train builders already and for rolling stock for which orders are
expected to be placed soon. Also as previously anticipated, enquiry
levels for retrofit applications are increasing as a result of the
letting of new franchises to UK train operators.
The contract awarded at the end of June, worth over GBP4.5
million, by the Ministry of Defence ("MOD") to modify
countermeasures equipment fitted to many of its aircraft will
contribute to revenues in 2014 and the two following years. This
programme will replace obsolete components within ALE-47 Threat
Adaptive Countermeasure Dispensing System (TACDS) Programmers which
form part of the integrated Defensive Aids Suite installed on a
variety of aircraft. We are hopeful that some other smaller
countermeasures projects will be approved in the second half of the
year.
Petards has been the long standing operator of an MOD enabling
contract to supply it with private mobile radio equipment,
ancillaries and engineering services and the Group's expertise in
this field was recognised when it was awarded the GBP7 million
Secure Management Radio Equipment ("SMRE") project in 2013. We were
therefore extremely pleased to have learned yesterday that Petards
has been awarded, subject to contract, the new enabling contract
that commences later this month. Revenues from this new two year
contract are estimated to be similar to those under the previous
contract which were in excess of GBP0.5 million per annum and the
MOD have the option to extend the contract by up to a further two
years.
Trading in our Emergency Services products remained similar to
that for the equivalent period in 2013 and continues to make a
small but positive contribution to the Group's profitability.
Consideration is presently being given to how the Group's business
in this area could be enhanced through product development.
Our 'Fit 4 Growth' programme is on-going and is now focused on
the continuous improvement and development of our businesses. To
support this programme and our current business levels of activity,
additional resources have been recruited but operating costs will
continue to be closely monitored to ensure they remain in step with
both revenues and margins.
Overview of the Results
Group revenues for the six months ended 30 June 2014 of GBP7.2
million were double the GBP3.6 million achieved in the equivalent
period last year and were almost 15% higher than the total revenues
for the prior year (2013: GBP6.3 million). Equipment deliveries for
the SMRE project accounted for a substantial proportion of this
growth, although revenues from both equipment and one-off
engineering services provided to Bombardier, Siemens and Hyundai
Rotem were also notable contributors.
In line with our expectations, gross margins were down to 27%
(June 2013: 40%). While margins on our different product lines were
generally maintained, the main cause of the reduction in the margin
percentage was the mix of business compared with that of 2013. In
particular, the SMRE project had a significant effect due to its
high material cost content as did some of the one-off rail
engineering services which were competitively priced in order to
gain market position for potential future equipment orders from
those customers.
Administrative expenses totalled GBP1.6 million (June 2013:
GBP1.7 million) and after net financial expenses of GBP73,000 (June
2013: GBP39,000) and no tax charge, the Group recorded a profit
after tax of GBP273,000 (June 2013: GBP338,000 loss).
Despite working capital increasing in the six months by
approximately GBP0.2 million due to higher revenues, net cash
inflow from operating activities was GBP0.2 million which compared
favourably with a net cash outflow of GBP1.0 million in the same
period last year. Cash balances at 30 June 2014 were GBP1.5 million
and were similar to those at 31 December 2013 (GBP1.4 million).
Board changes
I am pleased to announce that Paul Negus was appointed as a
director of the Company on 3 September 2014. Paul has
responsibility for business development for the Group's rail
products and brings considerable commercial experience having spent
eight years as Managing Director of PIPS Technology Limited, a
developer of automatic number plate recognition and CCTV systems
first under private ownership and latterly under the ownership of
Federal Signal Inc.
During the implementation of the 'Fit 4 Growth' programme, Osman
Abdullah assumed an interim role chairing the board of the
Company's main operating subsidiary, Petards Joyce-Loebl. In
recognition that this role is likely to continue for the
foreseeable future the Board considers that the nature of his
contribution will be as an executive director of the Company.
Outlook
The second half of 2014 has started well and the Group continues
to trade profitably. The Board anticipates securing some additional
business during the latter part of this year that is expected to
make a contribution to revenues during the second half year. The
Group's overall order book is in excess of GBP20 million of which
over one third is expected to be delivered before the end of the
current year.
There continue to be opportunities for development and growth in
all of our current product areas and we expect customers to be
placing orders on a number of projects in the coming months which
we believe we are well placed to secure.
The Board is confident about the Group's prospects for the
second half and beyond as whilst there is still work to be done
this year in closing out new business, the present order book
already provides a strong base going forward into 2015.
Raschid Abdullah
3 September 2014
Condensed Consolidated Income Statement
for the six months ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
Note 2014 2013 2013
GBP000 GBP000 GBP000
Revenue 7,163 3,572 6,259
Cost of sales (5,202) (2,147) (3,733)
Gross profit 1,961 1,425 2,526
Administrative expenses (1,615) (1,724) (3,856)
Operating profit/(loss) 346 (299) (1,330)
------------------------------------ ----- --------- --------- ------------------
Analysed as:
Earnings before interest,
tax, depreciation and amortisation
('EBITDA') 441 (158) (716)
Depreciation and amortisation (95) (69) (308)
Share based payments - - -
Restructuring costs - (72) (306)
346 (299) (1,330)
Financial income 2 15 20
Financial expenses 2 (75) (54) (1,078)
Profit/(loss) before tax 273 (338) (2,388)
Income tax 3 - - 95
Profit/(loss) for the period
attributable to equity
shareholders of the company 273 (338) (2,293)
Basic earnings per share
(pence) 4 0.79 (3.11) (15.87)
Diluted earnings per share
(pence) 4 0.62 (3.11) (15.87)
The above results are derived from continuing operations.
Condensed Consolidated Statement of Comprehensive Income
for the six month period ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
GBP000 GBP000 GBP000
Profit/(loss) for period 273 (338) (2,293)
Other comprehensive income
Currency translation on foreign
currency net investments - (13) (13)
Total comprehensive income for
the period 273 (351) (2,306)
Condensed Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2014
Currency
Share Share Merger Equity Retained translation Total
capital premium reserve reserve earnings differences equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 1 January
2013 (audited) 6,412 24,152 - - (28,849) (198) 1,517
Loss for the period - - - - (338) - (338)
Other comprehensive
income - - - - - (13) (13)
Total comprehensive
income for the
period - - - - (338) (13) (351)
Balance at 30 June
2013 (unaudited) 6,412 24,152 - - (29,187) (211) 1,166
Balance at 1 January
2013 (audited) 6,412 24,152 - - (28,849) (198) 1,517
Loss for the year - - - - (2,293) - (2,293)
Other comprehensive
income - - - - - (13) (13)
Total comprehensive
income for the
year - - - - (2,293) (13) (2,306)
Purchase of own shares (592) - - - - - (592)
Sale of own shares 592 - - - 3 - 595
Water Hall transaction
(note 2) 110 - 1,112 213 - - 1,435
Share issue: placing 115 1,035 - - - - 1,150
Expenses of share
issue - (87) (37) - - - (124)
Conversion of convertible
loan
notes 8 53 - (7) 7 - 61
Balance at 31 December
2013 (audited) 6,645 25,153 1,075 206 (31,132) (211) 1,736
Balance at 1 January
2014 (audited) 6,645 25,153 1,075 206 (31,132) (211) 1,736
Profit for the period - - - - 273 - 273
Other comprehensive - - - - - - -
income
Total comprehensive
income for the
period - - - - 273 - 273
Conversion of convertible
loan
notes 3 17 - (1) 1 - 20
Balance at 30 June
2014 (unaudited) 6,648 25,170 1,075 205 (30,858) (211) 2,029
Condensed Consolidated Balance Sheet
at 30 June 2014
Unaudited Unaudited Audited
30 June 30 June 31 December
2014 2013 2013
ASSETS GBP000 GBP000 GBP000
Non-current assets
Property, plant and equipment 170 182 165
Goodwill 401 401 401
Development costs 618 488 640
Deferred tax assets 647 587 653
1,836 1,658 1,859
Current assets
Inventories 1,900 1,924 1,779
Trade and other receivables 2,283 1,311 983
Cash and cash equivalents -
escrow deposits 35 - -
Cash and cash equivalents 1,508 256 1,440
5,726 3,491 4,202
Total assets 7,562 5,149 6,061
EQUITY AND LIABILITIES
Equity attributable to equity
holders of the parent
Share capital 6,648 6,412 6,645
Share premium 25,170 24,152 25,153
Equity reserve 205 - 206
Merger reserve 1,075 - 1,075
Currency translation reserve (211) (211) (211)
Retained earnings deficit (30,858) (29,187) (31,132)
Total equity 2,029 1,166 1,736
Non-current liabilities
Interest-bearing loans and
borrowings 1,515 - 1,518
Deferred tax liabilities 124 122 128
1,639 122 1,646
Current liabilities
Interest-bearing loans and
borrowings - 1,334 -
Trade and other payables 3,894 2,527 2,679
3,894 3,861 2,679
Total liabilities 5,533 3,983 4,325
Total equity and liabilities 7,562 5,149 6,061
Condensed Consolidated Statement of Cash Flows
for the six month period ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit/(loss) for the period 273 (338) (2,293)
Adjustments for:
Depreciation 24 24 47
Amortisation of intangible assets 71 45 261
Financial income (2) (15) (20)
Financial expense 75 54 1,078
Income tax charge - - (95)
Exchange differences - (13) (13)
Operating cash flows before movement in
working capital 441 (243) (1,035)
Change in trade and other receivables (1,336) 217 647
Change in inventories (121) (713) (568)
Change in trade and other payables 1,206 (251) (267)
Cash generated from operations 190 (990) (1,223)
Interest received 2 - 20
Interest paid (49) (39) (60)
Income tax received 38 - -
Net cash from operating activities 181 (1,029) (1,263)
Cash flows from investing activities
Acquisition of property, plant and equipment (29) (34) (40)
Capitalised development expenditure (49) (3) (371)
Cash deposits held in escrow (35) 77 77
Net cash (outflow)/inflow from investing
activities (113) 40 (334)
Cash flows from financing activities
Proceeds from share issue - - 1,150
Expenses of share issue - - (87)
Water Hall transaction (note 2) - - (83)
Proceeds from sale of own shares - - 595
New short term borrowings - 1,334 -
Repayment of bank borrowings - (42) (42)
Net cash inflow from financing activities - 1,292 1,533
Net increase/(decrease) in cash and cash
equivalents 68 303 (64)
Water Hall transaction: Settlement of
working capital facility (note 2) - - 1,551
Total movement in cash and cash equivalents
in the period 68 303 1,487
Cash and cash equivalents at start of
period 1,440 (47) (47)
Cash and cash equivalents at end of period 1,508 256 1,440
Cash and cash equivalents comprise:
Cash and cash equivalents per balance
sheet 1,508 256 1,440
Notes
1 Basis of preparation
The interim financial information set out in this statement for
the six months ended 30 June 2014 and the comparative figures for
the six months ended 30 June 2013 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
2013 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 include a reference
to any matters to which the auditor drew attention by way of
emphasis without qualifying their report, 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 2013. 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 2013, as described in those financial statements other
than standards, amendments and interpretations which became
effective after 1 January 2014 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
2 September 2014.
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 Financial expenses
Unaudited Unaudited Audited
6 months ended 6 months year ended
30 June ended 31 December
2014 30 June 2013
GBP000 2013 GBP000
GBP000
Interest expense on financial liabilities
at amortised cost:
* Convertible loan notes at 7% p.a. (cash) 59 - 34
15 - 9
- 52 54
* Convertible loan notes amortisation (non-cash) 1 2 3
* Bank finance (cash)
* Other (cash)
Net foreign exchange loss - - -
Water Hall transaction (see below) - - 978
Financial expenses 75 54 1,078
On 29 August 2013 the Group completed a debt for equity swap
with Water Hall Group plc ('the Water Hall transaction'). Under the
terms of the arrangement, the Group issued equity, share options,
and convertible loan notes with a combined fair value of
GBP2,975,000 to:
(i) settle its working capital facility of GBP1,551,000
(ii) purchase its own shares to the value of GBP592,000 and
(iii) acquire the remaining net assets of Water Hall Group plc
which comprised cash of GBP72,000 and net liabilities of GBP68,000
relating to trade and other payables net of VAT receivables.
The loss on this transaction of GBP860,000 was included in total
exceptional finance costs for the year ended 31 December 2013 of
GBP978,000; the balance included transaction expenses of
GBP118,000. The net cash effect of this transaction was an outflow
of GBP83,000. In addition the Group's overdraft of GBP1,551,000 was
settled. The debt for equity swap resulted in the Group obtaining
control of the Water Hall Group plc legal entity with the result
that, from 29 August 2013, Water Hall Group plc has been
consolidated into the accounts.
3 Taxation
No provision for taxation has been made in the Condensed
Consolidated Income Statement for the six months to 30 June 2014
based on the estimated tax provision required for the year ending
31 December 2014. No provision was required in the six months to 30
June 2013.
4 Earnings per share
Basic 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 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
2014 2013 2013
Earnings
Profit/(loss) for the period (GBP000) 273 (338) (2,293)
Number of shares
Weighted average number of ordinary shares
('000) 34,347 10,866 14,456
Diluted earnings per share
Diluted earnings per share assumes conversion of all potentially
dilutive ordinary shares, which arise from both convertible loan
notes and share options, and is calculated by dividing the adjusted
profit for the period attributable to the shareholders by the
assumed weighted average number of shares in issue. The adjusted
profit for the period comprises the profit for the period
attributable to the shareholders after adding back the interest on
convertible loan notes for the period.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2014 2013 2013
Adjusted earnings
Profit/(loss) for the period (GBP000) 347 (338) (2,293)
Number of shares
Weighted average number of ordinary shares
('000) 55,983 10,866 14,456
At 30 June 2013 and 31 December 2013 diluted earnings per share
was identical to the basic earnings per share as the Group was loss
making.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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