Interim Results
Petards Group PLC
28 September 2007
28 September 2007
PETARDS GROUP PLC:
INTERIM RESULTS
Petards Group plc ('Petards'), the AIM quoted developer of advanced surveillance
systems, announces interim results for the six months to 30 June 2007, which
mark a return to operational profitability for the Group. These results have
been restated under International Financial Reporting Standards (IFRS).
Financial Highlights
• Turnover of £10.3m (2006: £10.4m)
• Gross profit of £4.2m (2006: £3.6m)
• Operating profit of £31,000 (2006: £778,000 loss)
• Loss before tax of £131,000 (2006: £926,000 loss)
• Loss per share of 0.02p (2006: 0.15p loss)
• Margins increased to 40% (2006: 35%)
• Cash generation from operations of £103,000 (2006: £345,000)
• Cash outflow, after interest, investing and financing activities of
£204,000 (2006: £670,000)
Other highlights
• £2m contract to supply and install eyeTrainTM digital CCTV systems for
Bombardier on 286 UK trains
• Significant interest in new products: Forward facing train cameras and
Automatic Passenger Counting
• UVMSTM video recording orders won for 8 DLR stations and new Eurostar
terminus at St Pancras Station
• Electronics defence business still affected by diversion of defence
spending - orders in Sept of c. £1m.
• US sales up to £0.9m (2006: £0.3m)
• UVMSTM installed with Casino customers and prospects of further customer
expansion programmes
Commenting on outlook, Tim Wightman, Chairman, said:
'The growth in demand for security and surveillance systems remains strong,
particularly in the US, but the Group is finding that its size and limited
capital resources are constraining its ability to capitalise on the
opportunities. As previously reported, the Board has been appraising the
potential to partner or combine with other businesses to create synergies and
critical mass. It is also considering the financial resources that would be
necessary to enable it to fulfil its potential whilst remaining independent.
This review has been proceeding well and I hope to report to you further on this
over the coming weeks.
'Our on-board rail business, in which we have a leading market position has
reasonable forward visibility, but the timing of order placement for a number of
other significant order prospects, which have shorter lead-times, is uncertain.
Whilst we will be able to execute these orders quickly once received, the full
benefit will not now be realised until next year. This will mean that the
outcome for the current year will fall materially short of our previous
expectations.'
Contacts:
Petards Group plc Parkgreen Communications
Tim Wightman, Chairman Paul McManus
Andy Wonnacott, Finance Director Tel: 020 7479 7933
Tel: 01932 788 288 Mob: 07980 541 893
Email: paul.mcmanus@parkgreenmedia.com
Chairman's Statement
Petards Group plc announces interim results for the six months ended 30 June
2007. The unaudited interim financial information represents the first
published financial information prepared on the basis of the recognition and
measurement requirements of International Financial Reporting Standards '('
IFRS') as adopted by the EU ('Adopted IFRS').
IFRS
The Alternative Investment Market (AIM) rules require that the next annual
consolidated financial statements of the Group, for the year ending 31 December
2007, be prepared in accordance with Adopted IFRS.
This interim financial information has been prepared on the basis of the
recognition and measurement requirements of Adopted IFRS as at 30 June 2007 that
are effective at 31 December 2007, the Group's first annual reporting date at
which it is required to use Adopted IFRS. Based on these Adopted IFRS, the
directors have applied the accounting policies, as set out in the restatement
document referred to in note 1 of this interim financial information, which they
expect to apply when the first annual IFRS financial statements are prepared for
the year ending 31 December 2007.
However, the Adopted IFRS that will be effective (or available for early
adoption) in the financial statements for the year ending 31 December 2007 are
still subject to change and to additional interpretations and therefore cannot
be determined with certainty. Accordingly, the accounting policies for that
annual period will be determined finally only when the annual financial
statements are prepared for the year ending 31 December 2007.
Results
The trading performance in the first half year gave rise to an operating profit
of £31,000 (2006: £778,000 loss) on revenues of £10.3m (2006: £10.4m).
Margins achieved in the period increased to 40% (2006: 35%) which is
significantly higher than those achieved in first half of 2006. Higher margins
on new generation products first delivered last year and the operational
efficiencies arising from the reorganisation undertaken in June 2006 are amongst
the main reasons for this increase.
The cash generated from operations was £103,000 (2006: £345,000). After
interest, investing, and financing activities, the total cash outflow for the
period was £204,000 (2006: £670,000).
Trading review
I reported in June that the Group was well positioned to secure a number of
exciting opportunities within the rail industry for its on-board eyeTrainTM
digital CCTV systems. The first of these came to fruition in late July when we
were awarded the contract by Bombardier Transportation, worth in excess of £2m,
for the supply and installation of eyeTrainTM systems that are to be fitted to
286 'Networker' vehicles in the UK. These systems include a wireless video
capability that enables download of stored footage and viewing of images from
on-board cameras. Also, we were pleased that included within the scope of
supply were our new forward facing cameras which are used to capture the view
from the driver's cab to assist in the investigation of trackside incidents.
Forward facing cameras are one example of products we have developed that
integrate into and utilise eyeTrain's recording capability. In addition,
following the recent launch of our Automatic Passenger Counting (APC) system, we
have already received two orders for the supply of APC systems. Significant
interest is being shown in both of these new products which will help to
maintain our strong position in this market.
The transport sector provides opportunities for Petards UVMSTM network video
recording systems which are well suited to the high camera densities at rail and
metro stations. Amongst the UVMS orders won during 2007 are those covering
eight stations on the Docklands Light Railway as well as one for a system at St
Pancras Station which is to be the new terminus for Eurostar.
Our traditional ruggedised electronics defence business has continued to be
affected by the diversion of defence spending to address urgent operational
requirements in Iraq and Afghanistan. Recently we have seen early signs that
some funds are being released for projects in which we had expected to
participate, with orders in September approaching £1m.
Petards EIMC contributed £1m of revenues during its first four months in the
Group following its acquisition in March 2006, benefiting from a record order
book and strong demand for its ANPR (Automatic Number Plate Recognition)
cameras. However, order volumes for these cameras in 2007 have not been as
high, albeit that we see good opportunities in the medium term as we develop
overseas markets. Petards EIMC continues to be well regarded by customers for
its innovative camera technologies and our new MiniHawk 2i ANPR camera and
ProVida Kestrel range of in-car cameras have generated interest and orders since
their launch this summer.
Sales in the US are up on the same period last year at £0.9m (2006: £0.3m). To
date we have concentrated our efforts in the US on marketing and selling our
UVMSTM solutions. However, following interest from a number of customers, we
have started to market on a limited basis our ANPR cameras and solutions with a
view to establishing reference sites that would provide a platform from which
these to be sold in the US market.
During the period UVMSTM systems have been installed, expanding the capability
of two existing casino customers; and a number of smaller projects have also
been completed including a system monitoring car parks at Newark Liberty
International Airport. While we are seeing strong interest in UVMSTM network
video recording systems from casino operators in particular, project timescales
are prone to slippage and can be difficult to predict. However, delivery lead
times are short and we are well placed to secure a number of orders once these
projects proceed. Our existing casino customers have planned expansion
programmes and we are confident that we shall benefit from these in the future.
Dividends
The Board is not recommending the payment of a dividend.
Board changes
In August Terry Connolly FCA was appointed a non-executive director and I would
like to welcome him to the Board. Terry is a consultant specialising in
strategic and corporate affairs and was previously Group Managing Director of
Chrysalis where he was responsible for taking the company to a public listing.
Outlook
The growth in demand for security and surveillance systems remains strong,
particularly in the US, but the Group is finding that its size and limited
capital resources are constraining its ability to capitalise on the
opportunities. As previously reported, the Board has been appraising the
potential to partner or combine with other businesses to create synergies and
critical mass. It is also considering the financial resources that would be
necessary to enable it to fulfil its potential whilst remaining independent.
This review has been proceeding well and I hope to report to you further on this
over the coming weeks.
Our on-board rail business, in which we have a leading market position has
reasonable forward visibility, but the timing of order placement for a number of
other significant order prospects, which have shorter lead-times, is uncertain.
Whilst we will be able to execute these orders quickly once received, the full
benefit will not now be realised until next year. This will mean that the
outcome for the current year will fall materially short of our previous
expectations.
Tim Wightman
27 September 2007
Consolidated Income Statement
for the six months ended 30 June 2007
Unaudited Unaudited Unaudited
6 months 6 months Year
ended ended ended
Note 30 June 30 June 31 December
2007 2006 2006
£000 £000 £000
Revenue 10,294 10,422 23,235
Cost of sales (6,143) (6,820) (14,839)
Gross profit 4,151 3,602 8,396
Administrative expenses - reorganisation costs 6 - (419) (482)
Administrative expenses - other (4,120) (3,961) (7,960)
Administrative expenses - total (4,120) (4,380) (8,442)
Operating profit /(loss) 31 (778) (46)
Finance expenses (162) (148) (378)
Loss before income tax (131) (926) (424)
Income tax 4 - - (12)
Loss for the period attributable to equity
holders of the company
(131) (926) (436)
Loss per share - basic and
diluted
5 (0.02p) (0.15p) (0.07p)
The above results are derived from continuing operations.
Consolidated Statement of Changes in Equity
for the six month period ended 30 June 2007
Unaudited Unaudited Unaudited
30 June 30 June 31 December
2007 2006 2006
£000 £000 £000
Loss for period (131) (926) (436)
Currency translation on foreign currency net
investments 2 - (3)
Total recognised income and expense (129) (926) (436)
Shares issued - 200 200
Share based payments 24 19 44
Net decrease in total equity (105) (707) (195)
Total deficit at start of period (1,916) (1,721) (1,721)
Total deficit at end of period (2,021) (2,428) (1,916)
Consolidated Balance Sheet
at 30 June 2007
Unaudited Unaudited Unaudited
30 June 30 June 31 December
2007 2006 2006
ASSETS £000 £000 £000
Non-current assets
Property, plant and equipment 755 889 836
Intangible assets - goodwill 964 928 965
Intangible assets - other 59 91 70
Other investments, including derivatives - - 4
Deferred tax assets 233 245 233
Total non-current assets 2,011 2,153 2,108
Current assets
Inventories 2,466 2,997 2,345
Trade and other receivables 3,691 4,383 4,501
Cash and cash equivalents 156 26 502
Total current assets 6,313 7,406 7,348
Total assets 8,324 9,559 9,456
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings (3,532) (3,651) (3,224)
Derivatives (1) (15) -
Provisions (49) - (121)
Total non-current liabilities (3,582) (3,666) (3,345)
Current liabilities
Bank overdraft (532) (146) (674)
Other interest-bearing loans and borrowings (520) (743) (816)
Trade and other payables (5,711) (7,432) (6,537)
Total current liabilities (6,763) (8,321) (8,027)
Total liabilities (10,345) (11,987) (11,372)
Net liabilities (2,021) (2,428) (1,916)
Capital and reserves
Share capital 6,367 6,367 6,367
Share premium 23,255 23,255 23,255
Reserves (31,643) (32,050) (31,538)
Total deficit attributable to equity holders of the
company (2,021) (2,428) (1,916)
Consolidated Cash Flow Statement
for the six month period ended 30 June 2007
Unaudited Unaudited Unaudited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
£000 £000 £000
Cash flows from operating activities
Loss for the period (131) (926) (436)
Adjustments for:
Depreciation 163 197 467
Amortisation of intangible assets 23 179 202
Finance expenses 162 148 378
Loss/(gain) on sale of property, plant and equipment 1 - (4)
Equity settled share-based payment expenses 24 19 44
Income tax expense - - 12
Operating profit/(loss) before changes in working capital and
provisions 242 (383) 663
(Increase)/decrease in inventories (121) 214 871
Decrease in trade and other receivables 810 249 168
(Decrease)/increase in trade and other payables (781) 236 (829)
(Decrease)/increase in provisions (47) 29 121
Cash inflow from operations 103 345 994
Interest paid (191) (433) (633)
Income tax received - - 70
Net cash (outflow)/inflow from operating activities (88) (88) 431
Cash flows from investing activities
Capitalised internal development expenditure (11) - (2)
Proceeds from sale of property, plant and equipment - - 6
Acquisition of subsidiary, net of cash acquired - (187) (188)
Acquisition of property, plant and equipment (84) (144) (364)
Net cash outflow from investing activities (95) (331) (548)
Cash flows from financing activities
Repayment of borrowings - (222) (546)
Payment of finance lease liabilities (21) (29) (59)
Net cash outflow from financing activities (21) (251) (605)
Net decrease in cash and cash equivalents (204) (670) (722)
Cash and cash equivalents at start of period (172) 550 550
Cash and cash equivalents at end of period (376) (120) (172)
Cash and cash equivalent comprise:
Cash and cash equivalents 156 26 502
Bank overdraft (532) (146) (674)
(376) (120) (172)
Notes
(forming part of the financial statements)
1. Basis of preparation
The AIM rules require that the next annual consolidated financial statements of
the Group, for the year ending 31 December 2007, be prepared in accordance with
International Financial Reporting Standards ('IFRS') adopted for use in the EU
('Adopted IFRS').
The preparation of this financial information resulted in changes to the
accounting policies as compared with the most recent annual financial statements
prepared under previous United Kingdom Generally Accepted Accounting Practice ('
UK GAAP'). The revised accounting policies have been applied to all periods
presented in this financial information.
IFRS 1 - 'First Time Adoption of International Financial Reporting Standards'
mandates that most IFRS are applied fully retrospectively, meaning that the
opening balance sheet at 1 January 2006 is restated as if those accounting
policies had always been applied. IFRS 1 permits companies to apply certain
exemptions from the full requirements of IFRS during the transition. Details of
the exemptions applied by the Group are outlined in the restatement document
referred to below.
A detailed review of the changes in our accounting policies and reconciliations
of our financial statements from UK GAAP to IFRS at key dates were published to
the London Stock Exchange on 28 September 2007 and are also available on the
Group's website at www.petards.com.
2. Accounting policies
The accounting policies that the Group intend to apply to the year ending 31
December 2007 are set out in the IFRS restatement document referred to in note
1.
Status of financial information
The comparative figures for the year ended 31 December 2006 are not the Group's
statutory financial statements for that year. Those financial statements, which
were prepared under UK GAAP, have been reported on by the Group's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
The interim information for the half years ended 30 June 2007 and 30 June 2006
is unaudited. This information does not constitute statutory accounts within
the meaning of the Companies Act 1985. In relation to the financial statements
for the year ended 31 December 2006, the comparative information has been
extracted from an unaudited restatement of the financial information taken from
the audited Group's statutory financial statements for that year details of
which are given in the IFRS restatement document referred to in note 1.
Taxation
No provision for taxation has been made in the profit and loss account for the
six months to 30 June 2007 based on the estimated tax provision required for the
year ending 31 December 2007. No provision was required in the six months to 30
June 2006.
Loss per share
The calculation of earnings per share is based on the loss for the period and on
the weighted average number of ordinary shares outstanding in the period.
Unaudited Unaudited Unaudited
6 months 6 months Year
ended ended ended
30 June 30 June 31 December
2007 2006 2006
Loss for the period (£000) (131) (926) (436)
Weighted average number of ordinary shares ('000) 636,706 631,418 634,084
Loss per share (0.02p) (0.15p) (0.07p)
Diluted loss per share is identical to the basic loss per share as dilutive
potential shares are not treated as dilutive since they would reduce the loss
per share.
Reorganisation costs
The reorganisation expenses in 2006 arose on the centralisation of the Group's
production, finance and administrative functions.
Interim results
These results were approved by the Board of Directors on 27 September 2007.
Copies of the interim statement will be sent to shareholders. Further copies
will be available from the Company's registered office at Petards House, 8
Windmill Business Village, Brooklands Close, Sunbury on Thames, Middlesex TW16
7DY for the next 14 days.
This information is provided by RNS
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