2015 Interim Results

RNS Number : 3224A
Pennant International Group PLC
28 September 2015
 

 

 

28th September 2015

 

Pennant International Group plc

Interim Results for the six months ended 30 June 2015

 

Challenging trading environment and delayed contract awards.

New £7million Landmark contract with major global aerospace and defence contractor.

Positive outlook with Interim dividend increased by 11%.

 

Pennant International Group plc ("Pennant" or "the Group"), the AIM quoted supplier of integrated logistic support solutions, products and services, principally to the defence, rail, aerospace and naval sectors and to Government Departments, announces Interim Results for the six months ended 30 June 2015.

 

Commenting on the Group's performance, Chairman Christopher Powell said:

"Pennant experienced challenging markets in the six months to 30 June 2015. The anticipated second half weighting, highlighted last March is now likely to be significant. Contract awards have been delayed by the weakness of the oil price, election uncertainty in the UK and the complexities of public sector procurement. The outturn for the full year will depend on the timing of anticipated contracts with an aggregate tender value in excess of £15m, which are expected shortly.  The exact timing of the awards will result in an outcome for the year as a whole which could either be in line or significantly below market expectations.  Notwithstanding the outturn for 2015, prospects for 2016 remain very positive and underpin the Directors' decision to increase the interim dividend payment."

 

Highlights: Financial

 

·     Group revenues for the period of £5.7 million (2014: £9.6 million);

·     Loss before tax of £(0.75) million (2014: profit before tax £1.18 million);

·     Loss for the period attributable to shareholders of £(0.75) million (2014: £0.91 million);

·     Net cash at period end £(0.6) million (2014: £1.9 million);

·     Cash used in operations of £(1.0) million (2014: cash generated from operations of £1.4 million);

·     Basic EPS negative 2.86p (2014: positive 3.47p);

·     Interim dividend declared of 1.0p per share (2014: 0.9p);

 

Highlights: Operational

·     Award of a major new contract worth in excess of £7 million, with a potential total in excess of £9m, with an undisclosed customer for the development of Computer Based Training and electro-mechanical Maintenance Trainers.  This is a landmark contract with a new customer;

·     Successful manufacture and delivery of training aids to BAE Systems Australia Limited as part of a £16m contract;

·     Ongoing successful implementation of a £1.7m upgrade programme with AgustaWestland to the Wildcat training devices;

·     Successful renewal of multi-year contract extension with Australian Department of Defence, Defence Material Organisation to support OmegaPS;

 

On current trading and prospects, Mr. Powell added:

"The outturn for the full year will depend on the timing of anticipated contracts.  Prospects for 2016 remain very positive, taking into the account the recent order valued at between £7m - £9m and further anticipated imminent contract awards with an aggregate tender value in excess of £15m. These underpin the forward visibility and earnings well into 2017."

 

 

 

 

Enquiries:

 

Pennant International Group plc

www.pennantplc.co.uk

Philip Walker, CFO

Chris Snook, CEO

+44 (0) 1452 714 881

 

 

WH Ireland Limited

www.wh-ireland.co.uk

Mike Coe / Ed Allsopp

+44 (0) 117 945 3470

 

 

Walbrook PR (Financial PR)

paul.vann@walbrookpr.com

Paul Vann / Tom Cooper

+44 (0)117 985 8989

Mob: +44 (0)7768 807631

 

Pennant International Group plc

Interim Report for the six months ended 30 June 2015

 

Chairman's Statement

Pennant experienced challenging markets in the six months to 30 June 2015. The anticipated second half weighting, highlighted last March is now likely to be significant. Contract awards have been delayed by the weakness of the oil price, election uncertainty in the UK and the complexities of public sector procurement. The outturn for the full year will depend on the timing of anticipated contracts with an aggregate tender value in excess of £15m, which are expected shortly.  The exact timing of the awards will result in an outcome for the year as a whole which could either be in line or significantly below market expectations.  Notwithstanding the outturn for 2015, prospects for 2016 remain very positive and underpin the Directors' decision to increase the interim dividend payment.

Results and dividend

Revenues for the period were £5.7 million (Interim 2014: £9.6 million) impacted by delays in the expected award of three new contracts.

Administration costs for the period were £2.3 million which is in line with the first half of 2014.  Reorganisation costs of £126,650 (30 June 2014: £nil) were incurred during the period which will produce an annualised reduction in overheads in excess of £300,000.

The loss for the period after tax was £755,799 (Interim 2014: profit £914,277). Basic earnings per share fell to a negative 2.86p compared to a positive 3.47p in June 2014.

Cash used in operations was £1.0 million (Interim 2014: cash generated from operations £1.4 million). The cash balance at the end of the period was (£0.6 million) (Interim 2014: £ 1.9 million).

Your Board is declaring an interim dividend of 1.0p per share (Interim 2014:  0.9p) .The interim dividend will be paid on 11th December 2015 to shareholders on the register at close of business on 16th October 2015. The ex- dividend date is expected to be 15th October 2015.

Highlights

·     Award of a major new contract with a global aerospace and defence contractor initially worth in excess of £7 million, with a potential aggregate value of over £9m, with an undisclosed customer for the development of Computer Based Training and electro-mechanical Maintenance Trainers.  This is a landmark contract with a new customer.

·    Successful manufacture and delivery of two Generic Flying Controls Trainers (Genfly) and two Integrated Avionics Maintenance Trainers (IAMT) to BAE Systems Australia Limited as part of a £16m contract. 

·    Continuing work with BAE Systems Australia supporting a suite of training devices in service which is renewable on an annual basis for a five year rolling period.

·     Ongoing successful delivery of an £1.7m upgrade program with AgustaWestland to the Wildcat training devices.

·     Successful renewal of multi-year contract extension with Australian Department of Defence, Defence Material Organisation to support OmegaPS

·     Sales of new licences for the use of the Group's Integrated Logistic Support Software product, OmegaPS, to a number of customers' world-wide.

 

Outlook

 

The outturn for the full year will depend on the timing of anticipated contracts.

 

Prospects for 2016 remain very positive, taking into the account the recent order valued at between £7m - £9m and further anticipated imminent contract awards with an aggregate tender value in excess of £15m. These underpin the forward visibility and earnings well into 2017.

 

I would like to thank my colleagues and staff for their commitment and endeavours through a demanding period.

 

 

 

C C Powell

Chairman

 

Pennant International Group plc

Interim Report for the six months ended 30 June 2015

 

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2015

 

 

Notes

Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014

 

 

Unaudited

Unaudited

Audited

 

 

£

£

£

Revenue

 

5,775,036

9,574,431

17,798,023

Cost of sales

 

(4,172,834)

(6,076,492)

(10,841,174)

Gross profit

 

1,602,202

3,497,939

6,956,849

 

 

 

 

 

Administrative expenses

 

(2,352,558)

(2,315,806)

(4,782,146)

Operating (loss) / profit

 

(750,356)

1,182,133

2,174,703

 

 

 

 

 

Finance costs

 

(9,042)

(5,922)

(10,569)

Finance income

 

3,599

2,066

2,684

(Loss) / Profit before taxation

 

(755,799)

1,178,277

2,166,818

 

 

 

 

 

Taxation

2

-

(264,000)

814,612

(Loss) / Profit for the period

 

(755,799)

914,277

2,981,430

 

 

 

 

 

Earnings per share

3

 

 

 

Basic

 

(2.86p)

3.47p

11.32p

Diluted

 

(2.72p)

3.41p

10.88p

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2015

 

 

 

Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014

 

 

Unaudited

Unaudited

Audited

 

 

£

£

£

Profit attributable to equity holders of the parent

 

 

(755,799)

 

914,277

 

2,981,430

Other comprehensive income:

 

 

 

 

Items that will not be reclassified to profit and loss

 

 

 

 

Property revaluation gain

 

-

-

1,106,006

Deferred tax

 

-

-

(221,201)

Items that will may be reclassified to profit and loss

 

 

 

 

Exchange differences on translation of foreign operations

 

 

 

(128,868)

 

 

(22,947)

 

 

(12,235)

Comprehensive income attributable to equity holders of the parent

 

 

 

(884,667)

 

 

891,330

 

 

3,854,000

 

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2015

 

 

30 June 2015

30 June 2014

31 December 2014

 

Unaudited

Unaudited

Audited

 

£

£

£

Non-current assets

 

 

 

Goodwill

927,923

952,315

941,457

Other intangible assets

716,005

127,289

850,486

Property plant and equipment

2,864,249

1,926,365

2,999,600

Available-for-sale investments

3,700

3,700

3,700

Deferred tax asset

224,692

34,186

226,639

Total non-current assets

4,736,569

3,043,855

5,021,882

 

 

 

 

Current assets

 

 

 

Inventories

29,854

4,000

29,000

Trade and other receivables

5,701,345

5,251,638

5,383,126

Cash and cash equivalents

-

1,886,979

1,068,632

Current tax asset

12,393

-

743,056

Total current assets

5,743,592

7,142,617

7,223,814

 

 

 

 

Total assets

10,480,161

10,186,472

12,245,696

 

 

 

 

Current liabilities

 

 

 

Trade and other payables

1,161,862

2,794,846

2,179,010

Bank overdraft

642,643

-

-

Current tax liabilities

-

302,467

6,931

Obligations under finance leases

4,076

6,548

15,347

Deferred revenue

241,285

282,418

223,440

Total current liabilities

2,049,866

3,386,279

2,424,728

 

 

 

 

Net current assets

3,693,726

3,756,338

4,799,086

 

 

 

 

Non current liabilities

 

 

 

Obligations under finance leases

23,116

37,069

18,438

Deferred revenue

-

-

5,239

Deferred tax liabilities

379,952

126,854

379,952

Total non-current liabilities

403,068

163,923

403,629

 

 

 

 

Total liabilities

2,452,934

3,550,202

2,828,357

 

 

 

 

Net assets

8,027,227

6,636,270

9,417,339

 

 

 

 

Equity

 

 

 

Share capital

1,401,400

1,401,400

1,401,400

Share premium

5,600

5,600

5,600

Capital redemption reserve

200,000

200,000

200,000

Treasury shares

(418,225)

(459,288)

(418,225)

Retained earnings

5,946,359

5,363,114

7,207,603

Translation reserve

7,288

125,444

136,156

Revaluation reserve

884,805

-

884,805

Total equity

8,027,227

6,636,270

9,417,339

 

 

 

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 June 2015

 

 

 

Notes

Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014

 

 

Unaudited

Unaudited

Audited

 

 

£

£

£

Net cash (used in) / generated from operating activities

4

 

(1,045,225)

 

1,411,072

 

1,694,866

 

 

 

 

 

Investing activities

 

 

 

 

Interest received

 

3,599

2,066

2,684

Proceeds of sale of property, plant and equipment

 

-

-

-

Purchase of intangible assets

 

(22,773)

(41,271)

(802,565)

Purchase of property plant and equipment

 

(2,273)

(144,388)

(251,100)

Net cash used in investing activities

 

(21,447)

(183,593)

(1,050,981)

 

 

 

 

 

Financing activities

 

 

 

 

Proceeds from issue of 'B' shares

 

-

7,000

7,000

Dividends paid

 

(529,445)

(473,800)

(710,700)

Purchase of own shares for treasury

 

-

-

-

Proceeds of sale of treasury shares

 

-

-

26,625

Net (repayment of)/funds from obligations under finance leases

 

(6,593)

(783)

(10,615)

Net cash used in financing activities

 

(536,038)

(467,583)

(687,690)

 

 

 

 

 

Net (decrease)/ increase in cash and cash equivalents

 

 

(1,602,710)

 

759,896

 

(43,805)

 

 

 

 

 

Cash and cash equivalents at beginning of period

 

1,068,632

1,156,950

1,156,950

Effect of foreign exchange rates

 

(108,565)

(29,867)

(44,513)

 

Cash and cash equivalents at end of period

 

 

(642,643)

 

1,886,979

 

1,068,632

 

 

PENNANT INTERNATIONAL GROUP plc

STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2015

 

 

Share capital

Share premium

Capital

redemption

reserve

Treasury shares

Retained earnings

Translation reserve

Revaluation reserve

Total equity

 

£

£

£

£

£

£

£

£

At 1 January 2014

1,400,000

-

200,000

(459,288)

4,897,637

148,391

-

6,186,740

Profit for the year

-

-

-

-

2,981,430

-

-

2,981,430

Other comprehensive income

-

-

-

-

-

(12,235)

884,805

872,570

Issue of B shares

1,400

5,600

-

-

-

-

-

7,000

Recognition of share based payment

-

-

-

-

53,674

-

-

53,674

Sale of treasury shares to satisfy share options

-

-

-

26,625

-

-

-

26,625

Loss on sale of treasury shares transferred to retained earnings

-

-

-

14,438

(14,438)

 

-

-

 

-

Dividends paid

-

-

-

-

(710,700)

-

-

(710,700)

At 31 December 2014

1,401,400

5,600

200,000

(418,225)

7,207,603

136,156

884,805

9,417,339

Loss for period

-

-

-

-

(755,799)

-

-

(755,799)

Other comprehensive income

-

-

-

-

-

(128,868)

-

(128,868)

Recognition of share based payment

-

-

-

-

24,000

-

-

24,000

Dividends paid

-

-

-

-

(529,445)

-

-

(529,445)

At 30 June 2015

1,401,400

5,600

200,000

(418,225)

5,946,359

7,288

884,405

8,027,227

 

 

PENNANT INTERNATIONAL GROUP plc

NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2015

 

1.   Basis of preparation

 

This condensed set of financial statements has been prepared using accounting policies expected to be adopted for the year ending 31 December 2015. These are anticipated to be consistent with those applied in the Group's latest annual audited financial statements for the year ended 31 December 2014. These accounting policies are drawn up in accordance with International Accounting Standards and International Financial Reporting Standards as issued by the International Accounting Standards Board and adopted by the EU.

 

The comparative figures for the year ended 31 December 2014 set out in this Interim Report are not statutory accounts. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under s498 (2) or s498(3) of the Companies Act 2006.

 

AIM-listed companies are not required to comply with IAS34 'Interim Financial Reporting' and the company has taken advantage of this exemption.

 

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 2015.

 

3. Earnings per share

 

Basic earnings per share are 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 takes into account the potentially diluting effect of share options.

 

 

Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014

 

£

£

£

Earnings

 

 

 

Net profit attributable to equity shareholders

 

(755,799)

 

914,277

 

2,981,430

 

 

 

 

Number of shares

Number

Number

Number

Weighted average number of ordinary shares

 

26,472,261

 

26,322,261

 

26,347,261

Diluting effect of share options

1,348,810

488,956

1,065,000

Weighted average number of ordinary shares for the purpose of dilutive earnings per share

 

 

27,821,071

 

 

26,811,217

 

 

27,412,261

 

 

4.  Cash generated from operations

 

 

Six months ended 30 June 2015

Six months ended 30 June 2014

Year ended 31 December 2014

 

£

£

£

Profit for the period

(755,799)

914,277

2,981,430

Finance income

(3,599)

(2,066)

(2,684)

Finance costs

9,042

5,922

10,569

Income tax expense / (credit)

-

264,000

(814,612)

Depreciation of property, plant and equipment

132,883

129,131

266,635

Amortisation of other intangible assets

156,860

41,881

80,010

Profit on disposal of property, plant and equipment

-

-

-

Share-based payment

24,000

25,000

53,674

Operating cash flows before movement in working capital

(436,613)

1,378,145

2,575,022

 

 

 

 

Decrease/(increase) in receivables

(318,219)

498,908

367,420

Decrease in inventories

(854)

-

(25,000)

(Decrease)/increase in payables

(1,017,148)

(215,898)

(831,734)

Decrease in deferred revenue

12,606

(43,698)

(97,437)

Cash generated from/(used in) operations

 

(1,760,228)

 

1,617,457

 

1,988,271

 

 

 

 

Tax refund / (paid)

724,045

(200,463)

(282,836)

Interest paid

(9,042)

(5,922)

(10,569)

Net cash generated from/(used in) operations

 

(1,045,225)

 

1,411,072

 

1,694,866

 

 

 

5.   Copies of this statement

Copies of this statement 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.

 


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