Half Yearly Report

RNS Number : 5512N

Pennant International Group PLC

05 September 2011

 



Pennant International Group plc

Interim Results for the six months ended 30 June 2011

5 September 2011

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 2011.

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

"I am pleased to report a profitable first half in which major contract wins have substantially increased the Group's order book.. Activity in respect of these new orders will increase progressively during the second half and they are expected to contribute significantly to revenues in 2012 and beyond.

"In addition to the new orders won, tendering activity remains high particularly in the Training Systems Division providing a growing pipeline of opportunities for the medium term."

Highlights: Financial

·     Group revenues for the period of £4.96million (2010: £4.89million);

·     Gross margin of 40.5% (2010: 41.4%);

·     Operating profit of £279,000 (2010: £220,000);

·     Profit before tax of £272,000 ( 2010: £209,000);

·     Profit attributable to  equity holders of £202,000 (2010: £189,000) after full tax charge of £70,000 (2010: £20,000 charge);

·     Earnings per share of 0.72pence (2010: 0.67pence);

·     Net cash at period end of £699,000 (2010: £1,026,000);

·     Interim Dividend of 0.5pence per share (2010: 0.25p per share);

Highlights: Operational

·     Substantially increased order book with tendering activities in Training Systems Division 
remaining particularly high;

·     Training Systems: awarded the Group's largest ever contract worth in excess of £10million for 
Maintenance Training Equipment for the AW 159 Lynx Wildcat helicopter; successful completion of upgrade of electronic classrooms used to train Royal Australian Air Force maintenance personnel on Hawk Lead in Fighter; ongoing support revenues;

·     Data Services: A new Professional Services Agreement with Capgemini UK PLC developing 
the next generation of Basic PAYE Tools to support the introduction by HMRC of Real Time Information into PAYE; ongoing work on rail sector contract with potential value in excess of US$2million to supply manuals and training on major programme for supply of rolling stock;

·     Software Services: continuing  resilient revenues from five year contract with Canadian 
Department of National Defence for support to maximise effective use of OmegaPS; sale of new OmegaPS licences to Shenjang Aircraft Research and Design Institute of China; ongoing maintenance revenues from existing OmegaPS licences:

On current trading and prospects, Mr. Powell added:

"the Group's order book is strong and there has been a high level of in the Training Systems Division providing a growing pipeline of opportunities. This, together with the ongoing revenue streams from support and consultancy agreements, a strong balance sheet and a good cash position give your board confidence for the future."

Enquiries:

Pennant International Group plc                    Tel: [phone]    

Chris Snook, Chief Executive                                                    

John Waller, Finance Director

Winningtons Financial                                     Tel: [phone]

Paul Vann/Tom Cooper

WH Ireland                                                      Tel: [phone]

Mike Coe/Marc Davies                        

Pennant International Group plc

Interim Report for the six months ended 30 June 2011

Chairman's Statement

I am pleased to report a profitable first half in which major contract wins have substantially increased the Group's order book. Activity in respect of these new orders will increase progressively during the second half and they are expected to contribute significantly to revenues in 2012 and beyond. 

In addition to the new orders won, tendering activity remains high particularly in the Training Systems Division providing a growing pipeline of opportunities for the medium term.

Results

Turnover for the period was £4.96 million (Interim 2010: £4.89 million) and gross margin was 40.5% (Interim 2010: 41.4%). Administrative expenses were down by 3% at £1.73million (Interim 2010: £1.78 million). As a consequence of these factors there was a 30% increase in profit before tax to £271,789 (Interim 2010: £209,078).

The recognition, for the first time, of tax losses as a deferred tax asset in the annual accounts to 31 December 2010 has resulted in a full tax charge for the period of £70,000 (2010: £20,000). The profit after tax was £201,789 (Interim 2010: £189,078). Basic earnings per share rose to 0.72p (Interim 2010: 0.67p).

Cash generated from operations was £266,886 (Interim 2010: £489,464). Cash at the end of the period was £853,753 (Interim 2010: £1,371,938). After deducting borrowings the Group had net cash of £698,949 (Interim 2010: £1,025,510). The cash balance reflects the continuing policy of purchasing the Company's own shares when appropriate and the timing of contract stage payments.

Your Board is declaring the payment of an interim cash dividend of 0.5p per share (Interim 2010: 0.25p). The dividend will be paid on 30 September 2011 to shareholders on the register at close of business on 16 September 2011.The shares are expected to go ex-dividend on 14 September 2011.               

Current trading

The principal activities and achievements in the period included:

·   A contract with AgustaWestland worth in excess of £10 million for Maintenance Training 
Equipment for the AW159 Lynx Wildcat helicopter. This is the largest contract ever won by the Group and will provide substantial revenues through 2012 and 2013.

·   Successful completion of the upgrade of electronic classrooms in Australia used to train RAAF 

     personnel in the maintenance of the Hawk Lead in Fighter. Also extension of the contract to

     support the classrooms for a further two years to 2013.

·   Ongoing work and extensions to contract with BAE Systems for computer-based training

     systems and emulations supporting their sale of Hawk aircraft to India

·   A new Professional Services Agreement with Capgemini UK PLC developing the next 
generation of Basic PAYE Tools to support the introduction by HMRC of Real Time Information into PAYE.

·   Ongoing work on a contract in the rail sector with potential value in excess of US$ 2 million to supply manuals and training to a major programme for the supply of rolling stock.

·    Continuing resilient revenues from the consultancy agreement with the Canadian Department of National Defence for support to maximise effective use of OmegaPS.

·    The sale of new OmegaPS licences to Shenyang Aircraft Research & Design Institute.

In addition to the above ongoing revenue streams have continued under other support and consultancy agreements with:

·    UK Ministry of Defence - support of 140 training devices in use at military training 
establishments.

·    BAE Australia - support of classrooms and training equipment in respect of the Hawk Lead in Fighter.

·    Australian Defence Organisation - specialist consultancy in respect of the support of 
OmegaPS.

·    Various customers - software maintenance agreements in respect of OmegaPS installations.

·    Krauss Maffei Wegmann - support of a number of rail and police car simulators.

·    TOTAL E&P UK PLC - provision of draughting services.

Outlook

The Group's order book is strong and there has been a particularly high level of tendering in the Training Systems Division providing a growing pipeline of opportunities. This together with the ongoing revenue streams from support and consultancy agreements, a strong balance sheet and a good cash position give your Board confidence for the future.

C C Powell

Chairman

5 September 2011

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2011

	Notes	Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
		Unaudited	Unaudited	Audited
		£	£	£
Revenue		4,963,351	4,892,160	9,572,948
Cost of sales		(2,954,350)	(2,888,655)	(5,605,421)
Gross profit		2,009,001	2,003,505	3,967,527
Administrative expenses		(1,730,085)	(1,783,472)	(3,425,368)
Operating profit		278,916	220,033	542,159
Finance costs		(7,152)	(11,023)	(17,051)
Finance income		25	68	340
Profit before taxation		271,789	209,078	525,448
Taxation	2	(70,000)	(20,000)	35,017
Profit for the period		201,789	189,078	560,465
Earnings per share	3
Basic		0.72p	0.67p	2.01p
Diluted		0.70p	0.61p	1.96p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2011

		Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
		Unaudited	Unaudited	Audited
		£	£	£
Profit attributable to equity holders of the parent		201,789	189,078	560,465
Other comprehensive income:
Exchange differences on translation of foreign operations		6,351	68,412	151,595
Comprehensive income attributable to equity holders of the parent		208,140	257,490	712,060

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2011

	30 June 2011	30 June 2010	31 December 2010
	Unaudited	Unaudited	Audited
	£	£	£
Non-current assets
Goodwill	996,952	954,198	991,557
Other intangible assets	69,865	78,361	75,123
Property plant and equipment	1,792,534	1,789,942	1,776,559
Available-for-sale investments	3,700	3,700	3,700
Deferred tax asset	166,187	41,542	226,452
Total non-current assets	3,029,238	2,867,743	3,073,391
Current assets
Inventories	9,340	26,840	44,375
Trade and other receivables	2,703,983	2,226,901	2,388,739
Cash and cash equivalents	853,753	1,371,938	1,414,759
Total current assets	3,567,076	3,625,679	3,847,873
Total assets	6,596,314	6,493,422	6,921,264
Current liabilities
Trade and other payables	1,280,398	1,124,425	1,047,586
Current tax liabilities	12,000	18,335	17,000
Obligations under finance leases	17,596	4,373	20,179
Bank loan	137,208	187,616	190,730
Deferred revenue	321,452	336,969	338,815
Total current liabilities	1,768,654	1,671,718	1,614,310
Net current assets	1,798,422	1,953,961	2,233,563
Non current liabilities
Bank loan	-	140,118	42,639
Obligations under finance leases	-	14,321	-
Deferred tax liabilities	122,537	-	134,968
Deferred revenue	4,917	4,887	6,648
Total non-current liabilities	127,454	159,326	184,255
Total liabilities	1,896,108	1,831,044	1,798,565
Net assets	4,700,206	4,662,378	5,122,699
Equity
Share capital	1,475,000	1,600,000	1,475,000
Capital redemption reserve	125,000	-	125,000
Treasury shares	(439,321)	(474,518)	(81,076)
Retained earnings	3,135,225	3,222,128	3,205,824
Translation reserve	404,302	314,768	397,951
Total equity	4,700,206	4,662,378	5,122,699

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 June 2011

	Notes	Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
		Unaudited	Unaudited	Audited
		£	£	£
Net cash generated from operating activities	4	266,886	489,464	962,295
Investing activities
Interest received		25	68	340
Purchase of intangible assets		(17,802)	(38,475)	(66,074)
Purchase of property plant and equipment		(80,379)	(50,625)	(92,529)
Loan to Employee Benefit Trust		-	-	(292,775)
Net cash used in investing activities		(98,156)	(89,032)	(451,038)
Financing activities
Dividends paid		(273,888)	(280,701)	(349,698)
Transactions in own shares		(358,245)	(4,200)	44,529
Repayment of borrowings		(96,161)	(89,825)	(184,190)
Repayment of obligations under finance leases		(2,583)	(1,579)	(94)
Net cash used in financing activities		(730,877)	(376,305)	(489,453)
Net (decrease)/ increase in cash and cash equivalents		(562,147)	24,127	21,804
Cash and cash equivalents at beginning of period		1,414,759	1,284,384	1,284,384
Effect of foreign exchange rates		1,141	63,427	108,571
Cash and cash equivalents at end of period		853,753	1,371,938	1,414,759

PENNANT INTERNATIONAL GROUP plc

STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2011

	Share capital	Capital Redemption reserve	Treasury shares	Retained earnings	Translation reserve	Total equity
	£	£	£	£	£	£
At 1 January 2010	1,600,000	-	(470,318)	3,307,493	246,356	4,683,531
Total comprehensive income for the year	-	-	-	560,465	151,595	712,060
Capital reduction	(125,000)	125,000	292,425	(292,425)	-	-
Purchase of treasury shares	-	-	96,817	(52,288)	-	44,529
Recognition of share based payment	-	-	-	32,277	-	32,277
Dividends paid	-	-	-	(349,698)	-	(349,698)
At 31 December 2010	1,475,000	125,000	(81,076)	3,205,824	397,951	5,122,699
Total comprehensive income for the half year	-	-	-	201,789	6,351	208,140
Dividends paid	-	-	-	(273,888)	-	(273,888)
Transactions in treasury shares	-	-	(358,245)	-	-	(358,245)
Share based payment	-	-	-	1,500	-	1,500
At 30 June 2011	1,475,000	125,000	(439,321)	3,135,225	404,302	4,700,206

PENNANT INTERNATIONAL GROUP plc

NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2011

1.   Basis of preparation

This condensed set of financial statements has been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied to the Group's latest annual audited financial statements. The following standards, amendments to standards and interpretations have been adopted by the EU and are mandatory for the first time for the financial year beginning 1 January 2011 but have had no effect on the information presented in this condensed set of financial statements:

IAS 24 Related Party Disclosure (revised 2009)	Amends the definition of related party and modifies certain related party disclosure requirements for government related entities.
Improvements to IFRSs 2010 IFRS 1	Relate to first time adoption of IFRS.
Improvements to IFRSs 2010 IFRS 7 Financial Instruments: Disclosures	Requirement for qualitative disclosure as well as quantitative disclosure to better enable evaluation of risk arising from financial instruments.
Improvements to IFRSs 2010 IAS 1 Presentation of Financial Statements	Clarifies that changes in each component of equity arising from transactions recognised as other comprehensive income may be presented either in the statement of changes in equity or in the notes to the financial statements.
Improvements to IFRS 2010  IAS 34 Interim Financial Reporting	Adds examples to the list of events or transactions that require disclosure under IAS 34 and removes references to materiality.
Improvements to IFRSs 2010 IFRIC 13 Customer Loyalty Programmes	Clarifies the fair value of award credits.
IFRIC 14 Prepayments of a Minimum Funding Requirement (Amendments to IFRIC 14)	Removes the unintended consequences arising from the treatment of prepayments where there is a minimum funding requirement.

While the financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods and include the information required to be disclosed by the AIM Rules for Companies, they do not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34, 'Interim Financial Reporting'.

The results for the year ended 31 December 2010 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.

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 2011.

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 assumes conversion of all potentially dilutive ordinary shares, all of which arise from share options.

	Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
	£	£	£
Earnings
Net profit attributable to equity shareholders	201789	189,078	560,465
Number of shares	Number	Number	Number
Weighted average number of ordinary shares	28,115,886	28,070,116	27,908,547
Number of dilutive shares under option	720,000	2,760,000	720,000
Weighted average number of ordinary shares for the purpose of dilutive earnings per share	28,835,886	30,830,116	28,628,547

4.  Cash generated from operations

	Six months ended 30 June 2011	Six months ended 30 June 2010	Year ended 31 December 2010
	£	£	£
Profit for the period	201,789	189,078	560,465
Finance income	(25)	(68)	(340)
Finance costs	7,152	11,023	17,051
Income tax expense/(credit)	70,000	20,000	(35,017)
Share-based payment	1,500	6,258	32,277
Depreciation charge	87,044	88,704	178,137
Operating cash flows before movement in working capital	367,460	314,995	752,573
(Increase)/decrease in receivables	(315,244)	120,278	251,215
Decrease/(increase) in inventories	35,035	(10,500)	(28,035)
Increase in payables	232,812	134,606	57,767
Decrease in deferred revenue	(19,094)	(43,138)	(39,531)
Cash generated from operations	300,969	516,241	993,989
Tax paid	(26,931)	(15,754)	(14,643)
Interest paid	(7,152)	(11,023)	(17,051)
Net cash generated from operations	266,886	489,464	962,295

5.   Copies of this statement

Copies of this statement will be sent to shareholders and 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.

 

END

 

 

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