Half Yearly Report

RNS Number : 8834K

Pennant International Group PLC

05 August 2013

 



5 August 2013

Pennant International Group plc

Interim Results for the six months ended 30 June 2013

Strong trading momentum maintained;

Earnings per share up 50%; Dividend up 33%;

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, is pleased to announce Interim Results for the six months ended 30 June 2013.

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

"I am pleased to report continuing growth and further improvement in the performance of the Group. The period has seen the achievement of both operational and strategic milestones that position us well for the medium and longer term."

Highlights: Financial

·     Group revenues increased by 38% to £9.8million (2012: £7.1million);

·     Profit before tax up 51% to £1.14million (2012: £0.75million);

·     Profit for the period attributable to shareholders of £0.87million (2012: £0.58million);

·     Basic earnings per share increased by 50% to 3.31p (2012: 2.21p);

·     Net cash at period end of £1.17million (2012: £2.07million); Nil borrowings;

·     Interim dividend increased by 33% to 0.8p per share (2012: 0.6p)

Highlights: Operational

·     Largest ever contract worth £16million over 5 years awarded during period by BAE Systems Australia Limited on behalf of Australian Defence Force; contract provides for further one year extensions up to 20 years;

·    Contract worth up to £5million over five years awarded for support of training aids at a number of UK Ministry of Defence establishments;

·    On schedule completion and delivery of first of two maintenance trainers for the AW 159 Wildcat helicopter under contract with Agusta Westland; value in excess of £12million;

·    Successful completion of critical design review for Virtual Reality Parachute Flight Simulator for delivery to Singapore Defence, Science and Technology Agency;

·    Growing consultancy revenues from Canadian Department of National Defence to maximize use of proprietary OmegaPS software suite;

On current trading and prospects, Mr. Powell added:

"The order book provides good visibility through 2014 and beyond. During the period there has been significant ongoing activity with a broad global spread of potential customers on a number of significant opportunities, particularly in the defence and rail sectors.

"The pipeline is robust and active and the Group's good relationships with its customers and strong balance sheet continue to provide a strong platform from which to build and to realize the opportunities arising."

Enquiries:

Pennant International Group plc                              Tel: [phone]            

Chris Snook, Chief Executive                                                                     

John Waller, Finance Director

www.pennantplc.co.uk

Winningtons Financial                                                  Tel: [phone]

Paul Vann/Tom Cooper                                                 Mob: [phone]

WH Ireland                                                                         Tel: [phone]

Mike Coe                                            

Pennant International Group plc

Interim Report for the six months ended 30 June 2013

Chairman's Statement

I am pleased to report continuing growth and further improvement in the performance of the Group. The period has seen the achievement of operational and strategic milestones that position the Group well for the medium and longer term.

Results and dividend

Revenues for the period at £ 9.8 million were 38% higher than for the same period in 2012 (Interim 2012:£7.1 million) and operating profit rose strongly to £1,143,021 (Interim 2012:£755,003) an increase of 51%. Basic earnings per share rose to 3.31p (Interim 2012:2.21p).

 Cash was used during the period mainly to fund the start of some major contracts. It is expected that this requirement for working capital will reduce during the second half as stage payments are received. The group has no borrowings.

Your Board is declaring a 33% increase in the interim dividend to 0.8p per share (Interim 2012:  0.6p) .The interim dividend will be paid on 25 October 2013 to shareholders on the register at close of business on 4 October 2013. The ex- dividend date is expected to be 2 October 2013.

Highlights

Major new contract awards:

·     A contract with a value of approximately £16 million awarded by BAE Systems Australia Limited under which Pennant will supply and support a suite of training aids that will be used to provide a leading-edge technical training capability to the Australian Defence Force. The training aids will be delivered during the first 2 years with support revenues running for the remainder of the term. The 5 year contract provides for one year extensions up to 20 years.

·     A contract with a potential value of £5 million running over up to 5 years for the support of training aids at a number of UK Ministry of Defence establishments.

·     A contract with a value of £1.3 million for the supply of a software-based training capability to an Indian customer.

·     The sale of licences for the use of the Group's Integrated Logistic Support Software product, OmegaPS, to Fleetway Inc. for use on the Canadian Arctic Operations Patrol Ship project.

Operational milestones achieved:

·     Successful on- schedule completion of factory acceptance and delivery of the first of two maintenance trainers for the AW159 Wildcat helicopter under a contract with Agusta Westland having a value in excess of £12 million. 

·     Successful completion of critical design review for a Virtual Reality Parachute Flight Simulator for delivery to the Singapore Defence, Science and Technology Agency.

·     Production and delivery of a suite of training aids under a contract with BAE Systems for supply to Saudi Arabia as part of the upgrade of their Technical Studies Institute.

·     Continued development under a Professional Services Agreement with Capgemini UK PLC of the next generation Basic PAYE Tools to support the introduction of Real Time Information into the PAYE process.

·     Growing consultancy revenues under an agreement with the Canadian Department of National Defence to maximise the use of OmegaPS in the Department.

Outlook

 The order book provides good visibility through 2014 and beyond and during the period there has been significant on-going activity with a broad global spread of potential customers on a number of significant opportunities particularly in the defence and rail sectors.

In the defence sector these requirements range from basic training aids for ab-initio students to complex platform specific simulators, computer based training and virtual reality. In the rail sector there are major new opportunities relating to the provision of documentation and training for operators and maintainers of rail assets.

The pipeline is robust and active and the Group's good relationships with its customers and its strong balance sheet continue to provide a firm position from which to build and realise the opportunities arising.

C C Powell

Chairman

2 August 2013

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED INCOME STATEMENT for the six months ended 30 June 2013

	Notes	Six months ended 30 June 2013	Six months ended 30 June 2012	Year ended 31 December 2012
		Unaudited	Unaudited	Audited
		£	£	£
Revenue		9,827,811	7,099,457	14,469,715
Cost of sales		(6,532,155)	(4,458,912)	(8,952,086)
Gross profit		3,295,656	2,640,545	5,517,629
Administrative expenses		(2,152,635)	(1,885,542)	(3,920,782)
Operating profit		1,143,021	755,003	1,596,847
Finance costs		(5,181)	(1,031)	(3,832)
Finance income		2,209	1,056	9,950
Profit before taxation		1,140,049	755,028	1,602,965
Taxation	2	(266,000)	(172,000)	(428,649)
Profit for the period		874,049	583,028	1,174,316
Earnings per share	3
Basic		3.31p	2.21p	4.46p
Diluted		3.27p	2.18p	4.39p

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the six months ended 30 June 2013

		Six months ended 30 June 2013	Six months ended 30 June 2012	Year ended 31 December 2012
		Unaudited	Unaudited	Audited
		£	£	£
Profit attributable to equity holders of the parent		874,049	583,028	1,174,316
Other comprehensive income:
Exchange differences on translation of foreign operations		1,251	(10,936)	(49,910)
Comprehensive income attributable to equity holders of the parent		875,300	572,092	1,124,406

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 30 June 2013

	30 June 2013	30 June 2012	31 December 2012
	Unaudited	Unaudited	Audited
	£	£	£
Non-current assets
Goodwill	970,735	991,018	985,400
Other intangible assets	93,087	104,539	105,036
Property plant and equipment	1,831,311	1,782,213	1,821,559
Available-for-sale investments	3,700	3,700	3,700
Deferred tax asset	36,392	90,864	25,734
Total non-current assets	2,935,225	2,972,334	2,941,429
Current assets
Inventories	13,340	13,340	13,340
Trade and other receivables	5,797,189	4,055,574	3,918,737
Cash and cash equivalents	1,171,500	2,074,904	2,173,237
Total current assets	6,982,029	6,143,818	6,105,314
Total assets	9,917,254	9,116,152	9,046,743
Current liabilities
Trade and other payables	3,013,127	3,473,119	2,875,690
Current tax liabilities	593,652	178,898	374,927
Obligations under finance leases	4,418	13,201	4,726
Deferred revenue	319,236	321,560	341,016
Total current liabilities	3,930,433	3,986,778	3,596,359
Net current assets	3,051,596	2,157,040	2,508,955
Non current liabilities
Obligations under finance leases	47,567	-	24,477
Deferred revenue	5,470	19,786	12,251
Deferred tax liabilities	110,340	116,342	107,340
Total non-current liabilities	163,377	136,128	144,068
Total liabilities	4,093,810	4,122,906	3,740,427
Net assets	5,823,444	4,993,246	5,306,316
Equity
Share capital	1,400,000	1,400,000	1,400,000
Capital redemption reserve	200,000	200,000	200,000
Treasury shares	(390,382)	(351,341)	(402,690)
Retained earnings	4,274,967	3,368,005	3,771,398
Translation reserve	338,859	376,582	337,608
Total equity	5,823,444	4,993,246	5,306,316

PENNANT INTERNATIONAL GROUP plc

CONSOLIDATED STATEMENT OF CASH FLOWS for the six months ended 30 June 2013

	Notes	Six months ended 30 June 2013	Six months ended 30 June 2012	Year ended 31 December 2012
		Unaudited	Unaudited	Audited
		£	£	£
Net cash generated from operating activities	4	(549,950)	280,392	795,409
Investing activities
Interest received		2,209	1,056	9,950
Proceeds of sale of property, plant and equipment		1,000	-	10,358
Purchase of intangible assets		(22,310)	(5,765)	(36,860)
Purchase of property plant and equipment		(108,253)	(72,352)	(215,446)
Net cash used in investing activities		(127,354)	(77,061)	(231,998)
Financing activities
Dividends paid		(369,797)	(264,224)	(422,353)
Purchase of own shares for treasury		-	(195,785)	(343,315)
Proceeds of sale of treasury shares		4,125	-	61,425
Net funds from/(repayment of) obligations under finance leases		22,782	(2,078)	13,924
Net cash used in financing activities		(342,890)	(462,087)	(690,319)
Net (decrease)/ increase in cash and cash equivalents		(1,020,194)	(258,756)	(126,908)
Cash and cash equivalents at beginning of period		2,173,237	2,343,105	2,343,105
Effect of foreign exchange rates		18,457	(9,445)	(42,960)
Cash and cash equivalents at end of period		1,171,500	2,074,904	2,173,237

PENNANT INTERNATIONAL GROUP plc

STATEMENT OF CHANGES IN EQUITY for the six months ended 30 June 2013

	Share capital	Capital Redemption reserve	Treasury shares	Retained earnings	Translation reserve	Total equity
	£	£	£	£	£	£
At 1 January 2012	1,400,000	200,000	(191,214)	3,080,745	387,518	4,877,049
Total comprehensive income for the year	-	-	-	1,174,316	(49,910)	1,124,406
Recognition of share based payment	-	-	-	9,104	-	9,104
Purchase of own shares for treasury	-	-	(343,315)	-	-	(343,315)
Sale of treasury shares to satisfy share options	-	-	61,425	-	-	61,425
Loss on sale of treasury shares transferred to retained earnings	-	-	70,414	(70,414)	-	-
Dividends paid	-	-	-	(422,353)	-	(422,353)
At 31 December 2012	1,400,000	200,000	(402,690)	3,771,398	337,608	5,306,316
Total comprehensive income for the half year	-	-	-	874,049	1,251	875,300
Recognition of share based payment	-	-	-	7,500	-	7,500
Sale of treasury shares to satisfy share options	-	-	4,125	-	-	4,125
Loss on sale of treasury shares transferred to retained earnings	-	-	8,183	(8,183)	-	-
Dividends paid	-	-	-	(369,797)	-	(369,797)
At 30 June 2013	1,400,000	200,000	(390,382)	4,274,967	338,859	5,823,444

PENNANT INTERNATIONAL GROUP plc

NOTES TO THE FINANCIAL INFORMATION for the six months ended 30 June 2013

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 2013. These are anticipated to be consistent with those applied in the Group's latest annual audited financial statements for the year ended 31 December 2012. 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 2012 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 2013.

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 2013	Six months ended 30 June 2012	Year ended 31 December 2012
	£	£	£
Earnings
Net profit attributable to equity shareholders	874,049	583,028	1,174,316
Number of shares	Number	Number	Number
Weighted average number of ordinary shares	26,389,136	26,326,969	26,343,553
Diluting effect of share options	316,443	406,702	411,559
Weighted average number of ordinary shares for the purpose of dilutive earnings per share	26,705,579	26,733,671	26,755,112

4.  Cash generated from operations

	Six months ended 30 June 2013	Six months ended 30 June 2012	Year ended 31 December 2012
	£	£	£
Profit for the period	874,049	583,028	1,174,316
Finance income	(2,209)	(1,056)	(9,950)
Finance costs	5,181	1,031	3,832
Income tax expense	266,000	172,000	428,649
Depreciation of property, plant and equipment	96,399	81,103	172,197
Amortisation of other intangible assets	34,345	27,848	58,458
(Profit)/loss on disposal of property, plant and equipment	(435)	-	2,159
Share-based payment	7,500	4,114	9,104
Operating cash flows before movement in working capital	1,280,830	868,068	1,838,765
Increase in receivables	(1,878,452)	(1,252,794)	(1,115,957)
Increase in payables	137,437	715,647	118,218
Decrease in deferred revenue	(28,561)	(39,443)	(27,522)
Cash generated from operations	(488,746)	291,478	813,504
Tax paid	(56,023)	(10,055)	(14,263)
Interest paid	(5,181)	(1,031)	(3,832)
Net cash generated from operations	(549,950)	280,392	795,409

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.

 

END

 

 

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