RNS Number:4910M
Petards Group PLC
19 May 2005
PETARDS GROUP PLC:
PRELIMINARY RESULTS ANNOUNCEMENT
Petards Group plc ('Petards'), the AIM quoted developer of advanced surveillance
systems, announces preliminary results for the year ended 31 December 2004.
In his statement to shareholders, Tim Wightman, non-executive Chairman, said:
"In the last twelve months we have achieved many of the further steps necessary
to make the Petards Group a successful and profitable company in the future.
Inevitably this has been a painful process and the losses incurred in the year
and the effect they have had on the balance sheet cannot be lightly dismissed.
The weakness in the balance sheet was rectified after the year-end by means of a
share placing."
Financial Highlights
*Revenue of #22.6m up 7% (2003: #21.3m)
*Gross profit of #7.6m down 13% (2003: #8.7m) - result of the mix of
revenue
*Operating loss of #2,177,000 (2003: #1,962,000 loss)
*Loss before tax of #2,422,000 (2003: #1,958,000 loss)
*Loss per share of 3.7 pence (2003: 2.9 pence)
*Total net borrowings were #7.4m (31 December 2003: #5.8m)
*No dividend
*#5.1m net cash from placing in January 2005 (post year end)
*New #5m five-year term loan and #1m working capital facility with Bank of
Scotland
Other highlights
*All rationalisation now complete and overheads reduced correspondingly
*Name change from Screen PLC to Petards Group plc in February 2005
*David Hayes appointed Chief Executive in March 2005; other board changes
Commenting on outlook, Tim Wightman, non-executive Chairman, said:
"Following the rationalisation of the Petards division the Group's financial
performance has improved resulting in a small operating profit in the first
quarter of 2005.
The outlook for the first six months of the 2005 is encouraging and there are
presently many interesting order prospects. In the markets in which we operate,
the timing of order placement for these larger prospects is something over which
we have little influence. The performance in the second half will depend greatly
on our ability to convert those prospects into orders and then deliver them
before the year-end. At this stage it is difficult to judge the effects of these
conversions on the year's result.
Nevertheless, following the refinancing completed in January this year, the
Group is now on a stronger footing in many aspects of its business and the Board
expects to see the positive results from this during the remainder of the year."
Contacts:
Petards Group plc Binns & Co PR Ltd
Tim Wightman, Chairman Paul McManus
David Hayes, Chief Executive Tel: 020 7153 1485
Tel: 01932 788 288 Mob: 07980 541 893
CHAIRMAN'S STATEMENT
Introduction
In the last twelve months we have achieved many of the further steps necessary
to make the Petards Group a successful and profitable company in the future.
Inevitably this has been a painful process and the losses incurred in the year
and the effect they have had on the balance sheet cannot be lightly dismissed.
The weakness in the balance sheet was rectified after the year-end by means of a
share placing.
We have led a hand to mouth existence since the Company breached its banking
covenants when its shares were suspended in 2002. Although we have had the
support of our bankers throughout, the lack of capital has severely curtailed
our operations and damaged our trading relations. The Board has kept this matter
constantly under review.
The Board's preference was to strengthen the balance sheet in conjunction with a
merger or acquisition of a company with trading synergies which would provide
greater critical mass. In the event, discussions with two suitable businesses
came to nothing. The Board therefore decided to raise additional capital and its
proposals were sent to shareholders last December. Following the share placing
and restructured banking facilities which were completed in January we begin
2005 with a strong financial base. We will continue to search for suitable
businesses to acquire in our target markets but now it will be from a position
of relative balance sheet strength.
We also have a greatly strengthened management team which is made up of
experienced and technically strong people who are committed to the future
success of the Company. We will need to recruit additional specialist staff to
achieve our planned growth but the leadership team is now in place. All the
rationalisation in the Petards division has been completed and the division is
operating from one location at Sunbury-on-Thames. The overheads have been
reduced correspondingly. Product quality and customer service levels are
improving and this will continue to be an aspect of strong focus.
In revenue and profit terms, the 2004 results reflect the costs and disruption
of the changes within the Petards division balanced by the continued strength of
Joyce-Loebl. In cash terms, the losses incurred within the Petards division and
the absorption of working capital at Joyce-Loebl both aggravated the already
weak balance sheet position with which we started 2004.
Profit and loss account
Turnover for the year ended 31 December 2004 was #22.6m, an increase of 7% over
the figure of #21.3m in the previous year. However, gross profit declined by 13%
to #7.6m (2003: #8.7m) as a result of the mix of revenue during the year.
Administration expenses before exceptional items were lower by 7% at #9.4m
(2003: #10.1m). The operating loss for the year amounted to #2,177,000 (2003:
#1,962,000 loss). After net finance charges of #223,000 (2003: #4,000 credit)
the loss before tax for the year was #2,422,000 (2003: #1,958,000 loss). The
loss per share was 3.7 pence (2003: 2.9 pence).
Balance sheet
At 31 December 2004 shareholders' funds were in deficit by #0.2m (31 December
2003: surplus of #2.2m). Total net borrowings were #7.4m (31 December 2003:
#5.8m). The Company wrote to shareholders on 20 December 2004 setting out
proposals for an increase in share capital for consideration at an extraordinary
general meeting which was held on 24 January 2005.
Post balance sheet events
On 28 January 2005 the Company announced that it had raised #5.1m of capital
(net of expenses) by means of a placing of 557m new ordinary shares. On the same
date it entered into a new #5m five-year term loan and #1m working capital
facility with its bankers, Bank of Scotland. The proforma balance sheet as at 31
December 2004 included in note 6 illustrates the effect of this refinancing.
Dividends
The Board is not recommending the payment of a dividend.
Name change
On 10 February 2005 the Company changed its name from Screen PLC to Petards
Group plc. The Petards brand has been used for the Group's security and
surveillance products for many years and is well known within the industry in
the UK and abroad. We plan to build the business going forward on this name and
to retain the Joyce-Loebl name within Joyce-Loebl's traditional defence markets.
The Board
On 14 September 2004 Geoff Carswell resigned as a director and as Managing
Director of Joyce-Loebl Limited. He was succeeded as Managing Director of
Joyce-Loebl by Bill Conn who was appointed a director of the Company on 1
February 2005. Chris Langridge resigned as a director on 1 February 2005 and was
succeeded as Finance Director by Andy Wonnacott FCA who was appointed on 7 March
2005. On 24 March 2005 David Hayes was appointed Chief Executive and I reverted
to non-executive Chairman.
Staff
I should like to express my thanks to all the Group's employees who have
contributed strongly to the changes and improvements which we have seen in the
Company over the last twelve months.
Outlook for 2005
Following the rationalisation of the Petards division the Group's financial
performance has improved resulting in a small operating profit in the first
quarter of 2005.
The outlook for the first six months of the 2005 is encouraging and there are
presently many interesting order prospects. In the markets in which we operate,
the timing of order placement for these larger prospects is something over which
we have little influence. The performance in the second half will depend greatly
on our ability to convert those prospects into orders and then deliver them
before the year-end. At this stage it is difficult to judge the effects of these
conversions on the year's result.
Nevertheless, following the refinancing completed in January this year, the
Group is now on a stronger footing in many aspects of its business and the Board
expects to see the positive results from this during the remainder of the year.
Tim Wightman
19 May 2005
PETARDS GROUP PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2004
Before Exceptional After
exceptional items (note 2) exceptional
items items
Year ended Year ended Year ended Year ended
Note 31 December 31 December 31 December 31 December
2004 2004 2004 2003
#'000 #'000 #'000 #'000
Turnover
Continuing
operations 22,200 - 22,200 18,499
Discontinued
operations 443 - 443 2,754
--------- --------- --------- ---------
22,643 - 22,643 21,253
Cost of sales (15,043) - (15,043) (12,535)
--------- --------- --------- ---------
Gross profit 7,600 - 7,600 8,718
--------- ---------
Exceptional
items 2 - (402) (402) (314)
Goodwill
amortisation
and impairment (25) - (25) (278)
Other
administrative
expenses (9,350) - (9,350) (10,088)
--------- --------- --------- ---------
Total
administrative
expenses (9,375) (402) (9,777) (10,680)
--------- --------- --------- ---------
Operating loss
Continuing
operations (1,722) (402) (2,124) (2,205)
Discontinued
operations (53) - (53) 243
--------- --------- --------- ---------
Total
operating loss (1,775) (402) (2,177) (1,962)
--------- ---------
Profit on
disposal of
discontinued
operations 702 -
Costs of
fundamental
reorganisation (724) -
--------- ---------
Loss on
ordinary
activities
before
interest (2,199) (1,962)
Net interest
(payable)/rece
ivable (223) 4
--------- ---------
Loss on
ordinary
activities
before
taxation (2,422) (1,958)
Taxation - 144
--------- ---------
Loss on
ordinary
activities
after taxation
being loss for
the financial
year (2,422) (1,814)
========= =========
Loss per share
Basic and
diluted 4 (3.7p) (2.9p)
PETARDS GROUP PLC
CONSOLIDATED BALANCE SHEET
As at 31 December 2004
31 December 31 December
2004 2003
#'000 #'000
Fixed assets
Intangible assets 365 616
Tangible assets 969 942
----------- ------------
1,334 1,558
----------- ------------
Current assets
Stocks 6,815 6,490
Debtors 4,709 5,927
Cash at bank and in hand 249 -
----------- ------------
11,773 12,417
Creditors: amounts falling due within
one year (13,313) (11,605)
----------- ------------
Net current (liabilities) / assets (1,540) 812
----------- ------------
Total assets less current liabilities (206) 2,370
Creditors: amounts falling due after
more than one year (25) (158)
----------- ------------
Net (liabilities) / assets (231) 2,212
=========== ============
Capital and reserves
Called up share capital 654 654
Share premium account 23,660 23,660
Profit and loss account deficit (24,545) (22,102)
----------- ------------
Equity shareholders' funds (231) 2,212
=========== ============
PETARDS GROUP PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2004
Year ended Year ended
31 December 2004 1 December 2003
Note #'000 #'000 #'000 #'000
Net cash outflow from operating
activities 5 (1,819) (2,729)
Returns on investments and servicing
of finance
Interest received 294 288
Interest paid (503) (259)
Finance lease interest paid (14) (25)
------- -------
Net cash (outflow) / inflow from
returns on investments and servicing
of finance (223) 4
Taxation
UK corporation tax - 144
Capital expenditure
Purchase of tangible fixed assets (541) (333)
Sale of tangible fixed assets 97 16
------- -------
Net cash outflow from capital
expenditure (444) (317)
Acquisitions and disposals
Sale of business 835 -
------- --------
Net cash outflow before financing (1,651) (2,898)
Financing
Issue of shares - 1,048
Repayment of principal under finance
leases (114) (137)
------- -------
Net cash (outflow) / inflow from
financing (114) 911
------- --------
Decrease in cash in the year (1,765) (1,987)
======= ========
PETARDS GROUP PLC
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
For the year ended 31 December 2004
31 December 31 December
2004 2003
#'000 #'000
Loss for the financial year (2,422) (1,814)
Currency translation difference on foreign
currency net investments (21) (50)
--------- ---------
Total recognised losses relating to the year (2,443) (1,864)
========= =========
RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS' FUNDS
For the year ended 31 December 2004
Year ended Year ended
31 December 31 December
2004 2003
#'000 #'000
Loss for the financial year (2,422) (1,814)
Other recognised gains and losses (21) (50)
New share issues - 1,092
Expenses of share issues - (44)
Opening equity shareholders' funds 2,212 3,028
----------- -----------
Closing equity shareholders' funds (231) 2,212
=========== ===========
1. Basis of preparation
These financial statements do not constitute financial statements within the
meaning of Section 240 of the Companies Act 1985.
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2003 or 2004. Statutory
accounts for 2003 have been delivered to the registrar of companies, and those
for 2004 will be delivered following the company's annual general meeting. The
auditors have reported on those accounts; their reports were unqualified and did
not contain statements under section 237(2) or (3) of the Companies Act 1985.
The financial statements have been prepared in accordance with UK generally
accepted accounting practice and on the basis of accounting policies consistent
with those applied in previous periods.
2. Exceptional items
2004 2003
Operating exceptional items #'000 #'000
Costs of aborted acquisitions 113 -
Warranty costs 289 -
Goodwill impairment - 229
Reorganisation costs - 314
-------- --------
402 543
======== ========
During the year the group incurred professional fees in connection with the
acquisition of businesses that did not proceed to completion. In addition, in
the first half year remedial costs were incurred to rectify issues with the
original version of the Advantage.Net software at existing customer sites.
2004 2003
Non-operating exceptional items #'000 #'000
Profit on disposal of discontinued business (702) -
Costs of fundamental restructuring 724 -
-------- --------
22 -
======== ========
In March 2004, the net assets and business of Petards Emergency Services Ltd
were sold for a cash consideration of #866,000. The profit is shown net of
goodwill of #226,000 and associated costs.
The costs of the fundamental reorganisation arose from the integration of six
businesses at six locations into one company at one location.
3. Dividend
The Board of directors does not recommend the declaration of a dividend for the
year ended 31 December 2004.
4. Loss per share
The calculation of the basic loss per share is based on the loss for the year on
ordinary activities after taxation of #2,422,000 (2003 loss #1,814,000) divided
by the weighted average number of ordinary 1p shares of 65,420,479 (2003 -
61,777,457). Due to the group's loss for the year the diluted loss per share is
the same as the basic loss per share.
5. Net cash outflow from operating activities
2004 2003
#'000 #'000
Operating loss (2,177) (1,962)
Goodwill amortisation and provision for impairment 25 278
Depreciation of tangible fixed assets 387 613
(Profit) / loss on sale of tangible fixed assets (15) 16
Cash flows relating to fundamental reorganisation (383) -
Increase in stocks and work in progress (482) (312)
Decrease / (increase) in debtors 816 (2,312)
Increase in creditors 19 950
Exchange differences (9) -
-------- --------
Net cash outflow from operating activities (1,819) (2,729)
======== ========
6. Post balance sheet events
On 28 January 2005 the company announced that it had raised #5.1m of capital,
net of expenses, by means of a placing of 557m new ordinary shares. On the same
date it entered into a new #5m five-year term loan and a #1m working capital
facility with its bankers, Bank of Scotland. The table below illustrates the
impact of these transactions as if they were completed on 31 December 2004:
As reported at Adjustments Proforma at 31
31 Dec 2004 Dec 2004
#'000 #'000 #'000
Fixed assets 1,334 - 1,334
Net current
assets
excluding cash
and bank loans
and overdrafts 5,804 - 5,804
Cash 249 2,402 2,651
Bank loans and
overdrafts (7,593) 6,593 (1,000)
--------- -------- --------
Net current
assets /
(liabilities) (1,540) 8,995 7,455
--------- -------- --------
Creditors:
amounts
falling due
after one year (25) (3,925) (3,950)
--------- -------- --------
Net assets /
(liabilities) (231) 5,070 4,839
========= ======== ========
Called up
share capital 654 5,570 6,224
Share premium
account 23,660 (500) 23,160
Profit and
loss account
deficit (24,545) - (24,545)
--------- -------- --------
Equity
shareholders'
funds (231) 5,070 4,839
========= ======== --------
7. Report and accounts
Copies of the Report and Accounts will be sent to shareholders in due course.
8. Announcement
Copies of this announcement will be available from the Nominated Adviser:
Collins Stewart, 9th Floor, Wood Street, London, EC2V 7QR for 14 days from the
date of this announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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